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Two considerations should be given to including partial <br />public financing of initial hangar construction into a <br />bond issue. The first and most important is that growth <br />in numbers of based aircraft is essential to the ability <br />of the airport to generate revenues to meet operating and <br />maintenance expenses. Hangar availability to meet demand <br />will be a factor in this growth. Secondly, established <br />older hangar unit rental rates can eventually be used to <br />help subsidize new hangar development thereby keeping <br />rental rates down to a marketable level. Considering the <br />monthly rental rates required for hangars if relatively <br />low interest money is used, it is unlikely that private <br />developers subject to higher interest rates can develop <br />the required number of units at marketable rates. Full <br />use should be made of MN/DOT's Revolving Hangar Fund <br />monies using them to offset 80% of hangar costs on an <br />interest free basis for 10 years. The City, however, <br />should structure lease rates such that this debt could be <br />retired over the 10 year period. The City's cost of 20% <br />of the structure plus its one-third share of the site <br />preparation and paving project would then be retired in <br />approximately four to five years. Lease revenue after 14 <br />to 15 years can be used to defray airport 0 and M costs <br />and to finance additional hangar development. <br />This approach including hangar development (maximum of 20 <br />units) would require a bond issue of approximately <br />$700,000. Annual debt retirement based on a 20 year term <br />at 8% would be approximately $71,300. <br />Creation of a tax increment district around the airport could <br />be pursued. The district boundaries, however, should include <br />existing developed industrial property as well as undeveloped <br />parcels to achieve a tax increment. Creation of a district <br />with no existing development included may not provide a tax <br />increment to offset development costs in early years. <br />If 20% of the debt service on a municipal G.O tax incre- <br />ment bond can be paid from tax increment financing, then <br />issuance of the bond is not subject to referendum. This <br />is the same as with a general obligation special as- <br />sessment bond. Provisions of the City Charter would <br />apply, however. <br />A possible simplified tax increment financing scenario is <br />as follows: <br />10-14 <br />