In Re State Airport Hangar Lease Disputes (Scott Winick, Appellants)

2025 VT 21
CourtSupreme Court of Vermont
DecidedMay 2, 2025
Docket23-AP-336
StatusPublished
Cited by1 cases

This text of 2025 VT 21 (In Re State Airport Hangar Lease Disputes (Scott Winick, Appellants)) is published on Counsel Stack Legal Research, covering Supreme Court of Vermont primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
In Re State Airport Hangar Lease Disputes (Scott Winick, Appellants), 2025 VT 21 (Vt. 2025).

Opinion

NOTICE: This opinion is subject to motions for reargument under V.R.A.P. 40 as well as formal revision before publication in the Vermont Reports. Readers are requested to notify the Reporter of Decisions by email at: Reporter@vtcourts.gov or by mail at: Vermont Supreme Court, 109 State Street, Montpelier, Vermont 05609-0801, of any errors in order that corrections may be made before this opinion goes to press.

2025 VT 21

No. 23-AP-336

In re State Airport Hangar Lease Disputes Supreme Court (Scott Winick et al., Appellants) On Appeal from Vermont Transportation Board

September Term, 2024

David C. Coen, Chair

Scott R. Winick, Pro Se, Jay, for Plaintiffs-Appellants.

Charity R. Clark, Attorney General, Montpelier, and Jeffrey P. Sokolik, Assistant Attorney General, Barre, for Defendant-Appellee.

PRESENT: Reiber, C.J., Eaton, Cohen and Waples, JJ., and Dooley, J. (Ret.), Specially Assigned

¶ 1. DOOLEY, J. (Ret.), Specially Assigned. This appeal concerns an increase in

airport-hangar lease rates at state-owned airports. In 2019, the Agency of Transportation (AOT)

raised the rental fees for tenants’ hangar space. Five tenants appealed to the Transportation Board,

arguing that that the rent increase did not comply with the terms of their leases and was arbitrary.

The Board rejected their arguments, and tenants appealed. We affirm the Board’s conclusion that

AOT was permitted to consider changes to market value and maintenance costs outside of the prior

lease term in setting rents, but reverse and remand its decision concerning the fairness of the rent

increases. I.

¶ 2. Tenants own hangar facilities constructed on land leased from AOT at the Northeast

Kingdom International Airport and the Stowe-Morrisville State Airport. Each of tenants’ leases

contains a clause empowering AOT to adjust the amount of rent due upon renewal of the lease.

Tenants Sims, Winick, and Gauvin1 have identical lease provisions:

At the end of the first two-year period, and at the end of each succeeding two-year period, the STATE may adjust the amount of rent to reflect any increase for the Consumer Price Index for All Urban Consumers (CPI-U) over the previous two years, current market value for the land, and the maintenance costs for the airport.

The leases of tenants Macfarlane and the Morrisville-Stowe Hangar Association use nearly

identical language but vary in the stated time periods for both the lease term and the “lookback”

period for rent increases. Tenant Macfarlane’s operative lease provides for rent increases “at the

end of the first five-year period and at the end of each succeeding five-year period,” to reflect an

increase in the CPI-U “over the previous five years, current market value for the land and the

maintenance costs for the airport.” (Emphases added.) The Association’s lease also varies in the

time periods listed. It provides for rent increases “at the end of the first two-year period, and at

the end of each succeeding two-year period,” to reflect an increase in the CPI-U “over the previous

five years, current market value for the land, and the maintenance costs for the airport.”2

(Emphases added.)

1 Tenant Gauvin appears to have, in addition to the lease agreement under his own name, another lease agreement. Gauvin was the signatory for the lease between Lakeview Aviation and the State. It is not clear whether he brings his claims under his own name or that of Lakeview Aviation. Regardless, the terms of both leases are identical. 2 The Board appears to have located another differently phrased lease provision. Our review of tenants’ leases did not reveal that other lease provision. The other lease provision did not alter the Board’s analysis. We limit our review here to tenants’ leases as they appear in the record on appeal.

2 ¶ 3. On July 1, 2019, AOT increased the amount of annual rent from $0.12 to $0.25 per

square foot for hangar leases at the Northeast Kingdom International Airport and from $0.16 to

$0.25 per square foot at the Morrisville-Stowe State Airport. The 2019 adjustment was the first

rate adjustment for the Northeast Kingdom International Airport since 2008.

¶ 4. In accord with their leases’ dispute-resolution process, tenants appealed the rate

increases first to AOT and then to the Transportation Board. The Board consolidated tenants’

appeals in January 2023. Tenants and AOT filed administrative records and memoranda

supporting their positions.

¶ 5. Before the Board, tenants argued that AOT failed to comply with the lease terms

governing rate increases. Tenants did not dispute that the lease agreement allowed AOT to

consider the CPI-U, the fair market value of the airport property, and airport maintenance costs.

But they argued that the lease term restricted the period during which AOT could consider changes

to those factors, and that AOT did not so limit its review. Tenants also argued that the rate increase

was arbitrary and capricious and unsupported by AOT’s administrative record.

¶ 6. The Board made the following findings of fact.3 Between 2008 and 2019, AOT

invested more than $10 million in improving the Northeast Kingdom International Airport,

including constructing a full-length parallel taxiway, snow-removal equipment garage, and an

AVGAS/Jet A fuel farm, as well as lengthening the runway by 1000 feet. Improvements made to

the Morrisville-Stowe State Airport between 2017 and 2023 included rebuilding and extending the

runway, constructing a parallel taxiway, paving the runway-safety areas, procuring both loading

and snow-removal equipment, and hiring a full-time maintenance employee. The administrative

record before the Board did not include the cost of the improvements to the Morrisville-Stowe

airport.

3 As discussed below, there was no evidentiary hearing in the Board proceeding. While the Board referred to findings of fact, we question that description. 3 ¶ 7. Before the 2019 rent increase, the state collected approximately $20,000 in rent at

the Northeast Kingdom International Airport to offset around $236,000 in annual operating costs,

for a coverage rate of approximately 8.8%. That coverage rate was among the lowest of any state-

owned airport.

¶ 8. To update rental rates, AOT conducted a market-value analysis for leased space in

its state-owned airports and consulted with the Vermont Aviation Advisory Council (VAAC).4

The analysis looked at comparator properties in the region with similar characteristics, including

airport size and aircraft capacity, the presence of navigational aids, maintenance services, runway

length, type and number of facilities, and surrounding population. The Board found, however, that

“[d]etails of this analysis were not included in the administrative record.” The VAAC, charged

with making recommendations to state officials regarding aviation policy and airport investment,

supported the rate increases in a nonbinding vote after holding public meetings in 2018.

¶ 9. The Board concluded that the plain language of the lease agreements contemplated

the rent increases. It disagreed with tenants’ arguments that the lease language limited any

consideration of changes in market value or improvement costs to the previous lease period, noting

that the restriction on the lookback period was only applicable to a change in CPI-U. The Board

also concluded that AOT adequately demonstrated that it relied on proper factors in fashioning the

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