On Thursday morning, following an executive session in a joint meeting of the city of Newton and Harvey County commissions, a proposed settlement was approved by the governing bodies addressing a litigious dispute with Palomino Petroleum Inc. regarding the company's lease of Hangar W at the Newton City/County Airport.
Palomino entered into a lease with the airport in 2014 for Hangar W. That lease allowed Palomino exclusive use of the hangar, with an option to purchase the hangar at anytime before the lease expires in 2020. Under the terms of the lease, Palomino paid $5,825 in rent each month, with $3,340 placed in escrow.
According to court documents, Palomino requested that the lease agreement be rescinded and all amounts paid into escrow — totaling $83,500 — be repaid. The company filed the lawsuit Oct. 14, 2016.
Palomino claimed actual damages in excess of $75,000.
According to the court documents, Palomino Oil reported several "deficiencies" over the course of an 18-month period.
Also according to the court documents, Palomino Oil reported vehicles racing on the runway, a lack of upkeep around the company's leased hangar and notices to airmen providing pilots with warnings not being issued.
Palomino also alleged several items in a state of disrepair at the airport. Those included foreign object debris, in the form of pieces of concrete, gravel, rocks and shot pellets, scattered about the airport runways and taxiways; heavy vegetation along the airport runways, taxiways and the shoulders of the runway; a "sizeable" pothole on taxiway E, just north of the entrance to Hangar W; none of the taxiways lights working anywhere on the entire airfield; none of the lighted guidance signs working on any runways or taxiways; the Precision Approach Path Indicators and Visual Approach Slope Indicators not working on runway 8/26, and several lights not working on runway 17/35; the wind socks on runways 8 and 26 not working; and the wind indicator in the middle of the airfield, which helps pilots determine the wind direction not working (and the tail falling off).
The city filed an answer to those allegations Nov. 21, 2016. The filing did not give detail as to what the city and county had done to respond to any of those concerns. Legal counsel would not comment due to pending litigation.
The matter is set for trial in September, however, the city and county will present a settlement agreement to Palomino for the company to review. If they accept the agreement, there would not be a need of a trial.
Terms of the proposed settlement include termination of the lease on Hangar W by mutual consent of all parties as of 11:59 p.m. March 31, 2018; all rents, escrow payments, fees and other costs paid by Palomino pursuant to the lease up to the time of termination to be retained by Newton; all improvements or fixtures installed by Palomino or its agents regarding Hangar W shall remain in place and be retained by Newton; no payment to or refund of any amounts paid by Palomino shall be made by Newton in association with termination of the lease and Palomino shall have no further obligations under the lease; and, prior to termination of the lease; Palomino agrees to allow Newton's representatives to enter Hangar W for marketing purposes.
With the settlement being approved by the city and county commissions, it will now be submitted to Palomino for review.