Members of the Helena Regional Airport Authority board of directors said Tuesday they believe the airport received fair market value from Blue Cross and Blue Shield of Montana for 9 acres of land for the insurer’s new office building.

The board’s officers are preparing a report detailing the negotiations with Blue Cross and examining whether or not the airport authority was within its rights to negotiate a long-term deal for Blue Cross to relocate its 550 local employees.

Blue Cross agreed to pay around $240,000 a year at the outset of its 40-year lease, with the rent going up 10 percent every five years.

That figure is based on a value of the land at $8.25 per square foot, and on Blue Cross paying 7.5 percent annually of the value of the land.

“I think there was a lot of due diligence done, and I’m comfortable with the process we used and the number we came up with,” said vice chair Mark Eichler.

Added board secretary Phil Johnson: “We had a lot of heavy discussion, and I think the focus was that we wanted to maximize the return we thought we could negotiate.”

Airport manager Ron Mercer said the airport developed property values in response to a number of inquiries from businesses about possible leases, and Blue Cross initially offered a deal based on $6.33 per square foot, which the airport board felt wasn’t sufficient.

Mercer said the airport received overtures from several different businesses and rejected them — including a tire shop and a car dealership — along with a proposal from Utah-based PEG Development, which is developing the area around Home Depot across the street.

“We want a good return, but we don’t want to fill up every square inch of that property,” Mercer said.

Mercer recounted a brief history of the airport authority, which was established in 1993 and renewed for a second 10-year term in 2001. (The renewal was done early to facilitate the expansion of the airport terminal building.) The airport authority is up for renewal once again in 2011.

Mercer noted that Helena’s is the only agreement that needs periodic renewal, and if it isn’t renewed, the airport once again becomes a city-county airport. All other airport authorities in the state are permanent, he said.

“We agreed early on that it’s a good idea to have that (renewal) in there because it makes all the parties work together,” he said. “That way, if the airport was going to do something that’s not compatible with the city or the county, this gives them a chance to talk about it.”

The committee once again went over sections of state code dealing with airport authorities and whether they have the ability to lease property without other governmental approval.

A report on the Blue Cross deal was requested after two Helena City Commissioners sent a letter to both the airport and Blue Cross, outlining a number of their concerns with the plan and the way it was negotiated.

Commissioners Alan Peura and Paul Cartwright noted that if the airport goes bankrupt or insolvent, its financial obligations fall back on the city and county.

Airport board chair Dan Ellison said the Blue Cross deal is meant to help the airport remain solvent, by generating sources of revenue beyond aviation activities.

“We’re aware of all those things, and we’re trying to do something about it by attracting leases to the airport that will help us remain solvent,” he said.

Cartwright, who has attended each work session of the executive committee, said he hopes to work more closely with airport officials in the future.

“This is a much heavier responsibility than I think we appreciated, and the city commission needs to pay more attention and work more closely with the airport,” he said.

The committee is expected to meet once more next week ahead of the airport authority’s regular meeting on Sept. 16.

Reporter John Harrington: 447-4080 or john.harrington@helenair.com