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61 Glossary of Terms Aeronautical: Associated with activities directly related to the operation of aircraft. Aeronautical Activity: Any activity that involves, makes possible, or is required for the operation of aircraft, or that contributes to or is required for the safety of such operations. Aeronautical Improved Land: Airport land having improved access (airside and landside) and utilities to the property boundary. Aeronautical Infrastructure: Runways, taxiways, taxilanes, ramps, navaids, airport roadways, utilities, etc. Aeronautical Unimproved Land: Airport land without improved access (airside or landside) or utilities to the property boundary. Agency: Any federal, state, or local governmental entity, unit, organization, or authority. Airport Improvement Program (AIP): A program that provides funds to public agenciesâand, in some cases, to private entitiesâfor the planning and development of public-use airports included in the National Plan of Integrated Airport Systems. Airport Layout Plan (ALP): A scale drawing of existing and proposed land and facilities necessary for the operation and development of the airport. The ALP shows boundaries and proposed additions to all areas owned or controlled by the airport operator for airport purposes, the location and nature of existing and proposed replacement airport facilities and structures, and the location on the airport of existing and proposed non-aviation areas and improvements thereof. Airport Sponsor: A public agency or private entity with control of a public-use, federally obligated airport. Airport Sponsor Assurances: Certain FAA obligations with which federally obligated airports must comply to receive and keep AIP funds. Airside: Consists of runways, taxiways, taxilanes, aprons, roadways, lighting, utilities, naviga- tional equipment, imaginary obstruction identification surfaces, airport design surfaces, etc. Amortization: Accounting term referring to the process of allocating the cost of an asset over a period of time or the repayment of extinguishing debt with periodic payments or installments. Appraisal: Valuation of land and/or improvements by an authorized person consistent with the requirements of the Uniform Standards of Professional Appraisal Practices. A P P E N D I X A Glossary of Terms and Acronyms
62 Estimating Market Value and Establishing Market Rent at Small Airports Appraiser: An individual possessing the education, training, experience, and professional qualifications necessary (as determined by the airport sponsor) to render a properly informed opinion regarding the value of land and/or improvements. Apron: Paved areas of the airport within the air operations area designated by the airport sponsor for parking, loading, unloading, fueling, or servicing of aircraft. Based Aircraft: An aircraft identified in a written aircraft storage agreement with the airport sponsor, FBO, or SASO with a term greater than 6 months. Best Management Practice: A method, process, activity, incentive, or reward believed to be more effective at delivering a particular outcome than any other technique, method, or process when applied to a particular condition or circumstance. Capital Investment: An airport sponsorâapproved investment a lessee (or sublessee) makes to (1) the leased premises which will, at the end of the lease term, revert to the airport sponsor or (2) the airport infrastructure, which will immediately revert to the airport sponsor. Capitalization Rate: A real estate valuation measure that determines the rate of return on an investment based on the income a property is expected to generate. Commercial: An activity undertaken with the intent to generate or secure earnings, income, compensation (including exchange or barter of goods and services), and profit, whether or not such objectives are accomplished. Community Hangar: A square or rectangular hangar typically connected to other facilities (primarily to lean-to structures and FBO terminal buildings). Community hangars, which typically range from 75 feet by 75 feet to upwards of 100,000 square feet per building, are typically the largest hangar located at an FBO. Community hangars typically accommodate multiple aircraft of various sizes and configurations, which are owned by more than one company or individual and are typically serviced by the FBO. Compensation: Any form of reimbursement for goods or services, such as monetary, exchange, barter, favors, and gratuity. Competitive Proposal Process: A process used to seek competitive proposals from qualified entities when land and/or improvements are or become available at the airport for occupancy or use. Consumer Price Index (CPI): An index measuring the change in the cost of typical wage-earner purchases of goods and services, expressed as a percentage of the cost of these same goods and services in some base period. Cost Approach: A real estate appraisal method based on the current cost of replacing improve- ments on a property less depreciation plus the market value of the (leasehold) land assumed vacant. Depreciation affecting the property can occur from three sources: physical deteriora- tion, functional obsolescence, and economic obsolescence. Development Standards: A PMCD that conveys the design and construction standards and procedures governing the development of any aeronautical or non-aeronautical land and improvements on airport property. Executive Hangar: A square or rectangular hangar designed to accommodate the proprietary aircraft operations of a single company or individual. Executive hangars (ranging from 50 feet by 50 feet to upwards of 100 feet by 100 feet) are typically larger than T-hangars and smaller than most corporate hangars; in many cases, they have shop, office, and storage areas located within their footprint.
Glossary of Terms and Acronyms 63 Fee Policy: A PMCD that sets forth the process for establishing and adjusting fees at an airport. General Aviation: The portion of civil aviation that encompasses all facets of aviation except air carriers and military. General Aviation Airports: A National Asset: Identifies airports included in the National Plan of Integrated Airport Systems not classified as Primary airports. The identified airports are clas- sified as follows: ⢠Basic AirportâSupports general aviation activities such as emergency service, charter or criti- cal passenger service, cargo operations, flight training, and personal flying ⢠Local AirportâSupports local communities by providing access primarily to intrastate and some interstate markets ⢠Regional AirportâSupports regional economies by connecting communities to statewide and interstate markets ⢠National AirportâSupports the national and state system by providing communities with access to national and international markets Hangar: a closed structure to store aircraft in protective storage. Highest and Best Use: The reasonable, probable, and legal use of vacant land or an improved property, which is legally permissible, physically possible, appropriately supported, financially feasible, maximally productive, and results in the highest value. Immediately: The ability to occupy leased premises and offer products, services, or facilities (to the public) on the effective date of the lease agreement. When construction or alteration of facilities is involved, immediately shall mean the ability to obtain a certificate of occupancy from the authorizing agency within 18 months following possession of the leased premises. Improvements: All buildings, structures, additions, and facilities (including utilities, pavement, fencing, and landscaping) constructed, installed, or placed on or under any airport land. Income Approach: A real estate appraisal method, based on an estimate of the propertyâs possible net income, that measures the present worth of anticipated future benefits derived from property ownership. Landside: The portion of an airport used for activities other than the movement of aircraft, such as vehicle access roads and parking. Lease Agreement: A negotiated and typically legally binding arrangement between two parties as it relates to a course of action. Lease Rent: Monthly or yearly payment associated with a lease agreement, which is typically differentiated by the type of property (e.g., land, apron, vehicle parking, hangar, office, shop) and the use of property (aeronautical, non-aeronautical, commercialâFBO or SASOâor non-commercial). Leased Fee Interest: Ownership interest held by the lessor, which includes the right to receive the lease rent specified in the lease agreement plus the reversionary rights when the lease agreement terminates. Leased Premises: The land and/or improvements used exclusively under a lease agreement by a lessee or sublessee. Leasehold Interest: The right held by the lessee to use and occupy real estate for a stated term and under the conditions specified in the lease agreement.
64 Estimating Market Value and Establishing Market Rent at Small Airports Leasing Policy: A PMCD that sets forth the parameters for leasing airport land and improvements. Legal Requirements: All applicable federal, state, county, and local laws, codes, ordinances, policies, and regulations. Lessee: An entity that has entered into a lease agreement that grants the right to occupy or develop airport land and/or improvements. Market Rent: The most probable rent a property should bring in a competitive and open market (i.e., willing lessor and willing lessee), reflecting the terms and conditions of a specified lease agreement, including the rental adjustment mechanisms, permitted uses, use restrictions, expense obligations, term, renewal and purchase options, and tenant improvements. Market rents can be established by various methods, including analysis of market rents at comparable airports, appraisal, and negotiation. Market Value: The most probable price a specified interest in real property is likely to bring under all conditions requisite to a fair sale, the buyer and seller each acting prudently and knowledgeably, assuming the price is not affected by undue stimulus, giving due consideration to all available economic uses of the property. Minimum Standards: A PMCD that sets forth qualifications, standards, and criteria as the minimum requirements to be met as a condition for the right to engage in aeronautical activities at an airport. National Plan of Integrated Airport Systems (NPIAS): Identifies nearly 3,300 existing and pro- posed airports significant to national air transportation and thus eligible to receive federal grants under the AIP. The NPIAS also estimates the amount of AIP money needed to fund infrastructure development projects that will bring these airports up to current design stan- dards and add capacity to congested airports. Every 2 years, the FAA is required to provide Congress with a 5-year estimate of AIP-eligible development. The NPIAS comprises all com- mercial service airports, all reliever airports, and select general aviation airports. The identi- fied airports are classified as follows: ⢠Primary Commercial Service Large HubâAirports that each account for 1% or more of total U.S. passenger enplanements ⢠Primary Commercial Service Medium HubâAirports that each account for between 0.25 and 1% of total U.S. passenger enplanements ⢠Primary Commercial Service Small HubâAirports that enplane 0.05 to 0.25% of total U.S. passenger enplanements ⢠Primary Commercial Service Non-HubâAirports that enplane less than 0.05% of total U.S. passenger enplanements but more than 10,000 annual enplanements ⢠Non-primary Commercial ServiceâAirports that enplane up to 10,000 annual enplanements ⢠RelieverâAirports designed by the FAA to reduce congestion at a commercial airport and provide more general aviation access to the overall community. An airport that has scheduled airline passenger service cannot be a reliever airport ⢠General AviationâAirport that, as determined by the Secretary of Transportation, does not have scheduled service or has scheduled service with less than 2,500 enplanements per year Negotiation: To confer with another party so as to arrive at the settlement of a particular matter. Net Income: A measure of the profitability of a venture after accounting for all costs and taxes. Non-Aeronautical: Not directly related to the operation of aircraft. Non-Aeronautical Improved Land: Airport land having improved landside access and utilities to the property boundary, but no airside access.
Glossary of Terms and Acronyms 65 Non-Aeronautical Unimproved Land: Airport land without improved landside access or utilities to the property boundary and no airside access. Non-Commercial: Not for the purpose of securing earnings, income, compensation (including exchange or barter of goods and services), or profit. Operator: An entity that has entered into an agreement with the airport sponsor to engage in commercial aeronautical activities at the airport. Primary Management and Compliance Documents (PMCDs): A compendium of policies, standards, guidelines, rules, and regulations governing the operation and management of an airport. PMCDs consist of rules and regulations, minimum standards, leasing policy, rent policy, fee policy, and development standards. Property: Any tangible or intangible possession owned by an entity or a person. Rent Policy: A PMCD that sets forth the process for establishing and adjusting rents at an airport. Rent Study: A streamlined approach used to derive an opinion of market rent for airport properties without conducting an appraisal. Retail Rent: Rent charged directly from an airport sponsor or lessee to an end user, typically on a gross basis (i.e., taxes, utilities, insurance, and maintenance are the responsibility of the lessor). Retail rent may also include additional services and amenities including, but not limited to, aircraft towing and access to common areas. Reversion: Occurs when rights (which may include the ownership and title to improvements made to the leased premises) granted through a lease or sublease terminate and return to the leasing authority. Said leasing authority, whether lessor or sublessor, can include the airport sponsor or a lessee thereof. Sales Comparison Approach: A real estate appraisal method based on direct comparisons of similar properties that have sold in the same or similar markets. The data from these compa- rable sales is then analyzed and adjustments are made for differences considered significant. These adjusted sales are then weighted to provide an indication of value. Self-Sustaining: Maintaining an organization by independent effort. As it relates to airports, it means maintaining a rent and fee structure that conforms with the Assurances and financially supports the airport under its particular circumstances. Airports must maintain a fee and rental structure that makes the airport as financially self-sustaining as possible under the particular circumstances at the airport. The requirement recognizes that individual airports will have different abilities to be fully self-sustaining, given differences in conditions at each airport. The purpose of the self-sustaining rule is to maintain the utilization of the federal investment in the airport. Shadeport: A structure that typically has the capacity to store only one aircraft, usually not larger than a cabin class multi-engine aircraft, with open sides and no hangar doors. Shadeports may be stand-alone structures or combined to form a single structure. Specialized Aviation Service Operator (SASO): A commercial operator that provides any one or a combination of the following aeronautical activities: aircraft maintenance, avionics or instrument maintenance, aircraft rental or flight training, aircraft charter or aircraft manage- ment, aircraft sales, and other commercial aeronautical activities. A SASO does not engage in the sale and delivery of aviation fuels. Sublease: A negotiated and typically legally binding agreement between an entity and a lessee that transfers rights or interests in the lesseeâs leased premises and for which the airport sponsor has given proper consent.
66 Estimating Market Value and Establishing Market Rent at Small Airports Sublessee: An entity that has entered into a sublease with a lessee who is authorized (by the airport sponsor) to engage in commercial aeronautical activities at the airport. T-Hangar: A hangar that typically has the capacity to store only one aircraft, usually not larger than a cabin class multi-engine aircraft. This type of hangar derives its name from its shape (in the form of a âTâ), which increases the efficiency of the design so as to accommodate the wingspan and the tail section of an aircraft. T-hangars may be stand-alone structures, or they may be combined and nested so that the tail sections of the âTâ configuration interlock to form a single congruous structure. Term: The limited period for which a lease agreement between an airport sponsor and lessee is intended to last. Tiedown: An area paved or unpaved suitable for parking and mooring of aircraft wherein suitable anchoring points and related equipment are located. Value: An estimate of monetary worth. Wholesale Rent: Rent charged directly by an airport sponsor to a lessee (typically not an end user) on a triple-net basis (i.e., taxes, utilities, insurance, and maintenance are the responsibility of the lessee). Wholesale rent also does not include additional services or amenities. Acronyms AIP Airport Improvement Program ALP Airport Layout Plan AOPA Aircraft Owners and Pilots Association CFR Code of Federal Regulations CPI Consumer Price Index FBO Fixed-Base Operator MOU Memorandum of Understanding NPIAS National Plan of Integrated Airport Systems PMCD Primary Management and Compliance Document RFI Request for Information RFP Request for Proposals RFQ Request for Qualifications SASO Specialized Aviation Service Operator USPAP Uniform Standards of Professional Appraisal Practice
