Agricultural Operations on Airport Grounds (2022)

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20 The airport interviews and survey responses indicate that over 60% of the airports in the study use some form of a lease document. In a broad sense, the lease is used to convey airport land to an agricultural tenant for a specific term in return for payment. The lease may also out- line other important provisions, such as the responsibilities of the airport owner and tenant, important safety requirements, any crop restrictions, and other special conditions. This chapter summarizes the findings on airport agricultural land lease administration based on the litera- ture review, in-depth airport interviews, and survey data collected. Airport Farmland Bid Process and Strategies FAA Airport Compliance Manual, Order 5190.6B, requires that the airport be compen- sated at a fair market value rate for any non-aeronautical use of airport property. This is con- sistent with the grant assurance requirement to implement rates and charges that will make the airport as self-sustaining as possible. This is true for agricultural land leases as well. Like other airport revenues, proceeds from farming activities must be used for the operation, maintenance, or development of the airport. Many airports will use a public competitive bid process to both deter- mine fair market value and maximize the revenue potential of the farm- land lease. Prior to advertising for bid, airport officials must decide the exact parcels to be bid, the term of the lease(s) to be bid, and other relevant factors such as crop restrictions. Airports may advertise the agricultural land and solicit bidders to obtain a bid form with more specific instructions. This form of request for proposal (RFP) can then be completed, signed, sealed, and returned to be opened at a specified date. Appendix G contains a sample bid/RFP form. For a variety of reasons, some airports in the study with agricultural land leases do not offer farm parcels for public bid. Reasons may include • There is not enough interest in the area. • Airport may have worked for years with the same operator, who is familiar with airport operations. • Airport may work with an adjacent landowner for hay crop only. • Airport may have a long-term agreement with an operation that has significant investment in the property, or other factors. Airports may own irregularly shaped parcels protecting airfield surfaces from non-compatible development or may be located adjacent to current farmland. These parcels may be difficult to C H A P T E R   4 Findings on Airport Agricultural Land Lease Administration Many airports will use a public competitive bid process to both determine fair market value and maximize the revenue potential of the farmland lease.

Findings on Airport Agricultural Land Lease Administration 21   access from public areas and would need to be delineated from the adjacent property in order to bid separately. In this case, dividing the parcel to bid independently may de-value the entire field, and it may make sense to allow the current operator of the adjacent field to enter and continuously farm the entire parcel paying market rate for the acreage. When the land does not involve a public bid process, airports reported a number of ways for determining fair market value. One airport simply used other rent contracts in the area to determine fair market value. Other valuable resources may include consultation with the nearest USDA Farm Service Agency (FSA), or a university or county extension office. An agri- cultural extension service offers technical advice to farmers and provides expertise to support agricultural production. These offices will often produce survey data of average farm rates for particular areas that can be used to help airports determine appropriate lease rates. Considerations for Development of Airport Farmland Lease Agreements Airports may benefit from a process of evaluating what types of agricultural land uses may be compatible with airport operations. As the old axiom goes, “If you have seen one airport, you have seen one airport”—each has its own operational characteristics. Careful planning is needed to determine the impacts of farming activities on the airport. What might work at a general aviation airport may not be feasible at a primary airport. Airport officials assess many factors, including potential areas to be farmed, suitability for crops, types of crops, and operational concerns. Working through this self-assessment and planning process may include a review of the WHMP or consultation with the USDA or FAA. Airports should also understand compre- hensive land use plans and zoning requirements of local jurisdictions to determine appropriate land use of adjacent property. Appendix E contains a checklist to assist airports in determining the feasibility and development of an airport agricultural program. Airports subject to federal grant assurances are expected to restrict the use of land in the imme- diate vicinity of the airport to purposes compatible with airport operations. Care is taken to ensure risk factors such as wildlife attractants are mitigated, as discussed further in Chapter 5. Determining the term is an essential component of any lease agreement. The majority of air- ports responding to the survey used a lease term between 1 and 5 years, as shown in Figure 7. Airport operators interviewed for the synthesis reported that a short-term agricultural land lease is desirable in order for airport sponsors to maintain control over airport property and 1.70% 3.90% 6.10% 14.40% 22.70% 24.90% 26.90% 0.00% 5.00% 10.00% 15.00% 20.00% 25.00% 30.00% 4 years 2 years 6 or more years Continuous 1 year 5 years 3 years Figure 7. Term of agricultural lease agreements.

22 Agricultural Operations on Airport Grounds evaluate the impacts of agricultural uses. One airport interviewed incorporates five 1-year terms, explaining that this arrangement gives the aviation department the opportunity to pull acreage for development or construction uses as necessary while providing tenants a long-term lease for financing purposes. A number of airports prefer 1-year leases to provide them with the ability to assess rates, crop types, and impacts annually. Every airport interviewed incorporates a provision in the lease that allows the airport to immediately take back any property if needed for other airport purposes. These clauses are important to maintain flexibility to meet aviation demand of property, and efforts are typically made to provide the tenant adequate notice and/or compensate for any lost crop. The lease defines the exact land to be leased and the amount of the rental rate. This is typically on a cash per acre basis; however, some airports reported receiving compensation based on yield or by sharing in revenues. This is a form of a flexible land rental agreement, with the idea of sharing in the risks and rewards of farming activities. Adjustments can be made on the basis of yield, gross revenue, or price of crops. Many times, these types of agreements include a base rate stipulation to be paid to the airport. Although there are numerous ways to set up a flexible rental/cost structure, these arrangements could be illustrated by a few examples: • Airport receives XX% of the gross revenue in cash, participates in XX% of expenses. (Revenues could be further listed by income source—e.g., crop production, government payments, secondary uses.) • Base for (type of crop) is $______ for up to _______ bushel(s) per acre. • Base price of $_________ with bonus of XX% for over _______ bushels per acre. In addition, a few airports reported a flat annual rate amount. Other informal arrangements included no monetary compensation but instead a barter for services, such as a trade of hay crop in exchange for a farmer’s providing ground maintenance. For hay transactions, it is not uncommon for the operator to pay the airport by the bale at a predetermined rate. The agreement describes the understanding between parties, including all responsibilities for each. The airport uses the agreement to also protect itself against damage and loss, to include liability insurance requirements. Many airports in the questionnaire indicated they require the operator carry a minimum of $1,000,000 in liability coverage per occurrence and include language for indemnification and to hold harmless the airport owner against related claims. Other considerations include • Maintenance of property; • Application and management of chemicals; • Participation in government programs; • Subleasing; • FAA subordination; • Authorization to develop, install, and maintain structures and improvements; and • Right of airport to enter and inspect. Airport Agricultural Land Lease Practices Airports have incorporated a number of provisions into their agricultural land leases that work to balance the benefits of farming activities and the mitigation of airport operational safety concerns. Depending on local conditions, many airports described the use of crop restric- tions to meet clearance requirements and other airport concerns. A number of airports insisted on hay only or no row crops near runway and taxiway areas. One airport reported that no cannabis is allowed on airport property.

Findings on Airport Agricultural Land Lease Administration 23   Another strategy that can be included in lease language is the requirement to employ crop rotation. This is effective for balancing nutrient depletion in the soils and weed control. Because of the various operational and security concerns that airports may have, leases address key considerations, including, where applicable: • Access control, • Parking of equipment, • Notifications required, • Timely removal of crops, and • Use of unmanned aerial systems (UAS) in the airport environment. Finally, airports can consider seeking assistance as needed. Some airports in the study employed outside farm management expertise to assist with lease program development and implementation. Many state aeronautics offices offer guidance to their airport members that may be particularly relevant to that state. Extension offices offer guidance on farmland lease rates and sample lease forms. Airport managers are typically eager to share their experiences and preferred practices with their peers and may be a tremendous source of information or sample lease templates. Appendix F contains a sample airport agricultural lease. Industry Highlight #4 – Hydroponic Farming Inside the Terminal Appleton International Airport Appleton, Wisconsin When one thinks of a typical airport agricultural operation, the visual may be of a tractor tilling soil on the adjacent property in preparation for planting corn or beans. The Appleton International Airport (ATW) has initiated an innovative operation for growing fresh produce on-site within the passenger terminal. This unique concept of using terminal floor space applies a hydroponics system, growing high-quality, healthy alternatives for airline travelers by supporting the airport’s terminal restaurant. The Arrangement In 2019, ThedaCare, a community health care system and a member of the Mayo Clinic Care Network, partnered with the airport to elevate customer experience and increase healthy choices as part of the customer’s journey. This includes offering healthy choices at the restaurant and in the vending machines, installing a state-of-the-art mother’s room, and featuring healthy tips on monitors throughout the airport. That same year, after reading an article about a company that had developed an indoor hydroponics system, Airport Director Abe Weber contacted Fork Farms, LLC. The company had won a Wisconsin Innovation Award for product design, producing leafy vegetables and herbs within a fully self-contained, indoor, vertical farming unit requiring no more than a standard electrical outlet and less than 10 sq. ft. of space. In 2020, a natural connection was made between Fork Farms and ThedaCare, and a “Flex Farm” unit was brought to the passenger terminal to enhance the airport’s healthy traveler program. How It Works The system is designed to protect against agriculture-based food safety concerns, requires minimal maintenance, and has numerous applications.

24 Agricultural Operations on Airport Grounds Each growing cycle takes approximately 5 weeks to complete, from planting to harvesting. While the Farm can hold 288 plants per cycle, it is recommended that lettuce be planted in every other space, leaving 144 plants per cycle. A cycle begins by using Fork Farms “Rockwool Flats,” which act as seed incubators providing support for plant roots and contain all the elements that plants require to grow. Hydroponics in the terminal. (Source: Appleton International Airport.) Rockwool Flats in action. (Source: ForkFarms, LLC.) The Rockwool Flats are used to plant 144 lettuce seeds to start the cycle. Once the seeds are planted, it takes approximately 4 days to reach germination. When germina- tion has been reached, the plant is transferred into the Farm. For the next 4 weeks, lights run on the machine for 16 hours a day and on intervals automatically to optimize “sunlight.” For each growing cycle, proper monitoring of the system is crucial to ensure optimal growth and fast cycle times. This is a weekly process that takes no more than an hour. The process ensures the water, pH, and nutrients are at the appropriate levels depending on what is being grown. Once a cycle is complete, the greens are harvested and the machine is deep cleaned. The harvested lettuce “looks better than anything store-bought,” according to airport staff, with each leaf reaching 6 to 8 in. in length. A deep clean of the unit is required because during each cycle, algae is produced in the water and can lead to problems if not thoroughly removed. The process from initially planting, harvesting, and cleaning takes about 2 to 3 hours of labor for each cycle.

Findings on Airport Agricultural Land Lease Administration 25   The Benefits The program partners with the airport terminal’s restaurant, The Fox Cities Eatery, to provide fresh greens for burgers and sandwiches. The airport promotes this as part of its “Making Healthy Connections Fly” initiative, a forward-thinking program to ensure each traveler has a healthy and positive experience. Airport Director Weber states, “Eating healthy on the go can be difficult with a lack of fresh, nourishing food. We have worked closely with our health partner, ThedaCare, to introduce this on-site Flex Farm to meet those needs.” In addition, he enjoys sharing the operation with ticketed passengers who see the Flex Farm hard at work—producing fresh greens just a few feet away. Although the operation began as a test, Weber says the program has been a great success and is expected to continue. The airport may even consider additional on-airport facilities to support more produce—a great concept, especially when a year-round operation such as this provides fresh products during the shorter growing season of Wisconsin. Additional Information Appleton International Airport: https://atwairport.com/flexfarm/ Fork Farms, LLC: https://forkfarms.com/about/