Estimating Market Value and Establishing Market Rent at Small Airports (2020) / Chapter Skim
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Pages 16-28
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From page 16... ...
16 An FAA Part 16 complaint is a formal complaint received by the FAA regarding concerns about an airport's compliance with the Assurances. The FAA imposes strict deadlines for the filing, adjudication, and appeal of a Part 16 complaint.
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FAA Policies and Guidance 17 pertain to estimating market values and establishing and adjusting market rent. All guidance may be updated periodically to reflect new statutory requirements.
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18 Estimating Market Value and Establishing Market Rent at Small Airports a cate gorical statement that reversion must be included in every airport lease agreement. Assurance 5 is focused on the airport sponsor's ability to maintain the rights and powers granted by the FAA -- which can be accomplished by requiring existing lessees to demolish or remove all permanent improvements and return the underlying aeronautical or non-aeronautical land to its original condition.
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FAA Policies and Guidance 19 Airport sponsors often reference this portion of Assurance 24 in trying to understand the FAA's intent for market rent pertaining to leasing land and/or improvements that have grantfunding impacts (e.g., AIP-funded aprons)
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20 Estimating Market Value and Establishing Market Rent at Small Airports Unlike private businesses, airports are not profit driven and as such, the justification of market value should be in setting a reasonable rate, not necessarily in setting the highest rate possible. Additionally, Chapter 17 of this order indicates that "fair market pricing of airport facilities can be determined by reference to negotiated fees charged for similar uses of the airport or by appraisal of comparable properties." This chapter also indicates certain airport and property characteristics that the FAA views as reasonable for consideration when estimating market value or establishing and adjusting market rent.
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From page 21... ...
FAA Policies and Guidance 21 This policy also provides guidance regarding rental rates charged to not-for-profit aviation museums, aeronautical higher education programs, police/firefighting units operating aircraft at an airport, and civil air patrol and use of property by military units. This requirement extends to other departments within the airport sponsor (e.g., a law enforcement department)
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22 Estimating Market Value and Establishing Market Rent at Small Airports Policy on the Non-Aeronautical Use of Airport Hangars This FAA policy addresses utilization of airport hangars (designed for aeronautical use) for non-aeronautical purposes.
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FAA Policies and Guidance 23 Advisory Circulars -- Advisory Circular 150/5190–7, Minimum Standards for Commercial Aeronautical Activities This advisory circular provides recommendations and guidance for airport sponsors to develop minimum standards for commercial aeronautical activities. Minimum standards outline development requirements (i.e., land and improvements)
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24 Estimating Market Value and Establishing Market Rent at Small Airports market rent for aeronautical properties in the non-movement areas (e.g., hangars, office, land)
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FAA Policies and Guidance 25 Compatible Recreational Use of Airport Property on an Interim Basis. Compatible land uses are developments that discourage residences, schools, churches, and other congregations of large crowds near airports; such uses may include golf courses, racing tracks, solar gardens, and refuse facilities.
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From page 26... ...
26 Estimating Market Value and Establishing Market Rent at Small Airports if an airport sponsor is strategically oriented toward full self-sustainability, setting rental rates for not-for-profit entities at less than market rent may not align with its strategic direction. Conversely, if a goal of the strategic airport business plan is to secure additional development to increase utilization, airport management and staff may need to consider the desired timing, the market demand, and, ultimately, the rent rate for leasing land and improvements when the rental rate may need to be less than market rent.
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From page 27... ...
FAA Policies and Guidance 27 designed to assist with the operation, management, and development of the airport. These documents -- if developed consistent with industry best practices while maintaining consistency with FAA Assurances, orders, policies, advisory circulars, and other guidance materials, as well as the airport's ALP and master plan -- will • Contribute to the airport's financial health; • Facilitate its orderly development; • Promote quality products, services, and facilities; • Protect the health, safety, interest, and general welfare of the public; and • Reduce potential conflict with lessees, consumers, and users.
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From page 28... ...
28 Estimating Market Value and Establishing Market Rent at Small Airports 3.5 Chapter Review Expanding on the applicable FAA guidance outlined in Chapter 2, this chapter focused on the details related to estimating market value and establishing and adjusting market rent, as outlined in Figure 3-4. This chapter also investigated the benefits of strategic airport business plans and PMCDs.
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