Privately-Owned Hangars at Public Airport

SoCal 182 Driver

SoCal 182 Driver

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SoCal 182 Driver
Friends -

Do any of you own a private hangar that sits on ground owned by a public agency (city, county, etc.)? If so, what are the terms of your ground lease?

How many years is the lease?

Do you have a reversion clause that requires you to transfer ownership of the hangar to the public agency upon expiration of your lease?

I'm specifically interested in privately owned small T and box hangars, and not mammoth FBO-type hangars.

Thanks!
 
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SoCal 182 Driver said:
Do you have a reversion clause that requires you to transfer ownership of the hangar to the public agency upon expiration of your lease?

Thanks!
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That is common for any public airport that has received federal grants. Our airport usually does 50 year ground leases.
 
1s3, no time limit, $100 per year rent and $60 for electricity.
 
We do 20 year leases. You are correct - the airport can legally take the land at the end of the lease. When my son-in-law lawyer looked at the legal paperwork, he told me it was loaded with problems. Then he did his research on public airports/hangars. He said, yup - that's the way they all do it.

If the airprt is thriving and popular in the community, there is little chance of them ever taking the land back. I figure that if I keep mine for 20 years, it will have been cheaper than the rent they are getting for the same hangar over that period of time. Historically they just keep renewing the lease. Has anyone had experience with a municipality taking the land back?
 
At KEWN the leases are 30 yrs. the airport administration always takes back the land, never renews. Why would they? As they get another hanger that they can charge rent for. In the end, all the hangers will be owned by the airport.

There was a long time Dr., pilot, AME that had a Baron in a hanger that he had built. one of the first hangers that was built. after 30 years it reverted back to the airport and they promptly jacked up the rent to $1200 a month which is absolutely insane. He sold the plane and retired to the mountains. I think they were eventually able to rent it for half of what they were asking the doctor for.
 
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Set your price assuming that the airport will take the hangar the moment they can. Historic experience on 'how they have always done it' matters little if there is a new airport director or county administrator in charge. You are a 'rich hobby pilot' and the airport has to be 'self sufficient', whatever short term revenue they can squeeze out of the place is fair game.
 
I think that’s a bad strategy for most small airports. It does nothing to promote GA, which is the bread and butter for the small airports. But you are correct- get the wrong person in charge and they can ruin anything.
 
reversionary clauses and a maximum 30 year lease is required by FAA for airports accepting grants
 
Yes, this all has to do with grant assurances - the way I was told it is that the airport authority has to show that it is maintaining control over the airport property and keeping it in use for aviation. One interpretation of that is, they must eventually own all structures on the airport. And that means shorter term leases, absconding with hangars that owners built (sorry to present that with bias but that is the truth), and renting hangars back. (They always 'had' the land so there is no "taking land back").
Some airport directors/managers (well, those given control over interpreting and implementing this scheme) are aggressive ie "say goodbye to your hangar", some are a little more lax about it (renewing leases for 10+ years).
One hangar owner on our airport said he had a sale all lined up, and the potential buyer went to get a lease arranged with the county. Seller says that the airport director refused to provide any lease; buyer dropped that hangar like a hot potato and seller is furious, has reportedly looked into legal action but I'm not sure how far he will get. (admittedly this story only provides one side)
Also on our airport, some owners of older (some might say unsightly, but that is a very subjective thing) but quite functional hangars say they have been told the county would love to raze the row and build "nice, new hangars" then rent these to the aircraft owners (but the county is broke so that is dead before it started.....however, if true, it tells you the direction some airports want to go.)
 
1RTK1 said:
To my knowledge I do not have any reversionary clause on the hangar I own.
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Look into your state laws on this. At times, anything attached to the land at the end of a a land lease (from fence posts to buildings) becomes property of the lessor.
 
Some airport sponsors see private hangar owners as partners who bring their capital to build the hangar and provide the airport with long term r(30-50y) revenue from pad lease and fuel flowage. Other airport sponsors see the private hangar owners the way the ball python looks at a mouse.
 
weilke said:
Some airport sponsors see private hangar owners as partners who bring their capital to build the hangar and provide the airport with long term r(30-50y) revenue from pad lease and fuel flowage. Other airport sponsors see the private hangar owners the way the ball python looks at a mouse.
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If there is in fact a reversionary clause, do they usually re-up with every sale??? ie the purchaser gets a new 30yr lease etc.
 
1RTK1 said:
If there is in fact a reversionary clause, do they usually re-up with every sale??? ie the purchaser gets a new 30yr lease etc.
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Whatever is in the document. A common setup would be a 20 year term with two ten year extensions. Sometimes the per sf price gets indexed to something like an index of regional commercial real estate rents so the airport can tell the FAA that they are a good steward of the property and collect a market based rent.

I don't believe the FAA requires a revisionary clause. They DO require that all land remains under control of the airport and that the lease contributes to the income of the airport, so they can't give you a 99year lease for a dollar. New leases also require a clause that the lease is subordinate to any FAA rules they may pass in the future.
 
weilke said:
I don't believe the FAA requires a revisionary clause. They DO require that all land remains under control of the airport and that the lease contributes to the income of the airport, so they can't give you a 99year lease for a dollar.
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Correct!
 
Eric Brunelle said:
We do 20 year leases. You are correct - the airport can legally take the land at the end of the lease. When my son-in-law lawyer looked at the legal paperwork, he told me it was loaded with problems. Then he did his research on public airports/hangars. He said, yup - that's the way they all do it.

If the airprt is thriving and popular in the community, there is little chance of them ever taking the land back. I figure that if I keep mine for 20 years, it will have been cheaper than the rent they are getting for the same hangar over that period of time. Historically they just keep renewing the lease. Has anyone had experience with a municipality taking the land back?
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Santa Clara County is seizing all the private hangars at San Martin E16 in South Silicon Valley. They decided it was better for the county to confiscate the private hangars on airport leased land.
 
NordicDave said:
Santa Clara County is seizing all the private hangars at San Martin E16 in South Silicon Valley. They decided it was better for the county to confiscate the private hangars on airport leased land.
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How are they doing this?
 
SoCal 182 Driver said:
How are they doing this?
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All airport leases are expiring on a common date. The leases state all buildings and fixtures become property of the county at end of lease if the lease is not renewed, and the county elected not offer any renewals.
 
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Yeah, that's pretty consistent with what our County tried to do. We beat that back...but the issue on term length is unresolved.
 
weilke said:
Look into your state laws on this. At times, anything attached to the land at the end of a a land lease (from fence posts to buildings) becomes property of the lessor.
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Not in Longmont Colorado. They get the land back but we can unbolt our hangar and haul it off. The Peoples Republic of Boulder on the other hand takes whatever you build which I think is down right communism.
 
NordicDave said:
All airport leases are expiring on a common date. The leases state all buildings and fixtures become property of the county at end of lease if the lease is not renewed, and the county elected not offer any renewals.
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Does the AOPA know? Is this some attempt to strangle the airport to death?
 
So your story is the airport violated lease agreements? Not likely
Eric Brunelle said:
We do 20 year leases. You are correct - the airport can legally take the land at the end of the lease. When my son-in-law lawyer looked at the legal paperwork, he told me it was loaded with problems. Then he did his research on public airports/hangars. He said, yup - that's the way they all do it.

If the airprt is thriving and popular in the community, there is little chance of them ever taking the land back. I figure that if I keep mine for 20 years, it will have been cheaper than the rent they are getting for the same hangar over that period of time. Historically they just keep renewing the lease. Has anyone had experience with a municipality taking the land back?
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In my area the airport usually does not renew the original land lease and offers a hangar lease to the original owner at the market price.
 
NordicDave said:
Santa Clara County is seizing all the private hangars at San Martin E16 in South Silicon Valley. They decided it was better for the county to confiscate the private hangars on airport leased land.
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NordicDave said:
All airport leases are expiring on a common date. The leases state all buildings and fixtures become property of the county at end of lease if the lease is not renewed, and the county elected not offer any renewals.
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The airport is exercising their rights under the terms of the agreement. How you call that seizure is a bit odd.
 
Clip4 said:
The airport is exercising their rights under the terms of the agreement. How you call that seizure is a bit odd.
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It is a seizure. The government didn't pay for the improvements - private citizens did. They take the improvements at the end of the lease. That's a seizure. Just because it's in the terms makes it no less egregious. They set the terms and they have a monopoly. You're either forced to accept the terms or you have to uproot your entire life to move to another county just to own your hangar.
 
Ace66 said:
It is a seizure. The government didn't pay for the improvements - private citizens did. They take the improvements at the end of the lease. That's a seizure. Just because it's in the terms makes it no less egregious. They set the terms and they have a monopoly. You're either forced to accept the terms or you have to uproot your entire life to move to another county just to own your hangar.
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It is an amortized ownership conversion that is part of the lease. It is a normal arrangement at airports. If the owners didn’t understand the terms of the contract they shouldn’t have signed it and built a hangar. A $20,000 hangar built 20 years ago works out to $83 a month + what ever the lease provided for monthly land rent.

The hangars, located on land owned by the airport, now belong to the airport. That was the deal the parties agreed to. Go to court claiming a seizure and undue process, a judge will not take much time to rule the airport performed their requirements of the contract and the hangars belong to the airport.
 
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All this discussion convinces me to base at a private airport when I relocate. We are experiencing the very same issues as above at KMNM (Menominee MI) as a result of new county administration interpreting FAA regulation and recommendations with an iron fist. I am curious and apprehensive regarding the eventual sale of my hangar.
 
Ace66 said:
It is a seizure. The government didn't pay for the improvements - private citizens did. They take the improvements at the end of the lease. That's a seizure. Just because it's in the terms makes it no less egregious. They set the terms and they have a monopoly. You're either forced to accept the terms or you have to uproot your entire life to move to another county just to own your hangar.
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If you did a land lease with a private sector individual or company, the exact same terms would apply. If you go into one of these deals, you have to allow for the end of the lease when determining if it's in your best interest to enter into it.

If you think this is unfair, you and some other pilots should get together and build an airport. Privately owned public use airports used to be quite common.
 
SHV and DTN in Northeast LA. are on on course to take possession of all the hangars at both airports.
The standard reversion clause that has lain dormant in the leases for over 50 years is now being used the take property. The clause was intended to maintain control of the airport property for airport use and to have absolute control over who could do what at the airports. Kind of a Nuclear Option type of thing. No longer.
My small hangar was built in 1955 and has had 8 or 9 owners. Last year my land lease was $875.00. My large hangar was built in 1970 and has had 4 owners. Land lease last year was $1700.00. I pay for all maintaince, electricity and water. I mow and trim to keep it looking nice.
Until two years ago buying or selling the "improvements" (hangar) involved paying the money, getting a new 15 year lease (5 years and 2 5 year options) and changing the (improvements) to your name so you could be taxed by the city and Parish (County).
At the end of the 15 years you simply signed another lease. A real public-private partnership; I own the building they own the land and I maintain both...because I want to keep my investment up. Now, I'm told the new FAA position Is the airports need to OWN all the hangars at all airports with Grant Assurances. So I've been given the option of either signing a new lease for either 10 or 20 years (they won't say which, it depends on what my hangar is worth on an Amortization Schedule I guess) by February 10th or they take the hangar at the end of my current leases.
To add insult to injury I also have to commit to spending $20k on each property within the first half of a 20 year term of which 10% of the hangars value must be spent in the first year...it seems someone correctly surmised owners aren't likely to give a crap about the airport in general or their hangars specifically when forced to part with their investment. My hangars are not worth much now and all new construction has come to a halt.
It's kind of sucked the fun out of flying for lots of folks around here; what the Tower Controller's strikes and $5.00 a gallon a gas couldn't do (kill general aviation) this has. Lots of for sale signs going up and lots of friends saying it's time to hang up their headsets. I hope the FAA has a plan to replace 'em...
I'm reminded of the story about the old Indian in the bar..."our women kept the teepee, cooked and cleaned and kept the fires going while the men hunted and fished all day...and the stupid white man came and thought he could improve on that!

Hiperbiper
 
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