Impact fees charged for building a hangar on leased ground

[jriordan]

Good morning everyone! I'm just wondering how many airports (cities) are charging an impact fee for building a private hangar on a typical municipal airport where the ground is leased? We are struggling with this in my small hometown and it is severely crippling the growth of our little airport. Many folks want to build a hangar here but once they learn of the ridiculous impact fee and the lease terms for the ground, they usually bail and build somewhere else.

 

[chartbundle]

Similar here in Newport OR. Not sure of the amounts. The lease terms are pretty normal but according to one recent hangar builder it was a fortune in fees, even though he added 1 trip per day and there's no sewer available. For a little while the county also tried to charge hangar owners property tax for the land they were leasing from the city which has an exemption in Oregon for airports like ours, that was corrected once the hangar owners pointed out the law, obviously the buildings are still taxed.

The leases are public but for some reason I can't access the city's site right now to pull one down. I don't know if the fees are publicly listed.

 

[Doc Holliday]

It would help to know what airport the OP is referencing.

 

[Let'sgoflying!]

In many places it appears the money must be used for improvements to that particular location, and never for repairs/upgrades to some other project/place.
Does your state have that?
Maybe the hangar owner can show there have been no improvements/impacts?

 

[jriordan]

In many places it appears the money must be used for improvements to that particular location, and never for repairs/upgrades to some other project/place.
Does your state have that?
Maybe the hangar owner can show there have been no improvements/impacts?

I'm not sure what the State of Utah has to say about how and where impact fees are to be used. Impact fees are a fairly new implementation here in Kanab. They say the fees paid go towards public safety and the impact new construction has on roads, sewer systems, and water. Obviously, a hangar has a low impact itself on most, if not all of these, but they charge these fees across the board regardless and currently it's right at 20k! I come from a career in the fire service, so I understand the need for funding a city's infrastructure, but building a hangar on leased city ground, seems like an exception to the rule in my opinion. I was just checking to see if others are dealing with the same fees.

 

[jriordan]

It would help to know what airport the OP is referencing.

KKNB Kanab, UT

 

[jriordan]

Thank you! I agree. We, as pilots, aircraft owners, and hangar tenants, need to make our voices heard. We are in the process of doing just that currently.

It's pretty common, unfortunately. Lots of municipal airports tack on impact fees plus ground leases. Some charge per square foot, others a flat fee. Yours isn't alone. Best bet is to get with other hangar owners and push back at a city council meeting.

 

[jriordan]

Similar here in Newport OR. Not sure of the amounts. The lease terms are pretty normal but according to one recent hangar builder it was a fortune in fees, even though he added 1 trip per day and there's no sewer available. For a little while the county also tried to charge hangar owners property tax for the land they were leasing from the city which has an exemption in Oregon for airports like ours, that was corrected once the hangar owners pointed out the law, obviously the buildings are still taxed.

The leases are public but for some reason I can't access the city's site right now to pull one down. I don't know if the fees are publicly listed.

Thanks! Yes, the impact fee here is 20k for any new construction! I'm really wondering about the legalities of such fees with building on city owned land. I might be completely off my rocker but I believe it's worth looking into at least.

Our ground lease terms are another issue. Our airport is offering a 20-year lease with one 5-year extension. They say the hangar owner may be granted additional extentsions if they approach the city council with a solid argument and are granted such extension, but absolutely no guarantee of such. A 20-year lease is a bit of a tough pill to swallow when looking at the incredibly high costs to build a hangar nowadays!

 

[robin ardoin]

I consider myself fortunte in this regard. I will most likely build a hangar at my airport and currently hold a ground lease for two plots, 60'x120' each, at $0.05/sqft per annum. Ten yr term with gurantee of additional terms x 2. No impact fees, only annual property taxes, which are under $600/year on the ground. The parish (county equivalent) airport authority does not want to own hangars and, at the end of the lease, the owner can renew and sub-lease it ou,t move the hangar or sell it. They are very accomodating and constantly improving the property.

 

[Clip4]

Thank you! I agree. We, as pilots, aircraft owners, and hangar tenants, need to make our voices heard. We are in the process of doing just that currently.

If someone builds a hangar, it’s going to be there for more than 50 years and it can be rented as any other commercial storage property, The hangar owner may not be a pilot or own an airplane. I’d like to hear your argument for exempting hangars from tax?

 

[midwestpa24]

As usual I'll pay the devil's advocate.

I don't know exactly what the impact fee is or what they are using it for, but I will take a guess. My guess is it helps offset the cost to the city/county/community for the additional infrastructure necessary to support new development. That is not charged as a blanket fee here, either on or off airport. We either try to support development through grant funds or other taxpayer funded methods, or if the needs of the development exceed the capability of those sources, then the developer is on the hook for installing water, sewer, and pavement. There is a cost to install and maintain the basic infrastructure of an airport and community, and someone is paying for it ultimately.

 

[chartbundle]

There is a cost to install and maintain the basic infrastructure of an airport and community, and someone is paying for it ultimately.

To play devils devils advocate.
Our airport has no infrastructure. If you want water you pay for a meter from the water district, if you want electricity you pay the electric company directly. If you want 30 feet of asphalt from the taxiway, you pay for that. You want flat dirt to build your hangar, you pay for that. The only incremental cost to the airport is $20 for a new gate remote. The road. taxiway and the fence has been paid for for many years, and SDCs aren't supposed to be used for upkeep, that would be the hangar rent and property taxes. There's no sewer available. In a few years there may be a large on-site septic system which you could tie into, so that would be a reasonable fee, if it existed. It actually saves the airport money to have a new hangar as that's a few hundred square feet less land they need to mow. Now, if they open a new area to development, then I could also see fees to develop that area.

 

[jriordan]

If someone builds a hangar, it’s going to be there for more than 50 years and it can be rented as any other commercial storage property, The hangar owner may not be a pilot or own an airplane. I’d like to hear your argument for exempting hangars from tax?

I’m not quite sure what you are getting at with your comment. Our airport is much like many others where the hangar that I build someday cannot be used for any other purpose but aeronautical nor can it be rented out or subleased to anyone except aircraft owners. Our lease terms are for 20 years. After that you get one, 5-year extension and then it most likely gets reverted to City ownership. I am not questioning the property tax that is levied upon the hangar owner, only the impact fee of 20k charged at the time of building the hangar on city owned land. Especially since said hangar is not hooked up to the sewer system, the asphalt leading up to it is paid for by the owner, as is electrical. What real impact is it having on the infrastructure of the city on their own land?

Great discussion though! This is what I was hoping for.

 

[Clip4]

I’m not quite sure what you are getting at with your comment. Our airport is much like many others where the hangar that I build someday cannot be used for any other purpose but aeronautical nor can it be rented out or subleased to anyone except aircraft owners. Our lease terms are for 20 years. After that you get one, 5-year extension and then it most likely gets reverted to City ownership. I am not questioning the property tax that is levied upon the hangar owner, only the impact fee of 20k charged at the time of building the hangar on city owned land. Especially since said hangar is not hooked up to the sewer system, the asphalt leading up to it is paid for by the owner, as is electrical. What real impact is it having on the infrastructure of the city on their own land?

Great discussion though! This is what I was hoping for.

Your point is aircraft owners should be exempt from these taxes because the land is rented from the airport even if someone builds those hangars for an aviation commercial use. The airport doesn’t pay real estate taxes, which anyone off the airport has to pay. If you built this same hangar your property, the value would be reassessed and you would be paying real estate taxes on both the land and the hanger until it was removed. If anything, it’s very appropriate hanger developers on an airport pay these taxes. Hangar land rent pays to upkeep the airport only. The land the hangar is located in not taxed. At some airports, local government tax money subsidizes the airport.

If your airport allows 100 new hangars to be built, the city has to minimally have fire and EMS to serve the airport to maintain their insurance ratings, which the airport pays zero toward this. If they don’t, everyone in your city pays higher insurance premiums on their buildings.

Why people in aviation think they should be exempt from taxes and the regular citizens should pay for them Is baffling.

 

[jriordan]

Your point is aircraft owners should be exempt from these taxes because the land is rented from the airport even if someone builds those hangars for an aviation commercial use. The airport doesn’t pay real estate taxes, which anyone off the airport has to pay. If you built this same hangar your property, the value would be reassessed and you would be paying real estate taxes on both the land and the hanger until it was removed. If anything, it’s very appropriate hanger developers on an airport pay these taxes. Hangar land rent pays to upkeep the airport only. The land the hangar is located in not taxed. At some airports, local government tax money subsidizes the airport.

If your airport allows 100 new hangars to be built, the city has to minimally have fire and EMS to serve the airport to maintain their insurance ratings, which the airport pays zero toward this. If they don’t, everyone in your city pays higher insurance premiums on their buildings.

Why people in aviation think they should be exempt from taxes and the regular citizens should pay for them Is baffling.

I appreciate your feedback, however, you seem to be focusing on taxes (ie property tax) assessed to a hangar owner/builder. I’m not challenging that. I understand property taxes will be paid on a hangar built on city owned ground. I don’t necessarily agree with it, but that’s a whole other argument as I really don’t believe in property taxes and paying for items we’ve already purchased, year after year.
The issue I was polling folks on here was the impact fee, not the taxes. Unlike property taxes, which is based off of assessed value, the impact fee is a flat $20,000 fee levied on a builder no matter what he/she is building. It doesn’t matter if it’s a shack in your back yard, a 3-million dollar mansion, or a 40x40 hangar. That’s what I was asking folks about.
Your statement about being baffled about “people in aviation think they should be exempt from taxes” is a bit of a broad stroke statement. I wasn’t questioning the taxes, I’m questioning the impact fees. Also, why not question such fees or taxes? That’s our right to do so if we feel it’s warranted and we should in my opinion!

 

[Clip4]

I appreciate your feedback, however, you seem to be focusing on taxes (ie property tax) assessed to a hangar owner/builder. I’m not challenging that. I understand property taxes will be paid on a hangar built on city owned ground. I don’t necessarily agree with it, but that’s a whole other argument as I really don’t believe in property taxes and paying for items we’ve already purchased, year after year.
The issue I was polling folks on here was the impact fee, not the taxes. Unlike property taxes, which is based off of assessed value, the impact fee is a flat $20,000 fee levied on a builder no matter what he/she is building. It doesn’t matter if it’s a shack in your back yard, a 3-million dollar mansion, or a 40x40 hangar. That’s what I was asking folks about.
Your statement about being baffled about “people in aviation think they should be exempt from taxes” is a bit of a broad stroke statement. I wasn’t questioning the taxes, I’m questioning the impact fees. Also, why not question such fees or taxes? That’s our right to do so if we feel it’s warranted and we should in my opinion!

The impact fee is a one time tax, one you think you should be forgiven because the purpose is only aviation. That’s not a valid reason. Under your logic I shouldn’t pay taxes on my vacation cabin because I only use if for fishing.

 

[jriordan]

Good grief, you make a lot of assumptions! I never said we should be forgiven because the purpose is aviation.
My original post and subsequent comments have all been about polling others to see who all has an impact fee charged for building a hangar at their local airport. I’ve never said we as pilots or aircraft owners shouldn’t have to pay taxes just because it has to do with aviation! I simply am questioning the implementation of impact fees for building a structure on ground that is owned by the city and looking to see if other cities do the same. Do tell me where else you can go build a private building on someone else’s property? That’s what makes building a hangar unique and thus, I wanted to see what other cities are doing as compared to ours. Based on your continued comments about “aviation” folks trying to get away with not paying taxes, I am going to guess you are not a pilot or aircraft owner yourself?

 

[Let'sgoflying!]

The impact fee is a one time tax

Yes but Impact Fee is simply a term to describe the first of potentially many such charges (and one hopes not to buy into such a location). There are many situations where the term is simply morphed into a new term to disguise that it is an ongoing and recurring expense.

 

[Clip4]

Yes but Impact Fee is simply a term to describe the first of potentially many such charges (and one hopes not to buy into such a location). There are many situations where the term is simply morphed into a new term to disguise that it is an ongoing and recurring expense.

All I am saying is the community does not owe you a special tax consideration because you own an airplane. Too many aircraft owners think they do.

If you are the type of person that really dislikes ongoing and recurring expenses, aircraft ownership probably is quite difficult to swallow.

 

[donjohnston]

It would help to know what airport the OP is referencing.

Why? The OP was not asking about a specific airport.

 

[Doc Holliday]

Why? The OP was not asking about a specific airport.

Why not? It helps in understanding and comparison.

 

[Bob Noel]

"I'm just wondering how many airports (cities) are charging an impact fee for building a private hangar on a typical municipal airport where the ground is leased?"

a simple question.

 

[jriordan]

I consider myself fortunte in this regard. I will most likely build a hangar at my airport and currently hold a ground lease for two plots, 60'x120' each, at $0.05/sqft per annum. Ten yr term with gurantee of additional terms x 2. No impact fees, only annual property taxes, which are under $600/year on the ground. The parish (county equivalent) airport authority does not want to own hangars and, at the end of the lease, the owner can renew and sub-lease it ou,t move the hangar or sell it. They are very accomodating and constantly improving the property.

Robin, is there any way you could get me a copy of your contract please? Our airport manager is more than willing to talk about changes to the current lease terms but is asking us as airport users to go out and find examples of other airport's lease terms and contracts.

 

[jriordan]

As usual I'll pay the devil's advocate.

I don't know exactly what the impact fee is or what they are using it for, but I will take a guess. My guess is it helps offset the cost to the city/county/community for the additional infrastructure necessary to support new development. That is not charged as a blanket fee here, either on or off airport. We either try to support development through grant funds or other taxpayer funded methods, or if the needs of the development exceed the capability of those sources, then the developer is on the hook for installing water, sewer, and pavement. There is a cost to install and maintain the basic infrastructure of an airport and community, and someone is paying for it ultimately.

Thank you for the comment!
Having worked for a municipality for 20 years, I do understand the need for impact fees to help support/fund the needed infrastructure that comes with increased development. Especially as it applies to emergency services, roads, sewer, etc.
What I don't understand with our city is that they have gone to an "across the board" impact fee of $20,000 for any new construction. Now, I don't know if this still applies to say a garage or shed or something, but I do know it applies to any residence whether its a 1500 sq foot home or a 6000 sq foot home! It also applies to hangars, which is why I was asking if this is common at other airports. Thanks again for chiming in!

 

[robin ardoin]

Robin, is there any way you could get me a copy of your contract please? Our airport manager is more than willing to talk about changes to the current lease terms but is asking us as airport users to go out and find examples of other airport's lease terms and contracts.

I can try to find it and send a copy via direct messaging.

 

[GoFly]

$20,000 across the board impact fee for any new construction seems quite onerous. Maybe they should just up a sign at the county line saying “we are full, go away”

 

[Clip4]

Robin, is there any way you could get me a copy of your contract please? Our airport manager is more than willing to talk about changes to the current lease terms but is asking us as airport users to go out and find examples of other airport's lease terms and contracts.

I don’t believe your manager is asking you to do a nationwide search. Only rates and terms in your geographic area are relevant and airport size are relevant.

 

[jriordan]

I don’t believe your manager is asking you to do a nationwide search. Only rates and terms in your geographic area are relevant and airport size are relevant.

Yep, exactly, but that doesn't mean I can't learn what other airports are doing outside of our geographic region. It's also pertinent and valuable information. For an apples to apples comparison, yes, we need to look at airports in our region that are comparable in size, but learning what the mindset is of other municipalities and language in their lease contracts is still relevant.

 

[Racerx]

Yes but Impact Fee is simply a term to describe the first of potentially many such charges (and one hopes not to buy into such a location). There are many situations where the term is simply morphed into a new term to disguise that it is an ongoing and recurring expense.

And in many cases it has morphed into, "we can squeeze money out of people just because. What are they gonna do?"

The purpose of an impact fee is the added strain your project is putting on existing infrastructure and potential improvements. In an this case I highly doubt you're putting any strain on those things. I could see being required to put funds into escrow to ensure things are finished however.

Thread drift alert:

Some municipalities have decided that's not enough and have created TIF districts. In Illinois a vast majority of our property taxes goes towards funding the school district. Something like 78% of my 13k tax bill on a 450k home. A local village in my school districts taxing body decided a farm field on the corner of a very busy intersection was "blighted" as it had seasonal flooding... But can still grow crops. They created a TIF district. School district sued. Then settled. Settlement was the tif district won't be extended. The village then spent 12million on site development work to bring in a grocery store chain as well as outlots for other brick and mortar stores. The grocery store gave the village a 4million loan. In return the village would return 50% of the villages sales tax.

Current property tax bill is 350k. The school district gets 400 bucks of that. The amount it was when it was crops. For the next 23 years. Meanwhile my property value (and taxes) increase due to the proximity of another grocery store.

Chicago has 130 TIF districts. ~30% of the city is part of a TIF. And they have no idea why schools are underfunded.

 

[Clip4]

Yep, exactly, but that doesn't mean I can't learn what other airports are doing outside of our geographic region. It's also pertinent and valuable information. For an apples to apples comparison, yes, we need to look at airports in our region that are comparable in size, but learning what the mindset is of other municipalities and language in their lease contracts is still relevant.

Can your airport manager do the same? What if he goes fishing looking for different mindset across the country and proposes obscure contract language you don’t like?

 

[jriordan]

Can your airport manager do the same? What if he goes fishing looking for different mindset across the country and proposes obscure contract language you don’t like?

He can absolutely go and do the same! Nothing stopping him. The fact is that he asked us as the tenants of the airport, to go and get examples of other airport's lease agreements so that we may be able to have good info to work with when it comes to making changes to the current lease agreement and terms. Yes, we will need to have good comparibles with other airports in our region of similar size, but looking at language from airports outside of that, sure doesn't hurt IMHO.

 

[robin ardoin]

He can absolutely go and do the same! Nothing stopping him. The fact is that he asked us as the tenants of the airport, to go and get examples of other airport's lease agreements so that we may be able to have good info to work with when it comes to making changes to the current lease agreement and terms. Yes, we will need to have good comparibles with other airports in our region of similar size, but looking at language from airports outside of that, sure doesn't hurt IMHO.

Check your email. You should have a copy of my home field lease agreement in you inbox.

 

[Clip4]

He can absolutely go and do the same! Nothing stopping him. The fact is that he asked us as the tenants of the airport, to go and get examples of other airport's lease agreements so that we may be able to have good info to work with when it comes to making changes to the current lease agreement and terms. Yes, we will need to have good comparibles with other airports in our region of similar size, but looking at language from airports outside of that, sure doesn't hurt IMHO.

Regardless, the fees discussed here are not imposed by the airport and out of control of an airport manager.

 

[gov98]

In 2024 (ish) there was a Supreme Court case involving the County of El Dorado which said that impact fees had to be rationally related to the increased costs associated with the development, of course, they created some high minded "pronouncement," but not a ton of specificity so when the case went back to the California Court of Appeals that court said ehhh close enough, and after all that litigation the people trying to build a house got a splashy Supreme Court win followed up with a functional loss. In any event, depending on where you are, there's not terrible language in the Supreme Court case to draft a letter to somebody (the County/City) and say something like X is not reasonable under this case, we ask you reevaluate the Impact Fees given this case.

Back in the "real world" you're more likely to get a "compromise" okay we'll agree to $5k impact fees to put in a hangar up front than you are to get the money back that you've already paid. So may be worth just sending a letter and seeing what shakes out. Politely and Respectfully of course.

 

[SCCutler]

Regardless, the fees discussed here are not imposed by the airport and out of control of an airport manager.

Assuming the entity assessing the Impact Fee is also the airport sponsor, they are likely out of line by assessing the impact fee and using it for non-airport purposes, pursuant their Grant Assurances. The challenge, of course, is getting the FAA to be interested in the issue and, possibly, bringing a Part 13 action.

But it is a deeply suspect practice.

 

[Clip4]

Assuming the entity assessing the Impact Fee is also the airport sponsor, they are likely out of line by assessing the impact fee and using it for non-airport purposes, pursuant their Grant Assurances. The challenge, of course, is getting the FAA to be interested in the issue and, possibly, bringing a Part 13 action.

But it is a deeply suspect practice.

Suspect to you maybe. But if I am a private individual building a storage building on private property paying an impact fee and you are building a storage building on public property and don’t have to pay the fee, why do I have to pay it and you don’t? Not charging you the impact is what is deeply suspect.

 

[jriordan]

Regardless, the fees discussed here are not imposed by the airport and out of control of an airport manager.

You keep hopping from one subject to another with your replies. I was addressing the lease terms and looking at language regarding such with other airports and their contracts. The airport manager absolutely has control or input regarding lease terms.
The point of my original post was simply to ask how many other airports or municipalities are charging an impact fee for those wishing to build a hangar on airport-owned ground. Yes, city councils have control over this, not the airport manager.