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12 Guidebook for Managing Small Airports
determine their airport's economic impact, the best initial source of information is their state's
office of aeronautics.
FAA Policy and Procedures Concerning Use of Airport Revenue
Since 1982, the U.S. Congress has passed legislation establishing the Airport Improvement
Program (AIP), which provides federal grant funding; creating the authority for airport operators
to levy Passenger Facility Charges (PFCs); and governing how airport revenue is generated and
used. Both the U.S. DOT and the FAA have established regulations and issued policy guidance to
provide specific direction to airport operators regarding the eligibility and use of AIP funds, PFC
revenue, and airport revenue. Several regulations and policies regarding airport rates and charges,
which relate to how airport revenue is generated, have also been issued.
Land Acquisition (Negotiating and Paying Fair Market Value)
Whenever feasible in constructing or expanding an airport, the FAA encourages the airport
owner to use its existing owned land. However, in the event that additional land is necessary for
project purposes, private property may be acquired. When receiving federal funding for an airport
project, the airport owner must ensure that its property acquisition and its provision of relocation
assistance and payments to displaced persons conform to applicable federal requirements. The air-
port owner must also adhere to state laws, which may be more restrictive.
First, the airport owner determines the specific land requirements for a particular airport devel-
opment or noise compatibility project. Property can be obtained through several methods, such as
purchase of property interests (in fee) or through eminent domain (condemnation). It can also be
acquired through easements or by donation or exchange. Unless received through donation, pri-
vate property is acquired by the airport owner through payment of just compensation to the prop-
erty owner.
To ensure that fair market value is paid, the airport owner should arrange for a competent, inde-
pendent, real property appraiser familiar with local property values to appraise the property. The
appraiser will inspect the property and set forth an opinion of its current fair market value in a for-
mal appraisal report. This report will be reviewed by a review appraiser for conformance to accept-
able appraisal standards and FAA requirements. After the report is approved, it is used as the basis
for the airport owner's written offer to purchase the property.
Fair market value is usually defined as the amount of money that would normally be paid for
property in a sale between a willing seller, not compelled to sell, and a willing buyer, not compelled
to buy. The amount is generally considered by the courts to be "just compensation" under the Fifth
Amendment of the U.S. Constitution. Fair market value does not take into account intangible ele-
ments such as sentimental value, goodwill, business profits, or any special value that the property
may have for the owner or for the government, nor does it include costs and expenses for the
landowner's relocation.
After just compensation has been determined for a piece of property, an airport owner's repre-
sentative will call to negotiate for its purchase. The representative will discuss the basis of the offer
to buy the property with the owner, and the offer will be for no less than the amount of the approved
appraisal. Landowners can get their own appraisal, and that appraisal will be paid for by the airport.
Owners are given a sufficient period of time to consider the offer. When an agreement on the
price is reached, a sales contract is prepared. Upon execution by the airport owner, the contract
becomes a binding agreement.
Airport owners can take only a part of a property parcel. If the acquisition of a portion of prop-
erty leaves an "uneconomic remnant," the Uniform Act requires that the airport owner offer to
acquire the remnant at its fair market value.
