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Airport Owner/Sponsor Role 37 3.2.4 Land Releases Land releases involve the disposal of airport lands, and, more specifically, the approval required of the FAA to "release" land acquired with federal funds (thus allowing the airport sponsor to dispose of the land or allow it to be used for nonaeronautical purposes). The airport sponsor may dispose of land if said land is deemed unnecessary for aeronautical purposes. How- ever, the airport sponsor may be required to reimburse the FAA, or the FAA may stipulate how land sale proceeds are to be spent by the airport sponsor. The following provides an overview of the assurance addressing the disposal of airport land purchased with federal funds: Grant Assurance 31: Disposal of Land. This assurance stipulates when and how an airport sponsor can dispose of land acquired with federal funds. The airport sponsor must repay the FAA the portion of the proceeds "which is proportionate to the United States' share of the cost of acquisition of such land." In addition, the airport sponsor may purchase the land for a propor- tional share of the initial federal investment, based on current fair market value. The disposal of land must comply with federal assurances under the following circumstances: Land purchased under a grant for airport noise compatibility purposes can be disposed of when the land is no longer needed for such purposes, at fair market value, and at the earliest feasible time. The proceeds will either be paid back to the FAA (net gain can be kept by the airport spon- sor after repayment), or be reinvested in an approved noise compatibility project. Land purchased under a grant for airport development purposes (other than noise compatibil- ity) can be disposed of when the land is no longer needed for airport purposes, at fair market value. At the FAA's discretion, the proceeds due to the FAA can be reinvested in another eligible airport improvement project, or be paid for deposit in the trust fund if no eligible project exists. Land is considered to be needed for airport purposes (not eligible for disposal) if it may be needed for aeronautical purposes (including runway protection zones) or serve as noise buffer land, and/or the revenue from interim uses of such land contributes to the financial self-sufficiency of the airport. Within the context of airport development, the airport sponsor must be careful not to structure a lease agreement that may violate the Disposal of Land assurance due to an extended lease term. The FAA will typically view any lease term in excess of 50 years as a disposal of land, and therefore subject to the stipulations listed in Grant Assurance 31. Often, maximum lease terms are set by local or state statute and may exceed what the FAA considers an acceptable length. The FAA Airport Compliance Manual, Part VII: Releases and Property Reversions (Order 5190.6B) provides a detailed overview on the release and disposal of airport land. The FAA defines disposal of land to include a lease in excess of 50 years, while certain states allow for longer term leases without considering them a disposal of property. The airport sponsor can balance these two definitions by meeting the state standard first, and then presenting the lease to the FAA for consideration and concurrence before executing agreements. Several of the case stud- ies mentioned in this Guidebook include long-term leases, so it is important to coordinate with the FAA's Airport Development Office before finalizing such a negotiation, should the airport spon- sor choose to use one of these case studies as a model. 3.2.5 Business Practice Assurances There are three primary grant assurances that speak directly to the business practices of the air- port sponsor. These grant assurances impose guidelines as to how the airport sponsor must inter- act with commercial and noncommercial tenants on the airport, and are important practices in establishing a fair and equitable business environment. These assurances directly impact the