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Suggested Citation:"Front Matter." National Academies of Sciences, Engineering, and Medicine. 2020. Estimating Market Value and Establishing Market Rent at Small Airports. Washington, DC: The National Academies Press. doi: 10.17226/25719.
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Suggested Citation:"Front Matter." National Academies of Sciences, Engineering, and Medicine. 2020. Estimating Market Value and Establishing Market Rent at Small Airports. Washington, DC: The National Academies Press. doi: 10.17226/25719.
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Suggested Citation:"Front Matter." National Academies of Sciences, Engineering, and Medicine. 2020. Estimating Market Value and Establishing Market Rent at Small Airports. Washington, DC: The National Academies Press. doi: 10.17226/25719.
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Suggested Citation:"Front Matter." National Academies of Sciences, Engineering, and Medicine. 2020. Estimating Market Value and Establishing Market Rent at Small Airports. Washington, DC: The National Academies Press. doi: 10.17226/25719.
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Suggested Citation:"Front Matter." National Academies of Sciences, Engineering, and Medicine. 2020. Estimating Market Value and Establishing Market Rent at Small Airports. Washington, DC: The National Academies Press. doi: 10.17226/25719.
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Suggested Citation:"Front Matter." National Academies of Sciences, Engineering, and Medicine. 2020. Estimating Market Value and Establishing Market Rent at Small Airports. Washington, DC: The National Academies Press. doi: 10.17226/25719.
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Suggested Citation:"Front Matter." National Academies of Sciences, Engineering, and Medicine. 2020. Estimating Market Value and Establishing Market Rent at Small Airports. Washington, DC: The National Academies Press. doi: 10.17226/25719.
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Suggested Citation:"Front Matter." National Academies of Sciences, Engineering, and Medicine. 2020. Estimating Market Value and Establishing Market Rent at Small Airports. Washington, DC: The National Academies Press. doi: 10.17226/25719.
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A I R P O R T C O O P E R A T I V E R E S E A R C H P R O G R A M ACRP RESEARCH REPORT 213 2020 Research sponsored by the Federal Aviation Administration Subscriber Categories Aviation Estimating Market Value and Establishing Market Rent at Small Airports Aviation Management Consulting Group Centennial, CO Aeroplex Group Partners Long Beach, CA Decker Associates Littleton, CO DKMG Consulting Chicago, IL Hangar Network Centennial, CO

AIRPORT COOPERATIVE RESEARCH PROGRAM Airports are vital national resources. They serve a key role in trans- portation of people and goods and in regional, national, and interna- tional commerce. They are where the nation’s aviation system connects with other modes of transportation and where federal responsibility for managing and regulating air traffic operations intersects with the role of state and local governments that own and operate most airports. Research is necessary to solve common operating problems, to adapt appropriate new technologies from other industries, and to introduce innovations into the airport industry. The Airport Cooperative Research Program (ACRP) serves as one of the principal means by which the airport industry can develop innovative near-term solutions to meet demands placed on it. The need for ACRP was identified in TRB Special Report 272: Airport Research Needs: Cooperative Solutions in 2003, based on a study spon- sored by the Federal Aviation Administration (FAA). ACRP carries out applied research on problems that are shared by airport operating agen- cies and not being adequately addressed by existing federal research programs. ACRP is modeled after the successful National Cooperative Highway Research Program (NCHRP) and Transit Cooperative Research Program (TCRP). ACRP undertakes research and other technical activi- ties in various airport subject areas, including design, construction, legal, maintenance, operations, safety, policy, planning, human resources, and administration. ACRP provides a forum where airport operators can cooperatively address common operational problems. ACRP was authorized in December 2003 as part of the Vision 100— Century of Aviation Reauthorization Act. The primary participants in the ACRP are (1) an independent governing board, the ACRP Oversight Committee (AOC), appointed by the Secretary of the U.S. Department of Transportation with representation from airport operating agencies, other stakeholders, and relevant industry organizations such as the Airports Council International-North America (ACI-NA), the American Associa- tion of Airport Executives (AAAE), the National Association of State Aviation Officials (NASAO), Airlines for America (A4A), and the Airport Consultants Council (ACC) as vital links to the airport community; (2) TRB as program manager and secretariat for the governing board; and (3) the FAA as program sponsor. In October 2005, the FAA executed a contract with the National Academy of Sciences formally initiating the program. ACRP benefits from the cooperation and participation of airport professionals, air carriers, shippers, state and local government officials, equipment and service suppliers, other airport users, and research organi- zations. Each of these participants has different interests and responsibili- ties, and each is an integral part of this cooperative research effort. Research problem statements for ACRP are solicited periodically but may be submitted to TRB by anyone at any time. It is the responsibility of the AOC to formulate the research program by identifying the highest priority projects and defining funding levels and expected products. Once selected, each ACRP project is assigned to an expert panel appointed by TRB. Panels include experienced practitioners and research specialists; heavy emphasis is placed on including airport professionals, the intended users of the research products. The panels prepare project statements (requests for proposals), select contractors, and provide technical guidance and counsel throughout the life of the project. The process for developing research problem statements and selecting research agencies has been used by TRB in managing coop- erative research programs since 1962. As in other TRB activities, ACRP project panels serve voluntarily without compensation. Primary emphasis is placed on disseminating ACRP results to the intended users of the research: airport operating agencies, service pro- viders, and academic institutions. ACRP produces a series of research reports for use by airport operators, local agencies, the FAA, and other interested parties; industry associations may arrange for workshops, training aids, field visits, webinars, and other activities to ensure that results are implemented by airport industry practitioners. ACRP RESEARCH REPORT 213 Project 01-38 ISSN 2572-3731 (Print) ISSN 2572-374X (Online) ISBN 978-0-309-48105-2 Library of Congress Control Number 2019957386 © 2020 National Academy of Sciences. All rights reserved. COPYRIGHT INFORMATION Authors herein are responsible for the authenticity of their materials and for obtaining written permissions from publishers or persons who own the copyright to any previously published or copyrighted material used herein. Cooperative Research Programs (CRP) grants permission to reproduce material in this publication for classroom and not-for-profit purposes. Permission is given with the understanding that none of the material will be used to imply TRB, AASHTO, FAA, FHWA, FMCSA, FRA, FTA, Office of the Assistant Secretary for Research and Technology, PHMSA, or TDC endorsement of a particular product, method, or practice. It is expected that those reproducing the material in this document for educational and not-for-profit uses will give appropriate acknowledgment of the source of any reprinted or reproduced material. For other uses of the material, request permission from CRP. NOTICE The research report was reviewed by the technical panel and accepted for publication according to procedures established and overseen by the Transportation Research Board and approved by the National Academies of Sciences, Engineering, and Medicine. The opinions and conclusions expressed or implied in this report are those of the researchers who performed the research and are not necessarily those of the Transportation Research Board; the National Academies of Sciences, Engineering, and Medicine; or the program sponsors. The Transportation Research Board; the National Academies of Sciences, Engineering, and Medicine; and the sponsors of the Airport Cooperative Research Program do not endorse products or manufacturers. Trade or manufacturers’ names appear herein solely because they are considered essential to the object of the report. Published research reports of the AIRPORT COOPERATIVE RESEARCH PROGRAM are available from Transportation Research Board Business Office 500 Fifth Street, NW Washington, DC 20001 and can be ordered through the Internet by going to http://www.national-academies.org and then searching for TRB Printed in the United States of America

The National Academy of Sciences was established in 1863 by an Act of Congress, signed by President Lincoln, as a private, non- governmental institution to advise the nation on issues related to science and technology. Members are elected by their peers for outstanding contributions to research. Dr. Marcia McNutt is president. The National Academy of Engineering was established in 1964 under the charter of the National Academy of Sciences to bring the practices of engineering to advising the nation. Members are elected by their peers for extraordinary contributions to engineering. Dr. John L. Anderson is president. The National Academy of Medicine (formerly the Institute of Medicine) was established in 1970 under the charter of the National Academy of Sciences to advise the nation on medical and health issues. Members are elected by their peers for distinguished contributions to medicine and health. Dr. Victor J. Dzau is president. The three Academies work together as the National Academies of Sciences, Engineering, and Medicine to provide independent, objective analysis and advice to the nation and conduct other activities to solve complex problems and inform public policy decisions. The National Academies also encourage education and research, recognize outstanding contributions to knowledge, and increase public understanding in matters of science, engineering, and medicine. Learn more about the National Academies of Sciences, Engineering, and Medicine at www.national-academies.org. The Transportation Research Board is one of seven major programs of the National Academies of Sciences, Engineering, and Medicine. The mission of the Transportation Research Board is to provide leadership in transportation improvements and innovation through trusted, timely, impartial, and evidence-based information exchange, research, and advice regarding all modes of transportation. The Board’s varied activities annually engage about 8,000 engineers, scientists, and other transportation researchers and practitioners from the public and private sectors and academia, all of whom contribute their expertise in the public interest. The program is supported by state transportation departments, federal agencies including the component administrations of the U.S. Department of Transportation, and other organizations and individuals interested in the development of transportation. Learn more about the Transportation Research Board at www.TRB.org.

C O O P E R A T I V E R E S E A R C H P R O G R A M S CRP STAFF FOR ACRP RESEARCH REPORT 213 Christopher J. Hedges, Director, Cooperative Research Programs Lori L. Sundstrom, Deputy Director, Cooperative Research Programs Marci A. Greenberger, Manager, Airport Cooperative Research Program Brittany Summerlin-Azeez, Program Coordinator Eileen P. Delaney, Director of Publications Natalie Barnes, Associate Director of Publications ACRP PROJECT 01-38 PANEL Field of Administration Carlos E. Ruiz-Coll, Greenville-Spartanburg International Airport, Greer, SC (Chair) Kerry L. Ahearn, IEM, Morrisville, NC Gary P. Mascaro, City of Scottsdale - Scottsdale Airport, Scottsdale, AZ Winthrop Perkins, Airport & Aviation Appraisals, Inc., Bastrop, TX Jennifer R. Pyatkov, Jacobsen Daniels Associates, Falls Church, VA John Rostas, Armstrong Consultants, Inc., Centennial, CO Amy J. Walter, FAA Liaison Paul J. Eubanks, Airports Council International - North America Liaison Christine Gerencher, TRB Liaison

Staff from smaller airports typically lack specialized expertise in the negotiation and development of airport property or the resources to hire consultants. ACRP Research Report 213 provides airport management, policymakers, and staff a resource for developing and leasing airport land and improvements, methodologies for determining market value and appropriate rents, and best practices for negotiating and re-evaluating current lease agreements. There are many factors that can go into the analysis, and this report reviews best practices in property development. The lack of dedicated staff in property development at a smaller airport may not be a con- cern while managing the day-to-day operations; however, expertise in property develop- ment becomes important when an airport is approached with an unsolicited proposal, considering the development of property, or re-evaluating current lease agreements. Many staff members will reach out to their airport peers for assistance, but a solid understanding of the concepts, methodologies, and other factors involved in determining market value and market rent for airport property is also important in effectively managing airport property. A group of industry practitioners, led by Aviation Management Consulting Group, was selected to conduct research and develop guidance identifying the many factors needing consideration when estimating market value for leases and rents at airports. The guidance provides the regulatory and FAA compliance requirements, methodologies for estimating market rents, the various characteristics of airport property and improvements, and con- cludes with a chapter on negotiation best practices. This guidance will be useful to staff from small airports or anyone seeking to understand the nature of determining market value or market rents at airports. F O R E W O R D By Marci A. Greenberger Staff Officer Transportation Research Board

1 Summary 3 Chapter 1 Introduction 3 1.1 Setting the Stage 4 1.2 Purpose of the Report 4 1.3 Overview of the Report 5 1.4 Parties with Direct Interest in the Report 6 1.5 Key Airport Property Terms 9 1.6 Identification of the Types of Developers and Lessees 9 1.7 Chapter Review 10 Chapter 2 Understanding Market Value and Rent 10 2.1 Introduction 11 2.2 Market Value Definition 12 2.3 Market Rent Definition 13 2.4 Key FAA Guidance and Compliance Considerations 15 2.5 Chapter Review 16 Chapter 3 FAA Policies and Guidance 16 3.1 Introduction 16 3.2 FAA Policies and Guidance 25 3.3 Strategic Airport Business Plans 26 3.4 Primary Management and Compliance Documents 28 3.5 Chapter Review 29 Chapter 4 Estimating Market Value and Establishing Market Rent 29 4.1 Introduction 29 4.2 Decision Framework 33 4.3 Estimating Market Value and Establishing Market Rent 40 4.4 Adjusting Market Rent 40 4.5 Amortization 41 4.6 Chapter Review 42 Chapter 5 Airport and Property Characteristics 42 5.1 Introduction 42 5.2 Airport Characteristics 46 5.3 Airport Property Land Characteristics 48 5.4 Airport Property Improvement Characteristics 49 5.5 Off-Airport Characteristics 51 5.6 Tools to Identify Comparable and Competitive Airports 54 5.7 Methodology for Identifying Similar Airport Properties 54 5.8 Chapter Review C O N T E N T S

55 Chapter 6 Negotiation of Development and Lease Agreements 55 6.1 Introduction 55 6.2 Goals of Negotiation 56 6.3 Negotiation Best Practices 58 6.4 Development and Lease Agreement Considerations 59 6.5 Memoranda of Understanding 59 6.6 Dispute Resolution 60 6.7 Chapter Review 61 Appendix A Glossary of Terms and Acronyms 67 Appendix B Bibliography 70 Appendix C Comparable and Competitive Airport Resources Note: Photographs, figures, and tables in this report may have been converted from color to grayscale for printing. The electronic version of the report (posted on the web at www.trb.org) retains the color versions.

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Staff from smaller airports typically lack specialized expertise in the negotiation and development of airport property or the resources to hire consultants.

The TRB Airport Cooperative Research Program's ACRP Research Report 213: Estimating Market Value and Establishing Market Rent at Small Airports provides airport management, policymakers, and staff a resource for developing and leasing airport land and improvements, methodologies for determining market value and appropriate rents, and best practices for negotiating and re-evaluating current lease agreements.

There are many factors that can go into the analysis, and this report reviews best practices in property development.

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