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1 Airport sponsors (i.e., policymakers), managers, and others responsible for airport management (e.g., city managers, public works managers) who have either a direct or an indirect responsibility for the planning, development, operation, management, and marketing of airports often are considered âjacks of all tradesâ because of the diverse and demanding nature of these responsibilities. This is especially true at smaller airports where, out of necessity or owing to the lack of resources (e.g., time, money, staff), the demands of day-to-day airport management limit these professionalsâ ability to acquire the knowledge or experience to master each area of responsibility. One of these areas is airport property management, which includes developing, negotiating, and executing development and lease agreements and estimating market value or establishing and adjusting market rents for aeronautical, non-aeronautical, commercial, and non-commercial airport land and improvements. To plan, develop, operate, manage, and market the airport, sponsors rely on the revenues associated with developing and leasing airport land and improvements. Additionally, airport sponsors and management must comply with the FAA airport spon- sor assurances (Assurances), which require that airport sponsors maintain a fee and rental structure that will make the airport as self-sustaining as possible given the circumstances. While a variety of airport property management resources are available, including ACRP publications and FAA Assurances, orders, policies, advisory circulars, and other guidance materials, few resources specifically address industry best practices for estab- lishing and adjusting the market value (e.g., rents, fees, investment) for various airport properties (e.g., aeronautical, non-aeronautical, commercial, and non-commercial). Further, there are few resources for developing, negotiating, and executing airport property development and lease agreements. Without clear guidance on such vital topics, these professionals are left to their own accord to find or create methodologies that may or may not be consistent with FAA obligations and industry best practices, and that may or may not reflect true market valuations. In addition, these methodologies may not be well received by potential or existing airport property developers and lessees or achieve the most successful outcomes for the airport sponsor, the community, the developer or lessee, and other airport stakeholders. The lack of guidance, knowledge, or experience in property management for airport policymakers and management at small airports can create inconsistencies between the leasing practices of the airport sponsor and other airport policy documents. Additionally, the lack of guidance, knowledge, or experience can, and has, led to informal complaints under 14 Code of Federal Regulations (CFR) Part 13 and formal complaints under 14 CFR Part 16. Additionally, this general lack of guidance, knowledge, or experience can result in failed property development and unfavorable or failed lease agreement negotiations. Such failure thereby impacts the continued provision of aeronautical products, services, and S U M M A R Y Estimating Market Value and Establishing Market Rent at Small Airports
2 Estimating Market Value and Establishing Market Rent at Small Airports facilities; development of new improvements; or the provision of new aeronautical products, services, and facilities. As such, this report provides the underlying education and serves as a reference point for airport managers and airport real estate/property managers to assist in developing and leasing airport land and improvements, thereby maximizing the airportâs self- sustainability. Utilizing the results of an extensive literature review, interviews, and surveys of interested parties, this report addresses (1) the definition of key airport property terms, (2) the importance of a structured leasing approach, (3) methodologies for establishing and adjusting airport land and improvement market values (e.g., rents, fees, investment), (4) methodologies for identifying comparable and competitive airports, and (5) industry best practices for negotiating and re-evaluating current lease agreements.