Session 10 Non-aeronautical Development of Airport Land 31 st Annual AAAE Basics of Airport Law Workshop and 2015 Legal Update November 1-3, 2015 Desk Reference Chapters 14, 15, 23, 28 Daniel S. Reimer Denver International Airport John E. Putnam Kaplan Kirsch & Rockwell
Non-aeronautical Revenue in Context Source: Airports Council International North America 2
Most Common Legal Issues 1. FAA approval process 2. Use for public purposes 3. Length of lease 4. Rent 5. Environmental review 3
Why is Use so Important? Valley Aviation Services v. City of Glendale (16-09-06) [Grant Assurance 19] prohibits a sponsor from causing or permitting any activity or action on the airport that would interfere with its use for airport purposes. p.34 When an airport sponsor requests and is awarded AIP funds to acquire land for development, it is obligated to ensure such lands are used for aeronautical purposes. p.35-36 Allowing nonaeronautical use of land developed and designated as aeronautical on an approved airport layout plan is a violation of Grant Assurance 29, Airport Layout Plan. p.36 4
Relevant Grant Assurances 19 Operation and Maintenance 20 Hazard Removal and Mitigation 21 Compatible Land Use 22 Economic Nondiscrimination 24 Fee and Rental Structure 25 Airport Revenues 29 Airport Layout Plan 31 Disposal of Land 5
Land Sale Federal law and Assurance 31 require land purchased with AIP funds to be sold when no longer needed for airport or noise compatibility purposes. Must return/reuse FAA s proportionate share of sale proceeds Must obtain fair market value Must obtain release from FAA to delete property from Exhibit A Property Map Sale proceeds are airport revenue. 6
Land Lease FAA guidance recognizes interim and concurrent uses. Release may be required for long-term leases (greater than 25 years). Release can be full or partial. Airport must obtain fair market value rent, with limited exceptions for public uses. Rent is airport revenue. 7
Airport Layout Plan Must re-designate land identified for aeronautical use Revenue-generating nonaeronautical use What if no designation? FAA s traditional role is to evaluate impact on safety, efficiency and utility. How does that apply here? FAA action on ALP amendment is subject to NEPA. What level of review is required? 8
Land Use Compatibility FAA generally prohibits on-airport residential use. Structures must be evaluated under FAR Part 77 for potential hazards to air navigation. Certain uses have additional requirements. Solar arrays Oil and gas wells 9
Draft Advisory Circular 150/5100-20 Oil and Gas Development Surface use requires ALP amendment ALP amendment requires NEPA Pure subsurface use does not require ALP change Must be compatible with aeronautical uses Revenue use principles apply Provides recommended lease terms 10
Revenue Use Sale and lease proceeds are almost always airport revenue. Below FMV sale or lease is not revenue diversion, but may violate self-sufficiency assurance. Limited exceptions for public uses Airport typically can invest in on-airport infrastructure in support of commercial development. 11
DEN-Specific Requirements Other restrictions on land use Intergovernmental agreement Zoning Competitive selection Title to improvements Rent escalation Treatment of rent as gross revenues Stapleton establishing sale price 12
Relevant Questions 1. Is land on Exhibit A Property Map? 2. Was land acquired with AIP grant funds? 3. How is land depicted on ALP? 4. Is airport planning sale or lease? 5. If lease, what is intended term? 6. How is rent to be established? 7. Is land intended for public purpose? 13
FAA Role Airport Layout Plan amendment Full or partial release Environmental review FAR Part 77 review Lease review (voluntary) 14
DEN Examples 15
Colorado Springs Pikes Peak Airstrip Attack Images: Pikes Peak Airstrip Attack 16
Pittsburgh International Images: Allegheny County Airport Authority 17
Oil and Gas Examples Denver Pittsburgh Dallas-Fort Worth Image: Ft. Worth Star-Telegram 18
Huntsville, AL Agriculture Examples $500K annually Roughly 3,000 acres for cotton Jacksonville, FL $300K annually Timber and pine straw Denver, CO 16,000 acres of dryland farming 19 Image: Huntsville Times
UAS Activity Image: University of North Dakota 20
Power Generation 21