Hangar Rent - Can it be Reduced?
During the last EAA Chapter Leaders Academy, a question was asked of our Government Relations staff - "The airport director at the airport says he must charge our chapter full commercial rental rates for the Chapter Hanger. Is this true?"
Randy Hansen, EAA director of government relations, provides the answer: "The answer is yes.and no.
First, the yes: On February 16, 1999, the FAA issued a Federal Register notice titled "Policy and Procedures Concerning the Use of Airport Revenue," within which the FAA clearly says that non-profit or not-for-profit organizations may receive fair market value rent reductions or reduced rate rent concessions for their efforts supporting and promoting the airport and aviation. Although non-profit EAA Chapters are not specifically listed, the list of organizations in this document, including museums, CAP, etc., was never meant to be all-inclusive. So, yes you can negotiate a reduced rent with the airport manager. These are the steps that generally must be followed per Section VII, paragraph E of that document:
- You and the airport management work out a reasonable reduced rent concession.
- The airport management submits the agreed rent concession to its local FAA Airport District Office (ADO) for their review. The review will consist of:
- The history of the airport - how many rent concessions are in place today.
- The length of the rent concession - in general the FAA likes 3 to 5 year rent concession agreements. (15 to 20 year agreements are frowned upon.) So, try for a contract for a period 10 years.
- Sufficient justification must be included in the request to show tangible and intangible benefits to the airport and/or to civil aviation. For EAA chapters the justification would include EAA Young Eagles activities; support of community fly-ins; volunteerism supporting airport operations; local school (youth) education programs; local civic aviation education programs; and any other aviation supporting activities the chapter does throughout the year.
- The FAA ADO will not "approve" the reduced rent concession agreements. What it will do is issue a statement of "No Objection" that gives the airport manager the authority to proceed with granting the reduced rent concessions to your chapter. The FAA ADO strives to issue its ruling within three days of receipt of the request.
The "no" answer from the FAA ADO will come if the airport has several other reduced rent concessions in place, and adding one more will directly affect the airport's ability to be self-sufficient.
If you'd like more information on this topic or any airport-related issues, please feel free to give Randy a call at 920-426-6103 or e-mail him at email@example.com.