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Mutual Help List, Hangar Construction

I thought I would raise some points for you to consider.  Sorry, probably more 
questions than answers.

When you say "on the airport's books" what do you mean by that?  Unless you're 
a private agency I assume you have no tax liability for personal property or 
real estate.  Typically, public agencies don't maintain a balance sheet.  It 
doesn't sound like there is any revenue bond financing involved.  Perhaps this 
is an inventory of airport property and assets for insurance purposes.  Maybe 
state statute or county code requires that you maintain a capital or long-term 
asset inventory and market value.

Regardless of the answers to the questions above, it sounds clear that your 
airport will retain ownership of the land.  However, you indicate that the 
improvements upon the property will revert to airport ownership after 25 years. 
 Therefore, it sounds like the airport will own nothing except the land until 
the hangar facility reverts to the airport's ownership.  Until then, if I'm 
reading your description correctly, you don't own the improvements, your tenant 

I would suggest that you and/or your tenant seek the advice of a CPA firm about 
the tax exposure.  There is likely no tax exposure on your part (assuming 
you’re a government agency), but if the hangar is the personal property of 
your tenant then he will likely have a tax liability; assuming your state has a 
property tax.

Our leasing policies require that the tenant secure and maintain all liability, 
property and casualty insurance on leasehold premises.  Even though you may not 
own the hangar at the beginning of the lease, if it is destroyed then it would 
also be your loss at the end of the lease term.  You should require the tenant 
to insure the property and improvements for the full replacement value and name 
your airport as additional insured.

Good luck with your project.


-----Original Message-----

From: help-owner@xxxxxxxxxxxxxxxxxxxxxx 
[mailto:help-owner@xxxxxxxxxxxxxxxxxxxxxx] On Behalf Of ereischman@xxxxxxxx

Sent: Wednesday, March 11, 2015 9:08 AM

To: help@xxxxxxxxxxxxxxxxxxxxxx

Cc: stepheni@xxxxxxxxx

Subject: CAA: Mutual Help List, Hangar Construction

We have leased acreage to a tenant who is building a hangar.  The lease term is 
25 years.  At the end of the lease, the hangar will be property of the airport. 
 How/when is the hangar recorded on the airport's books.  They will be paying a 
monthly fee for the property.  

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