What a Hangar Owner Is Owed When the Airport Takes the Land

Abstract

1. Introduction

Airport projects take land. A runway safety area extension takes forty feet of apron. A taxiway realignment takes vehicle access. A perimeter road takes the fuel truck route. A terminal expansion takes a row of hangars outright. In each case the hangar owner has to work out what they are owed, and the answer frequently surprises them in both directions.

Owners who assume they will be paid what the hangar cost to build are usually disappointed. Owners who assume a partial taking means partial payment are frequently underpaid. Both errors have the same root: treating the hangar as the property. On a public field the hangar is rarely the property. It is an improvement on land the owner does not own, held under a lease that ends, and the compensable interest is defined by that lease rather than by the structure.

This paper sets out the framework that governs, with the authority for each element. It is written for appraisers, owners, sponsors, and counsel who need to know which questions are legal and which are valuation, because the two are answered by different people and the sequence matters. An appraisal built on the wrong measure of compensation is not a weak appraisal. It is inadmissible.

Sections 2 through 4 address the interest taken and how the lease can enlarge or extinguish it. Sections 5 and 6 address partial takings and easements, which together describe the majority of airport acquisitions. Section 7 sorts the elements that are and are not compensable. Section 8 takes up highest and best use, which on an obligated airport is a narrower question than it appears. Section 9 addresses temporary construction easements. Section 10 lists the record to assemble. Section 11 states the limits of a general treatment of a subject governed largely by state law.

2. The Interest Being Taken

2.1 The Leasehold, Not the Building

Most hangar owners on public fields own a building on land they lease. What the owner holds is a leasehold, and a leasehold is compensable property. The Supreme Court settled that in A.W. Duckett & Co. v. United States (1924), where a lessee's possession under its lease was held to be part of the thing taken and therefore within the government's obligation to pay.

What a leasehold is worth is a narrower question. The measure is the excess of the value of use and occupancy over the rent the tenant is obligated to pay, for the remainder of the term, plus the value of any renewal right the lease confers. That is the formulation in United States v. Petty Motor Co. (1946), and the Court applied it again in Alamo Land & Cattle Co. v. Arizona (1976), holding that a leasehold has compensable value only to the extent the capitalized fair rental value for the remaining term exceeds the capitalized value of the contract rent.

Practitioners call this the bonus value, and it explains the outcome owners find hardest to accept. A lease with twenty-two years remaining at a rent well below market carries substantial value. The same building on a lease with four years left, at a rent that resets to market on renewal, carries very little. The structure is identical in both cases. The compensation is not.

2.2 Valuing the Whole, Then Dividing It

Two approaches compete for how multiple interests in one parcel are handled.

Under the undivided fee rule, which the federal courts and most states follow, the condemnor acquires the entire property, the property is valued as a single whole, and the one award is then apportioned among the interest holders. The constitutional principle behind it comes from Boston Chamber of Commerce v. City of Boston (1910), where Justice Holmes framed the inquiry as what the owner has lost rather than what the taker has gained, and held that the several interest holders could not combine to claim the value of an unencumbered fee when the property was not held as an unencumbered whole. The practical consequence is that the sum of the apportioned parts cannot exceed the value of the encumbered whole.

Under the aggregate of interests approach, each interest is valued separately and the awards are added. Utah requires it. In Utah Department of Transportation v. FPA West Point, LLC (2012), the Utah Supreme Court held that its courts must value each property interest separately rather than value the whole and apportion.

The distinction is not academic. It determines whether the tenant's appraiser values a leasehold directly or values the fee and then argues over division, and it determines what testimony is admissible. For a federal acquisition the operative statement is in the Uniform Appraisal Standards for Federal Land Acquisitions at section 4.2.2.1: a property with multiple ownership interests “must be valued as a whole, embracing all of the rights, estates, and interests of all who may claim, and as if in one ownership,” because just compensation is for the property itself rather than for the several interests, so “the appraised value of the property represents the whole fee.” The same section states the prohibition that follows: “The value of the whole cannot be derived by adding together the separate values of various interests or components. As a result, summation or cumulative appraisals are improper under federal law.”

Section 4.2.2.2 extends the prohibition to physical components, and it is the sentence that disposes of the most common error in hangar work: one does not value the land as one factor and the improvements as another and add them, “because the value of the improved property may be greater than, equal to, or even less than the property in its unimproved state.” A hangar appraisal that reports a land value and a depreciated replacement cost and sums them has not valued the property.

One limit on the appraiser belongs here and the standards state it plainly: “Legal instruction is required for any departure from the unit rule, as the rule’s application is a matter of law that cannot be determined by an appraiser.”

Practitioners should confirm which rule governs in the forum before the appraisal is scoped, and should not assume the majority rule applies without checking, because the minority position is held by at least one state supreme court in unambiguous terms.

2.3 Where the Sponsor Is the Condemnor

A separate situation arises when the airport sponsor is itself the condemning party. There the sponsor already holds the fee. What is extinguished is the leasehold alone, and the valuation question is confined to the tenant's interest without any apportionment exercise. The analytical work is the same bonus value calculation; what changes is that there is no larger award to divide and no competing claimant.

3. Improvements the Tenant Built

This is where hangar takings diverge most sharply from ordinary commercial condemnation, and it is the question on which the largest sums turn.

A hangar on a public field is commonly built at the tenant's cost on the sponsor's land, under a lease providing that the improvements revert to the sponsor at expiration. If the lease has eight years to run and the building has a forty-year remaining physical life, what is the owner paid: eight years of use, or the value of a forty-year building?

The Supreme Court answered a version of this question in Almota Farmers Elevator & Warehouse Co. v. United States (1973). The tenant had built grain elevator improvements on land leased from a railroad. The Court held that just compensation is the fair market value of those improvements measured over their useful life, taking into account the reasonable expectancy that the lease would be renewed, rather than their salvage value at the end of the stated term. The reasoning is market-based rather than rights-based: renewal is not itself a compensable legal right, but a willing buyer would pay for the probability of it, and just compensation means the full monetary equivalent of what was taken.

Almota is the hangar owner's case. It is also incomplete on its own, because the Court decided United States v. Fuller the same day and reached a result that cuts the other way. Fuller holds that the government, as condemnor, may not be required to compensate an owner for elements of value that the government itself created, or that it might have destroyed through the exercise of governmental authority. The value at issue there derived from revocable federal grazing permits on adjoining land.

A condemning airport sponsor will cite Fuller, and the argument is not frivolous. The sponsor granted the lease. The sponsor decides whether to renew it. Federal obligations constrain what the sponsor may do with the land. If the renewal expectancy that makes the hangar valuable is itself a creature of the sponsor's discretion, Fuller suggests the sponsor need not pay for it.

The distinction that separates the two cases is whose discretion is at issue and whether the expectancy is a market fact. In Almota the lessor was a private railroad with commercial incentives, and the renewal expectancy was something a buyer would price. In Fuller the permits were revocable at the will of the same sovereign doing the condemning. Where the condemnor is a municipality or authority acting as a landowner rather than as a sovereign, and where the record shows a consistent practice of renewal that the market has observed and paid for, the Almota analysis is the stronger one. Where the sponsor can point to its own federal obligations as the reason renewal was never assured, Fuller gains force.

Some states have removed the ambiguity by statute. California directs that all improvements pertaining to the realty be taken into account in determining compensation, and specifies that this applies notwithstanding the tenant's right or obligation to remove the improvement at the expiration of the term. Where a comparable provision governs, the reversion clause does not defeat the improvement claim, and the analysis returns to ordinary valuation.

Two practical points follow. Read the reversion clause first, because it frames everything downstream. And develop the renewal record early: the sponsor's history with this tenant and with others, any written policy, the airport layout plan's treatment of the parcel, and what comparable transactions on the field show buyers actually paying for leases of similar remaining term. That record is the evidence Almota asks for, and it is far easier to assemble before litigation than during it.

4. Condemnation Clauses

A ground lease can extinguish the tenant's claim before any valuation question is reached, and the clause that does it is usually boilerplate nobody negotiated.

Many ground leases terminate automatically on a taking. Petty Motor held that where the lease so provides, the tenant, at least absent a contrary state rule, has no right that persists beyond the taking and can be entitled to nothing. Modern authority applies the rule with the same result. In Utah Department of Transportation v. Kmart Corp. (2018), the Utah Supreme Court held that a termination-on-condemnation clause extinguished all of the lessee's compensable property interests, and that Utah's aggregate of interests valuation rule did not revive an interest the lease had already ended. Utah's separate-valuation rule and the outcome that the tenant recovers nothing are not in tension: valuation methodology cannot create an interest that no longer exists.

A clause purporting to reserve the tenant a separate claim against the condemnor can be worse than silence, and the reason is procedural rather than substantive. The tenant does have a compensable interest. What the tenant does not have is a separate lawsuit. The claim runs against the single condemnation award, and apportionment is decided within the eminent domain proceeding itself. In Thee Aguila, Inc. v. Century Law Group, LLP (2019), a California appellate court held that apportionment disputes must be resolved in the original eminent domain action rather than in a later separate suit. The same decision held that a lease clause assigning all awards to the landlord did not reach the tenant's business goodwill, because goodwill exists separate and apart from the parties' interests in the property taken. A tenant who relies on a reservation clause and misses the condemnation action may find it has preserved a right it can no longer assert.

The lease is therefore the first exhibit in any competent analysis, and the two provisions to read before anything else are the reversion clause and the condemnation clause.

5. Partial Takings and the Remainder

Airport projects usually take part of a site. The compensable question in a partial taking is not only the value of what was taken but what the taking did to the value of what remains.

That principle is old and settled. Bauman v. Ross (1897) established that in a partial taking the incidental injury or benefit to the part not taken is to be considered. United States v. Grizzard (1911) stated the rule plainly: compensation includes not only the market value of the part appropriated but the damage to the remainder resulting from the taking. In Grizzard a flooding of seven and a half acres cut the farm's value in half, and the owner recovered the full difference, including the loss of road access.

The second element is severance damage, and it is where hangar cases are won and lost. A hangar that keeps its full square footage but loses the apron depth required to turn the aircraft it was built for has suffered a real loss that no measurement of the taken strip will capture. A hangar that keeps its apron but loses the taxiway connection has lost its reason to exist. In both cases the acquired area is small and the damage is not.

Benefits run the other way and are constrained. Bauman held that special and direct benefits capable of present estimate and reasonable computation may be set off, while general benefits shared by the public at large may not. The scope of the offset is where federal and state practice part, and getting it backwards produces an inadmissible federal appraisal. Under federal law the offset runs against the whole award. The Uniform Appraisal Standards for Federal Land Acquisitions states it at section 1.7.1.3: “Direct (special) benefits may offset the contributory value of the part taken and any damages to the remainder caused by the government’s project,” adding that appraisers “should note that the federal rule in this regard may be different from state rules.” United States v. River Rouge Improvement Co., 269 U.S. 411, 414-16 (1926) is the authority. It construed a statute directing that special and direct benefit to the remainder be taken into account “by way of reducing the amount of compensation or damages,” both, and the Supreme Court later described that holding as one in which “the compensation award for the part of the property taken by the Government was reduced by the value of the special and direct benefits to the remainder of the land” (United States v. Rands, 389 U.S. 121, 125-26 (1967)).

Many states limit the offset to the remainder, which is the version practitioners more often carry in their heads, and it has good statutory support. New Mexico, whose before-and-after provision was noted above, codifies the limit in the same section: elements that would enhance or benefit property not taken “shall only be considered for the purpose of offsetting any damages or diminution of value to the property not taken.” Confirm which rule governs before the appraisal is scoped. On a federally funded airport project it is the federal rule, and an airport improvement that raises the value of the remaining hangar parcel can reduce the payment for the ground actually acquired.

One further doctrine shapes the valuation date and the figure. United States v. Miller (1943) holds that fair market value is what a willing buyer would pay a willing seller, that the owner is entitled to the full and perfect equivalent in money, and that where land was probably within the scope of the project from the time the government committed to it, any increase in value attributable to the project's authorization is excluded. On an airport this is a live issue, because a published master plan or a funded capital program can move land values years before acquisition. Whether a particular parcel was within the original scope is a question for the judge rather than the jury, under United States v. Reynolds (1970).

6. Avigation Easements

An avigation or overflight easement transfers no land and often changes nothing an owner can see. It nonetheless takes a property right: the right to be free of flights at a given altitude, with the noise, vibration, and use restriction that follow.

United States v. Causby (1946) established that frequent low overflights can effect a compensable taking. The landowner owns at least as much of the space above the ground as can be occupied or used in connection with the land, and flights so low and so frequent as to be a direct and immediate interference with the enjoyment and use of the land fall into the same category as invasions of the surface.

Griggs v. Allegheny County (1962) answered the question that matters most for an airport sponsor: who pays. Liability rests with the airport proprietor, not with the federal government and not with the carriers. The county decided where the airport would be built, what runways it would need, their direction and length, and what land and navigation easements would be required. The glide path, the Court reasoned, is as necessary to the operation of the airport as a surface right of way is to the operation of a bridge. That allocation is the foundation of proprietor liability and remains the rule.

State courts continue to apply the doctrine. The Wisconsin Supreme Court in Brenner v. New Richmond Regional Airport Commission (2012) held that a compensable taking occurs where government action causes aircraft to fly over the land low enough and frequently enough to have a direct and immediate effect on the use and enjoyment of the property, and expressly rejected the argument that an owner must show the deprivation of practically all beneficial use. The court also observed that requiring owners to pursue individual airlines or pilots would effectively leave them without a remedy, which is the Griggs point restated. In McCarran International Airport v. Sisolak (2006), the Nevada Supreme Court held that county height-restriction ordinances effected a per se taking of usable airspace below 500 feet, and that a predecessor's perpetual avigation easement did not bar compensation.

The measure of compensation is the ordinary partial taking measure applied to an easement: the difference in market value at highest and best use with and without the encumbrance. There is no separate avigation doctrine of valuation, and practitioners should not treat one as though it existed. Sisolak applied the before-and-after difference and the jury awarded on that basis.

Owners routinely treat these instruments as paperwork and sign them for a nominal sum. On a parcel with development potential, or on a hangar whose highest and best use depends on a use the easement now forecloses, that is an expensive assumption.

7. What Is and Is Not Compensable

7.1 Business Goodwill and Lost Profits

The federal rule is that they are not compensable. Mitchell v. United States (1925) held that damages resulting from the loss or destruction of a business incidental to a taking of land are not recoverable as part of the compensation for the land, and that the settled policy of Congress has been to limit compensation to interests in the land taken. Land's special adaptability to a business use can inform the value of the land; the consequential loss of the business cannot be recovered on top of it.

Kimball Laundry Co. v. United States (1949) appears to contradict this and does not. There the Court held that going concern value, including trade routes and customer lists, is compensable where the taking is temporary. The distinction is the reconciliation: on a permanent fee taking the owner remains free to relocate the business, so the going concern value has not been taken; on a temporary occupancy the owner can neither relocate the patronage nor keep it, and then gets the plant back. Permanent takings therefore follow Mitchell and temporary occupancies follow Kimball Laundry.

Several states compensate goodwill by statute, and where they do the statute governs rather than the federal rule. California requires the claimant to prove that the loss is caused by the taking, that it could not reasonably be prevented by relocating or by steps a reasonably prudent person would take, that it is not covered by relocation payments, and that it is not duplicated in the compensation otherwise awarded. Wyoming applies a substantively identical four-element test, both deriving from the Uniform Eminent Domain Code. Minnesota compensates loss of going concern and shifts the burden: the owner shows the business was destroyed by the taking, and the condemning authority must then prove an exception, with notice of intent to claim required within sixty days of the first court hearing. Vermont includes the value of the business on the property within its statutory definition of damages.

For an FBO, a maintenance operation, or a charter business losing its base, this is frequently the largest number in the case, and whether it is recoverable at all is a question of which state the airport sits in. Where it is recoverable the proof burden is specific: Virginia requires three years of federal returns by statute, and Florida conditions the claim on how long the business has been established and on the owner holding the adjoining land.

7.2 Relocation Costs

Relocation is a different animal, and the difference is structural rather than a matter of degree. The Uniform Relocation Assistance and Real Property Acquisition Policies Act of 1970 and its implementing regulations at 49 CFR Part 24 create a statutory entitlement that sits outside the just compensation award. The Act says so directly: its provisions create no rights or liabilities affecting the validity of property acquisitions, and nothing in it is to be construed as creating, in any condemnation proceeding, an element of value or of damage not in existence before its enactment.

The Act applies to federally assisted programs, which includes land acquisition on airports receiving Airport Improvement Program funds. The FAA's own guidance for sponsors is Advisory Circular 150/5100-17, which directs compliance with the Act and with 49 CFR Part 24.

The practical significance is that relocation benefits are neither an offset against the award nor an argument for reducing it. They are paid in addition, they are administered separately, and they follow a national standard rather than state condemnation law.

7.3 Trade Fixtures

Whether equipment is compensable as part of the realty or excluded as personal property varies by state, and the classification frequently controls a large share of the claim.

The federal baseline is United States v. General Motors Corp. (1945), which held that a leaseholder is entitled to compensation for the destruction or depreciation of fixtures and permanent equipment, not as part of the value of the occupancy but in addition to it. Moving and preparation costs come in as elements affecting market rental value rather than as independent items of damage.

New York applies a four-part annexation test, set out most recently in Matter of City of New York (Kaiser Woodcraft Corp.) (2008): actual annexation to the realty, adaptability to the use or purpose of the realty, intent that the annexation be permanent, and whether the item would lose substantial value if removed. The Court of Appeals rejected the broader approach of treating all business equipment as fixtures, holding that use in connection with a business is not the test and that the common thread among compensable fixtures is devaluation of functional utility on removal.

California takes a cleaner route for this purpose, treating machinery or equipment as an improvement pertaining to the realty where it cannot be removed without substantial economic loss or substantial damage to the property, and applying that treatment regardless of the tenant's right or obligation to remove at term's end.

For a hangar the items in dispute are predictable: door systems, overhead cranes, paint booths, wash racks, fuel systems, ground power units, and aircraft jacks. The door system is rarely in doubt. The rest depend on the rule in the forum, and the two poles produce opposite answers on the same list. Under the New York annexation test a freestanding ground power unit or a set of aircraft jacks almost certainly fails, because neither is annexed and neither loses substantial value on removal. Under the California economic-loss test a paint booth or an in-ground fuel system very likely passes, because neither comes out without substantial economic loss. An appraiser who reports one schedule of compensable fixtures without naming the rule it was built under has reported a number that may be wrong by the value of the list.

A third rule governs where the project is federally funded, and it is administrative rather than judicial. Section 24.105(b) of title 49 measures a tenant-owned improvement at “the amount which the improvement contributes to the fair market value of the whole property, or its salvage value, whichever is greater,” and the FAA states the practical classification test in Order 5100.37B: “Generally an item is considered a fixture and real estate, if removal of the item would destroy the item or would substantially damage the real estate.” Section 12 sets out how that route works.

7.4 Improvements That Have Already Reverted

Improvements the owner paid for but which have already reverted to the sponsor under the lease belong to the sponsor, not to the owner, regardless of who wrote the check. This is a lease question rather than a valuation question, and it is answered by reading the document.

8. Highest and Best Use on an Obligated Airport

Just compensation is measured at the property's highest and best use, not at its current use. Olson v. United States (1934) states the standard and its limit together: value considers the highest and most profitable use for which the property is adaptable and needed or likely to be needed in the reasonably near future, but elements of value that depend on occurrences which, while within the realm of possibility, are not fairly shown to be reasonably probable, are excluded.

On a federally obligated airport that second clause does a great deal of work, because the constraint on legal permissibility is unusually tight and is documented in ways an opposing expert can produce.

The grant assurances a sponsor accepts in exchange for federal funds run with the airport. The current version dates from April 2025. Assurance 5 requires the sponsor to preserve the rights and powers necessary to perform its obligations and bars transfers of property interests without the Secretary's approval. Assurance 22 requires the airport to be available for public use on reasonable terms without unjust discrimination among aeronautical activities. Assurance 24 requires a fee and rental structure making the airport as self-sustaining as possible. Assurance 29 requires a current airport layout plan and provides that the sponsor will not make or allow any alteration that does not comply with the approved plan. The statutory basis is 49 U.S.C. 47107, which carries the same requirements, including the obligation to maintain a current layout plan subject to the Secretary's review and approval.

Three consequences follow for a highest and best use analysis.

First, the approved airport layout plan is evidence of legal permissibility. A use inconsistent with the plan is not merely unapproved; it is a use the sponsor has bound itself not to allow. An expert proposing a highest and best use that the plan does not accommodate has to explain why the sponsor could lawfully have permitted it.

Second, a change to non-aeronautical use requires federal involvement. The FAA's 2023 policy on processing land use changes provides that aeronautical and airport-purpose uses do not require FAA approval or consent, while changes to non-aeronautical or mixed use do, with release from federal obligations available only through the sale or conveyance process. A highest and best use premised on a commercial non-aviation redevelopment is premised on a federal approval that may or may not be forthcoming, and Olson requires that the probability be shown rather than assumed.

Third, and specific to hangars, the FAA's 2016 policy on the non-aeronautical use of airport hangars defines what counts as aeronautical use. Storage of active aircraft qualifies, as does final assembly of an aircraft under construction, non-commercial construction of amateur-built or kit-built aircraft, maintenance and refurbishment, and storage of aircraft handling equipment. Non-aeronautical storage is limited, and non-aeronautical use must be charged at fair market value under Assurances 22, 24, and 25. Any appraisal that reaches its value conclusion through a use the policy treats as non-aeronautical has to confront the policy directly.

The doctrinal bridge between the appraisal concept of legal permissibility and the constitutional measure is Fuller, discussed in Section 3. A condemnor is not required to pay for value it created or could have destroyed through the exercise of governmental authority. Where the value of a hangar parcel depends on a use the sponsor's federal obligations would not have permitted, the sponsor has a direct argument that the value was never the owner's to lose.

None of this is decided by the appraiser. It is decided by law, and the appraisal has to be built on the framework that actually applies. That is why the appraisal and the legal analysis need to start in the same week rather than in sequence.

9. Temporary Construction Easements

Temporary construction easements are separately compensable and are routinely treated as an afterthought in the offer package.

The measure is rental value rather than the before-and-after difference in fee value. Kimball Laundry held that for a temporary taking the proper measure is the rental that probably could have been obtained. General Motors refined it: the value is not what an empty building would fetch on a long-term lease, but what the market rental value would be on a lease from the long-term tenant to the temporary occupier. Moving-out and space-preparation costs enter as elements affecting that hypothetical rent rather than as independent damages, while fixtures and permanent equipment destroyed or depreciated are compensated in addition.

On an airport a construction easement across an apron or a taxilane can suspend the tenant's ability to use the hangar for its purpose, which makes the rental measure a substantial number rather than a nominal one. Where the temporary occupancy also destroys going concern value, Kimball Laundry permits recovery of that as well, which is the one context in which an aviation business operator can reach business value under federal law without a state statute.

10. Evidence to Assemble

The record below should exist before the appraisal is commissioned, not after the offer is rejected.

• The ground lease and every amendment, side letter, consent, and estoppel certificate.
• The airport layout plan and any published master plan showing the project, with the approval dates.
• The sponsor's minimum standards, rules and regulations, and current rate and charge schedule.
• The renewal record: this tenant's history, other tenants' history, and any written sponsor policy on renewal or extension.
• Rent and expense history for the building if it is leased or subleased, and the rent roll.
• The full description of what is being acquired, including permanent easements and temporary construction easements, each of which is separately compensable.
• Any correspondence in which the agency has characterized the project, its schedule, or its effect on access.
• Environmental reports, because remediation obligations under the lease can offset or exceed the award.
• Comparable ground lease transactions on the field and at competing fields, which are the evidence a renewal expectancy argument requires.

11. What Has Actually Been Decided

Section 12 records that no scholarship addresses hangar takings. That remains true. It does not follow that nothing has been decided, and the decided cases are more instructive than the doctrine, because a striking number of them end in zero.

11.1 The zeros are the lesson

Three aviation takings in eight years produced nothing for the claimant, and each failed on a different evidentiary ground.

Love Terminal is the one every hangar appraisal should be tested against. The Court of Federal Claims awarded $133.5 million for a six-gate terminal. The Federal Circuit reversed to nothing, and the sentence that did it reads: “Here there can be no regulatory taking because plaintiffs have not demonstrated, or even attempted to demonstrate, that their ability to use their property for commercial air passenger service under the pre-WARA regulatory regime had any value.” The court noted that the plaintiffs had lost roughly $13 million between acquiring the sublease and the statute’s enactment, faulted their experts for valuing the leasehold on the assumption that the governing regulation would be repealed, and added that the reasonable investment-backed expectation analysis “is designed ... not to protect private predictions of regulatory change.”

A leasehold improvement with a large replacement cost and no demonstrated income-producing value is worth nothing. That is the holding, and it applies directly to a hangar whose cost approach is strong and whose income evidence is thin.

Cully Corp. found a temporary taking and awarded nothing, because the reversionary interest taken had negligible market value and the claimant had never attempted to enforce its rights under the underlying lease. SilverWing vacated a jury award because the evidence did not establish the economic detriment claimed. In each, the doctrine favored the claimant and the record did not.

11.2 What the older cases settle

Hedberg-Freidheim is the closest reported decision to the fact pattern this paper addresses, and it has been available since 1948. A lessee held about four years of a 1910 airport lease, had built a hangar and a lean-to, and held a removal right that, unexercised, vested title in the lessor. The jury returned $22,000 and the Minnesota Supreme Court reversed, holding it error to instruct the jury to value the leasehold and the hangar separately and add them together. That is the unit rule applied to precisely this asset, seventy-eight years ago, and it disposes of the most common error in hangar condemnation work.

Spokane Airport Board supplies the other half of the practical answer, and it is the half tenants find hardest to accept. The airport did not condemn. It exercised a 180-day no-fault cancellation in the lease because the hangar was to be demolished. The tenant became a holdover, unlawful detainer lay, and no compensation claim survived. Most hangar tenancies end this way rather than by condemnation, and a cancellation clause is doing work no condemnation analysis reaches.

11.3 The live matter

One proceeding will move this area and it has not produced a final number.

The Philadelphia airport expansion case put a board of viewers award in excess of $139 million in front of a jury de novo, on a theory that the highest and best use of land across the road from an international airport is an air cargo facility integrated into the restricted airfield. If that theory is accepted at trial it is the strongest available authority for airport-integrated highest and best use.

12. The Federal Route a Hangar Tenant Actually Takes

Section 7.2 states that relocation benefits sit outside the award. That is right and it is incomplete, because it does not answer the question a displaced hangar tenant will ask first: does the federal relocation statute reach me, and what does it pay for the hangar I built?

On a federally funded airport project the answer is yes, conditionally, and the FAA addresses the question by name.

12.1 A hangar tenant can be a displaced person

FAA Order 5100.37B addresses the question by name at paragraph 1-25: “A FBO or other airport tenant may be determined to be a displaced person and entitled to relocation assistance if the airport must acquire the tenant’s real property interest to force possession of the land needed for project development.” It continues: “The lease terms with the airport owner will determine the occupancy rights of the tenant and if the airport must acquire the tenant leasehold or ‘break’ (extinguish) the current lease.” A person who takes occupancy after the acquisition, or who is not required to move permanently, is not a displaced person.

12.2 The regulation that reaches a tenant-built hangar

This is the provision the subject area needs most, and it answers the reversion question from a direction Section 3 does not reach. Title 49 of the Code of Federal Regulations, section 24.105, in the version effective 3 June 2024:

“(a) When acquiring any interest in real property, the agency shall offer to acquire at least an equal interest in all buildings, structures, or other improvements located upon the real property to be acquired, which it requires to be removed or which it determines will be adversely affected by the use to which such real property will be put. This shall include any improvement of a tenant-owner who has the right or obligation to remove the improvement at the expiration of the lease term.”

“(b) Just compensation for a tenant-owned improvement is the amount which the improvement contributes to the fair market value of the whole property, or its salvage value, whichever is greater.”

Subsection (c) conditions payment on the tenant assigning all right, title and interest in the improvement, the landowner disclaiming all interest in it, and no duplication of compensation otherwise authorized. Subsection (d) preserves the tenant’s right to reject the administrative payment and obtain payment under other applicable law.

Three consequences follow, and together they qualify Section 3 rather than contradict it.

The removal right or obligation does not defeat the claim. Subsection (a) reaches the tenant-built hangar expressly because of that right, not in spite of it. The reversion clause that governs the state condemnation analysis does not govern here.

There is a floor measure, and it is stated: contributory value or salvage value, whichever is greater. Contributory value can be low where the improvement does not add to the value of the whole. Salvage value is rarely zero for a steel hangar.

And the administrative offer is not a ceiling. Subsection (d) preserves the litigation route. A tenant who takes the administrative payment has not waived a better claim unless the assignment under subsection (c) has already run.

12.3 The two traps

The first is the funding source. FAA Order 5100.37B paragraph 1-23 provides that passenger facility charges are not federal funds, and “when a project or sponsor program is funded solely with PFC’s ... the Uniform Act does not apply.” Where the charges are used to acquire land for a current or planned federally funded project, the regulation does apply. A hangar tenant’s entire relocation entitlement can turn on how the project displacing them is paid for, and that is a question for the sponsor’s grant file rather than for the lease.

The second is the protective lease. Paragraph 3-7 authorises a sponsor to enter short-term leases of under six months specifically to “preclude new or additional tenants from entering occupancy on the property and possibly becoming eligible for relocation payments,” and paragraph 1-24 permits a long-term lease in lieu of displacement, cautioning that lease terms “should at a minimum span the eligibility time frame of 18 months to avoid potential dispute concerning a lessee’s relocation payment eligibility.” A tenant offered a short renewal shortly before a project is announced is being managed rather than accommodated.

12.4 The figures, and where to get them

Part 24 was comprehensively rewritten effective 3 June 2024, the first such rulemaking since 2005. Two current figures a displaced hangar business will ask about: reestablishment expenses for a non-residential displaced person are capped at $33,200 under section 24.304, which expressly excludes the purchase of capital assets including trade fixtures; and the fixed payment in lieu of actual moving and reestablishment expenses under section 24.305 is average annual net earnings, not less than $1,000 and not more than $53,200.

A currency caution belongs with those numbers. FAA Order 5100.37B dates from 2005 and the sponsor-facing advisory circular from 2017, and both predate the 2024 rewrite. The order still recites a $20,000 fixed-payment maximum against the current $53,200. Take the figures from the Code of Federal Regulations and the airport-specific application from the FAA documents.

13. Limitations

Three limits bear on how this paper should be used.

The law is mostly state law. The federal cases cited here bind federal condemnations and are persuasive elsewhere, but the measure of compensation, the treatment of severance damages and benefits, the compensability of goodwill and trade fixtures, and the choice between the undivided fee and aggregate of interests approaches are all matters on which states differ. Every proposition here should be checked against the law of the forum before it is relied on.

There is no scholarship on hangar takings specifically. A search of the law reviews, the appraisal literature, and the right of way literature returns nothing dedicated to the valuation of aircraft hangars in condemnation. The decided cases collected in Section 11 fill part of the gap, but they are a compilation rather than a literature, and the closest decision on the facts is from 1948. The authority assembled here is drawn from general condemnation law and from airport law separately, and the synthesis is the author's. Where those two bodies of law have not yet been put together by a court, the analysis above is an argument rather than a statement of settled rule.

Nothing here decides a legal question. Compensability rules, admissibility, procedure, and deadlines are matters for counsel, and several of them are governed by short statutory notice periods that a party can lose by inaction.

14. Conclusion

What a hangar owner is owed is determined by the lease before it is determined by the building.

The interest taken is usually a leasehold, and its value is the excess of market rent over contract rent for the remaining term rather than the cost of construction. Where the tenant built the improvements and the lease returns them at expiration, Almota allows the market's expectancy of renewal to be priced and Fuller supplies the sponsor's answer, and the record of actual renewal practice is what decides between them. A condemnation clause can end the inquiry before it starts. Most airport projects are partial takings, where the damage to the remainder rather than the value of the acquired strip is the compensable event, and where special benefits offset severance damage but not the payment for land. Avigation easements take a right even where nothing visible changes, and the proprietor pays. Goodwill, relocation, and trade fixtures each follow their own rule, and two of the three are statutory.

Highest and best use on a federally obligated airport is a narrower question than on ordinary commercial land, because the grant assurances, the approved layout plan, and federal hangar-use policy constrain what the property could lawfully have become, and Olson requires that a proposed use be reasonably probable rather than merely possible.

These disputes recur with enough regularity to be tracked. The hangar and airport eminent domain tracker follows matters across the country by state, posture, and category, with the source document for each, and the valuation case-law tracker follows the decisions. Both are more useful than any general discussion for seeing how a specific jurisdiction has actually handled the question in front of you.

Authorities and References

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California Code of Civil Procedure sections 1263.205, 1263.210, 1263.260, and 1263.510.

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49 U.S.C. section 47107.

This paper is research and general information for professionals evaluating aviation real estate. It is not appraisal, legal, or tax advice, and it does not create an engagement. Compensability rules vary by jurisdiction and are questions for counsel.