How does an airport hangar ground lease work?
With a ground lease you own the hangar building and lease the land under it from the airport for a fixed term at a set ground rent. At the end of the term the lease is renewed, renegotiated, or the building reverts to the airport, so term length and renewal language matter as much as the price of the hangar. Tailwind owners at Colorado Air and Space Port hold a 40-year ground lease at a low fixed rate.
What is a ground lease?
A ground lease separates the land from the building. The airport, usually a city or county, leases you a parcel for a set number of years. You build or buy the hangar on it and own that improvement. You pay ground rent, keep the building insured and maintained, and use it under the airport's rules. When you sell, you assign the lease to the buyer.
Why do airports lease land instead of selling it?
Most public airports have accepted federal grants, and the grant assurances that come with them generally prohibit selling airport land. Ground leases let the airport keep the land in aviation use permanently while private owners fund the buildings. It is the standard arrangement at general aviation airports nationwide, including Colorado Air and Space Port.
What happens when the lease ends?
One of three things. The lease is renewed on similar terms; it is renegotiated at a new rent; or the improvements revert to the airport. AOPA has documented cases of owners losing hangars they paid six figures for when a lease expired without renewal rights. This is not a reason to avoid ground leases, which are the only way to own a hangar at most airports, but it is the reason to read the term and renewal language before anything else.
A long initial term protects you twice: you are unlikely to hit the end while you own the hangar, and a buyer twenty years in still sees enough term left to pay a fair price.
What should I check before signing?
- Term remaining. Forty years from your start date is very different from fifteen years left on someone else's lease.
- Renewal and reversion. Is there an option to renew? On what terms? What exactly reverts, and when?
- Ground rent and escalators. Fixed, indexed, or reappraised, and how often.
- Assignment rights. Can you sell freely with consent, and can consent be unreasonably withheld?
- Sublease and use rules. Aviation use only? Can you store a vehicle or run a maintenance shop?
- Insurance and maintenance obligations. What coverage and upkeep the airport requires.
- Taxes and fees. Possessory-interest tax, utility connections, and any airport fees beyond ground rent.
Have an attorney who has read airport leases before look at yours. It is a short document with long consequences.
What does it cost to hold a ground lease?
| Cost | What it is |
|---|---|
| Ground rent | Paid to the airport for the land, on the schedule in the lease |
| Possessory-interest tax | Colorado property tax on a privately owned improvement on public land, assessed by the county |
| Insurance | Property coverage on the building, plus liability the lease requires |
| Utilities and upkeep | Heat, power, water, door service, and general maintenance |
How does Tailwind's ground lease at KCFO work?
Tailwind hangars on Violet Hill at Colorado Air and Space Port sit on a 40-year ground lease at a low fixed rate through Adams County. Ownership is whole-hangar: one owner, one hangar. Owners pay no landing fees and no ramp fees. Tailwind will share the lease documents when you start a hangar brief, and encourages you to read them with your attorney before you commit. Tailwind builds only at KCFO.
Frequently asked questions
Can I sell a hangar that sits on a ground lease?
Yes. You assign the lease to the buyer with the airport's consent, and the buyer takes over the remaining term. The more term left, the more the hangar is worth.
Is a ground-leased hangar the same as owning a hangar condo?
No. A hangar condominium gives you a deeded unit and a share of common ground; a ground lease gives you the building and a leasehold in the land. Most public airports only offer the leasehold form.
What is possessory-interest tax?
Colorado taxes the private use of tax-exempt public property. If you own a hangar on airport land, the county assesses the building as a possessory interest and bills property tax on it. Budget for it as an annual cost.
What happens at the end of Tailwind's 40-year term?
The lease terms govern, and Tailwind will walk you through the renewal language in the actual documents rather than summarizing it here. Ask for the lease early and read the end-of-term section first.