***21. APPENDIX A: RENT-FREE GUIDANCE***

# Subject: CRITERIA FOR RENT-FREE SPACE

From: AFZ-400

APP-500

ASU-100

To: All Regional Logistics AXX-50

All Regional Airports Division Managers, AXX-600

Under Airport Improvement Program (AIP) grant agreements, airports are
required to provide space or land at no cost for the FAA to construct at
its cost facilities for air traffic, navigation, weather reporting and
communication activities. For the most part, land has been provided
without cost. However, for many years the FAA has not consistently
exercised its rights to receive space in buildings at an airport on a
cost-free basis. The FAA has been paying rent when it should have gotten
such space on a cost-free basis. In a very few cases, rent has been paid
legitimately in return for improvements accomplished by airport sponsors
at the agency's request.

Therefore, beginning October 1, 1999, as leases begin to expire or new
requirements for a covered activity are identified, Regional Logistics
Divisions should advise airport sponsors that the FAA intends to assert
its rights for cost free space and land in accordance with the attached
guidance document, "Criteria for Rent-Free Space." The attachment
provides the following information: 1) Grant language stating airport
sponsor obligation; 2) Definition of interest in building; 3) List of
facilities that qualify to receive rent-free space; 4) Condition of
space from the airport sponsor; 5) Utilities and custodial services to
be provided; and 6) Explanation of expiring leases for covered
activities.

An airport sponsor becomes obligated to provide rent-free space upon the
execution of a grant agreement and this obligation lasts for 20 years.
If a subsequent grant is issued after the date of the first grant, then
the 20-year period begins again on the date of the latest grant
agreement.

The rent-free space provisions of a grant agreement do not constitute
the actual lease agreement covering the use of rent-free space by FAA.
In all cases where the grant agreement includes a provision to provide
rent-free space, the FAA enters into a lease agreement with the airport
sponsor to provide for the use of the space. The Real Estate Contracting
Officer is the authorized person for the FAA to negotiate lease
agreement(s) with the airport sponsor for rent-free space. Enforcement
of the cost free provision in the grant agreements is delegated to a FAA
Airports' employee located either in Airports' regional headquarters or
in an Airports District or Field Office (ADO/AFO). Therefore,
coordination between Logistics and Airports Divisions is essential.

Airports Division Managers should publicize this initiative through
articles in newsletters, presentations at State and regional airport
conferences, and during meetings with individual sponsors.

As mentioned above, the FAA's Real Estate Contracting Officers are
authorized to begin use of the attached guidance to renew leases that
expire on or after September 30, 1999, or enter into new agreements as
required. A Real Estate Contracting Officer who is uncertain of an
airport's grant status should contact the FAA Airports' Office that has
primary oversight of the airport. A listing of Airports offices is
attached. In the event that an airport sponsor and a Regional Real
Estate Contracting Officer are unable to resolve issues involving the
application of the grant assurance for cost-free space, the appropriate
Airports' employee should be consulted.

Dorothy Sirk

Manager, ASU-100

Concur: \_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_
\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_

Chris Reese, Manager Elis Ohnstad, Manager

AFZ-400 APP-500

Attachment -- "Criteria for Rent-Free Space Guidance"

## [CRITERIA FOR RENT-FREE SPACE]{.mark}

####### A. Grant Language

> *Section 47107(a)(12) of Title 49 United State Code provides that "the
> airport owner or operator will provide, [without cost]{.underline} to
> the Government, [property interests of the sponsor in land or water
> areas or buildings]{.underline} that the Secretary decides are
> desirable for, or that will be used for, constructing at Government
> expense, facilities for carrying out activities related to air traffic
> control or navigation." This wording replaced earlier wording that
> previously included weather-reporting and communications activities
> related to air traffic control. Since the Act which recodified these
> requirements as Title 49 provided that no substantive changes were
> made, the inclusion of "weather-reporting and communications
> activities" is included in the reference to "air traffic control or
> navigation" in the new wording.*

####### B. Interest in Buildings

Definition:

"The FAA will receive without cost the right to occupy space in an
[existing]{.underline} building or portion of a building owned or
controlled by the sponsor."

####### C. Covered Activity

Covered activity is the following list of facilities that qualify for
rent-free space as defined by the grant language.

*ATCT - Airport Traffic Control Tower*

*CERAP - Combined Center Radar Approach Control*

*CWOS - Contract Weather Observation Station*

*FSS - Flight Service Station*

*RAPCON - Radar Approach Control*

> *TRACON - Terminal Approach Radio Control*

### "Inquire about other facilities"

###### **D. Condition of Space** {#d.-condition-of-space .unnumbered}

The FAA reserves the right to occupy space rent-free for the above
referenced facilities (see C. Covered Activity). This includes any space
(i.e. storage, parking for official FAA vehicles essential to the
Covered Activity, etc.) requirements that directly support the operation
of above referenced facilities.

Any improvements or alterations added to the space for the specific use
by the FAA will be at the expense of the FAA. The cost of such
improvements if provided by the sponsor, may be paid lump sum or
amortized over the term of the lease. These costs are a subject of
negotiations between the FAA and the sponsor taking into consideration
availability of funds to the FAA for facility improvements.

The FAA reserves the right to inspect the space sufficiently in advance
of the required occupancy date, and to determine the space is acceptable
prior to lease execution.

The FAA may accept the space "As-Is". In this document, the FAA defines
"As-Is" as the existing condition of the space, including any items in
the space, at time of acceptance.

Other requirements to be provided by the sponsor without cost to the
FAA:

-   Any support buildings, if available, that will directly support a
    covered activity

```{=html}
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-   Maintenance\
    [Exterior Maintenance]{.underline}

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-   Exterior of the building(s) and its subsystems.

[Interior Maintenance]{.underline}

-   Maintain mechanical systems that supply or control space, in good
    repair and condition so that they operate in accordance with
    manufacturer's specifications. Examples of such systems are HVAC,
    safety systems, lighting systems, and access systems.

**E. Services**

Utilities/custodial services -- The requirement of rights in existing
buildings does not require the sponsor to provide utilities or services
at no cost. The cost of utilities and services provided by the sponsor
will be subject to negotiation. The sponsor should install a separate
meter when utilities are to be paid for by FAA. Proration of utilities
is generally not acceptable.

####### F. Expiring Leases For Covered Activities

A lease for space that accommodates a covered activity will become
rent-free under these guidelines and when current lease expires and is
renewed, unless another legally binding agreement governs.