Court Opinion

ID: 9614295
Source: CourtListenerOpinion
Date Created: 2023-08-22 04:24:04.610008+00
Date Added: 2024-06-11T13:02:39.019236
License: Public Domain

RABINOWITZ, Justice,
dissenting.
The federal-state lease which gave rise to this appeal is a unique circumstance which does not fit neatly within our eminent domain jurisprudence. I dissent because I believe that prior case law does not compel us to conclude that TNC must be compensated for the value of the improvements on the airport property, and that policy dictates otherwise.
The majority opinion cites numerous cases in which a government lessee was required to compensate a private landowner-lessor for improvements made during the course of the lease. In these cases, the government entity builds nonremovable improvements and then condemns the leased property. In awarding compensation, the court, either from express lease terms or based upon the circumstances, determines that the parties intended that the improvements were part of the lease price.1 In such circumstances, compensation is appropriate for two reasons. First, the government entity could have condemned the property and then made the improvements. However, having chosen not to do so, the government should be required to fulfill its end of the bargain.2 Second, in setting the lease price for the unimproved property, the landowner has set the price with the expectation that it -will receive the benefit of the improvements at the termination of the lease term. Thus, by denying compensation for such improvements the court would be deny*855ing part of the “rent” which the landowner is due.
Neither of these factors are present in this case. First, the State was unable to condemn the property because it was federal land and was subject to selection under Alaska Native Claims Settlement Act.3 Thus, if the State wished to go ahead with the construction of an airport, a lease was the only property arrangement which was available. Second, I conclude that in view of the totality of the circumstances, the construction of improvements on the property as required by the lease was not part of the “rental price” for use of the property. The terms of the lease, including its twenty-year duration and the renewal provision, were prescribed by federal regulations.4 Additionally, the nominal $10 yearly rental fee, rather than being in exchange for the improvements at the end of the lease period, was more likely the result of federal policies favoring the development of airfields in outlying locations. The federal government financed most of the initial cost of building the airport through an FAA grant. It would have been a self-defeating proposition to with one hand give an FAA grant to build the airport, while with the other to take back a portion of this money as rental payments for the land on which the airport was built.
Nor do I believe that the federal government perceived these improvements as “fruits of the lease.” The lease is silent as to the ownership of the improvements at the termination of the lease. The majority reasons, however, that the transfer of the improvements at the end of the twenty-year term is an implicit provision of the lease. The majority also argues that several of the lease terms demonstrate that the federal government had an “interest in the airport which is not limited to the twenty-year lease term.”5 I disagree. These terms permitted the federal government to use the airport, and to take it over in the case of a military emergency. I concede that the federal government had an interest in the existence of an airport at Teller, but not necessarily a federal airport. These interests are consistent with continued operation of the airport by the State, and the renewal provision giving the State a preference suggests that this was the arrangement which the federal and state governments foresaw. Thus, I conclude that the construction of the improvements was not a part of a bargained-for exchange, and that the federal government had no expectation of taking over the airport at the termination of the lease.6 Because the federal government had no such expectation under the lease, neither could TNC.
In short, the federal and state governments build airports in remote locations to benefit nearby populations. The public has financed this effort at Teller once in the form of federal taxes which went toward the FAA grant. Now, the majority would have the public pay for these improvements a second time as a result of the State’s condemnation. TNC is being compensated as a result of federal and state laws and policies which led to the development of an airfield near Teller and has given up virtually nothing.7 I therefore conclude that TNC need not be compensated for the value of the improvements.
AFFIRMED.

.- See United States v. Certain Space in Rand McNally Bldg., 295 F.2d 381, 383 (7th Cir.1961).

. See United States v. Certain Parcels of Land, 90 F.Supp. 27, 34 (W.D.Va.1949).

. 43 U.S.C. § 1610(a)(1) (1988).

. 43 C.F.R. § 2911 (1973).

. Majority Opinion at 853.

. In other words, I would distinguish the prior lease cases cited by the majority because they were commercial exchanges rather than intergovernmental land transfers.

. The State’s valuation of the unimproved property is approximately $40,000, while the value of the improvements is approximately $800,000.