Hangar Loan Program Provides Funding For Aircraft Storage

by Luke Bourassa
South Region Development Engineer
MnDOT Office of Aeronautics
Published In Midwest Flyer Magazine Online October/November 2021 Issue

Funding for airport projects in Minnesota comes from a variety of different sources. One of the more unique programs is Minnesota’s “Hangar Loan Program.” Rather than force hangar projects to compete for grant dollars with other infrastructure needs, this program provides loans to publicly owned airports to construct revenue-generating hangar facilities and provides protection for the fleet of general aviation aircraft registered in Minnesota. The program was established by the Minnesota State Legislature in 1957 and has provided funding for the construction of over 1,000 aircraft hangars throughout the state for more than 60 years. The program is administered by the Minnesota Department of Transportation (MnDOT).

The Hangar Loan Program has a total capitalization of $4.4 million. The funds are loaned out to airports that demonstrate a need for hangar facilities, can be used to construct new hangar facilities, and are available for up to 80 percent of the actual construction costs. The community requesting the loan is responsible for the remaining 20 percent of construction costs. The loan agreement obligates the airport to own and maintain the hangar for a minimum of 20 years and requires the hangar to be used for storing aircraft. Airports must reimburse the State by making monthly payments over a period of 20 years or less. Currently there is no interest charged to participating airports, and there are 10 completed hangar projects making monthly payments. As airports repay their hangar loans, the funds go back into the program and can be loaned out again to other airport sponsors. 

Communities interested in using this program need to add the hangar and associated site prep work to their Capital Improvement Plan (an airport’s CIP is a list of potential projects that an airport is pursuing in the next several years). Once the project is on an airport’s CIP, the airport sponsor needs to submit a request letter to MnDOT with some basic details of the project, including a drawing of the hangar site shown on an approved airport layout plan and an estimated cost of the project. Once MnDOT receives the request with all the details needed, the project is added to the Hangar Loan Program wait list. Currently there are six projects waiting for loans. Once a project reaches the front of the line, the sponsor is notified by MnDOT. 

The process of receiving the hangar loan is similar to a State Airports Funds grant. The airport sponsor is responsible for the hangar design, construction advertisement, bid letting, construction supervision and administration. MnDOT staff will perform a final inspection once the hangar is complete, before dispersing the loan and moving the project into the repayment phase. 

The MnDOT Hangar Loan Program is one of the tools that MnDOT uses to help airports meet the needs of flyers in Minnesota. The purchasing power of the program has been diminished as the cost of construction has risen in recent years, so the wait time for loans has increased. Even with the increased wait time, this program is still a popular option for airports looking to provide additional hangar space for aviators in their communities. 

To learn more about the Hangar Loan Program, contact Luke Bourassa at luke.bourassa@state.mn.us or 651-508-0448.

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