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AIRPORT IMPROVEMENT HANDBOOK - (Chapter 3 Page 37)

321. - 349. RESERVED.

Section 4. DONATIONS, CONTRIBUTIONS, AND LOANS

350. GENERAL. The value of land, labor, materials, and equipment donated or loaned to a sponsor may be credited toward the sponsor's share provided the donation is necessary to accomplish the project (except land as noted in Paragraph 351 [donated land], below) and is one for which the sponsor otherwise would have paid. Proposed donations on which grant payments will be requested must be identified and a valuation agreed upon between the regional field office and the sponsor. This agreed upon valuation shall be set forth in the grant application. The project file must contain information used in arriving at this agreement.

Donated land implies a gift to the airport owner by another party for use by the airport for aeronautical purposes. The value of donated land is based on an appraisal by a competent appraiser and is the fair market value of the land at the time of conveyance to the sponsor.

Property currently owned and originally purchased by the sponsor cannot be treated as donated land. By definition, the sponsor cannot donate purchased land to himself or to the FAA. This transaction, involving previously purchased land, is considered as a project credit. Handling the valuation of the credit varies by type of airport sponsor and is covered in detail in Paragraph 722.

Source http://www.faa.gov/airports/resources/publications/orders/media/aip_5100_38/aip_5100_38c_part1.pdf