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(3) suit against a Sponsor to prove that the Sponsor has taken compensable property rights without payment of just compensation. (2) There is no obligation for the Sponsor to reimburse the property owner for legal, ap- praisal, or other expenses when condemna- tion action is consummated in favor of the Sponsor, unless otherwise required by State law. (3) Federal participation in settlement and liti- gation expenses will be handled on a case -by - case basis depending on the Sponsor's com- pliance with its commitments to accomplish airport development under an ADAP/FAAP project and documentation that the Sponsor has followed proper action in the process- ing of the case. 44. FUNCTIONAL REPLACEMENT. Gen- erally the amounts to be paid for lands or improve- ments in public use or ownership should be justi- fied in the same manner and to the same extent as though the acquisition involved a private use or ownership. An exception to the foregoing would be when the Sponsor requests and can, pursuant to State law, incur costs for the functional replace- ment of lands or improvements in public use or ownership. In such instances, Federal funds may participate in justifiable costs incurred pursuant to State law, provided it is demonstrated and FAA concurs that functional replacement is necessary to obtain the land or its use and preserve and protect the public interest. a. Description. Functional replacement means the replacement of real property acquired as a re- sult of an ADAP/FAAP project with lands or fa- cilities, or both, which will provide functionally equivalent utility. b. Types of Public Property. Property meeting the following standards may be considered for func- tional replacement: (1) Lands and facilities owned by any State, county, city, municipality or other govern- mental entity which are devoted exclusively to public use. (2) Lands and facilities in quasi -public or pri- vate ownership where: (a) The lands or facilities or their services are enjoyed by the general public without limitation or restriction. Limitations on services to specified areas or jurisdictions may be an ex- ception to this condition so long as the area served and the service rendered contributes to the general benefit of the overall community. (b) The owner is a nonprofit entity that renders public services more or less essential to the general public safety or well being, and is organized, con- trolled or chartered to render such service. (c) Replacement of such lands or facil- ities will not result in unnecessary duplication of or competition with ex- isting publicly owned facilities which provide essentially the same service. c. Federal Participation. Federal participation under this policy requires that: (1) Applicable State law permit the Sponsor to incur functional replacement costs, (2) The FAA concurs with the Sponsor and owner determination that functional replace- ment is necessary to preserve and protect the public interest, and that FAA approval has been given prior to incurrence of costs involved. The functional replacement actually takes place and costs of replacement are actually incurred by the public agency or other owner whose property is being replaced. d. Cost Participation. Functional replacement cost is considered to be that cost which is necessary to replace the land and/or facility being acquired with its functional equivalent. Costs of betterments and enlargements, except for those necessary to re- place the utility and those required by law, local codes, or standards for similar facilities, will not be eligible for Federal participation. (1) Federal funds may be used to participate in replacement costs on the following basis: (a) The functional replacement cost of the buildings, structures or other real property improvements required to be replaced. (b) The market value of the land to be acquired when the owning party has