The city sells it's hangers and
also sells lots for building new hangers. If the airport has debt on the
hangers, they could sell the hangers to the tenants and pay the debt.

You're on the right track.
From what I've seen of Iowa City, it's growing in directions that include all
that lovely open land around the airport, and some developers are casting
covetous eyes upon the space for industrial and other uses. Trashing the
airport would give them a playground.

But I posted recently about the clever airport manager I talk to on occasion,
and another clever thing he's done, along with lots of ongoing work pacifying
homeowners who are too near the airport, is work slowly and steadily to get a
plot of land developed for new street and hangar space on an undeveloped side
of the airport.

The waiting list has been 8 years long for hangar space, and you can bet the
folks who'll get the new hangars are those who'll be valuable allies in the
preservation of the airport.

Plus, the new buildings will include non-hangar spaces too, plumbed and wired
(all with T-1 Net connections) office space for insurance agents, tax
preparers...ANY business in a fast-growing metro area that will generate tax
revenue and jobs. Just like a strip mall, it'll be seen as economic development
and do a lot to quiet critics of the "unused" space and its aviation subsidy.
There ARE solutions...