GA Airports Are Economic Engines

Size: px

Start display at page:

Download "GA Airports Are Economic Engines"

Clemence Jenkins
6 years ago
Views:

1 GA Airports Are Economic Engines Association of California Airports 2010 Conference Presented By: Derek Kantar, Aviation Planner CalTrans HQ, Division of Aeronautics 1

2 GA Airports Are Economic Engines Why This Topic Now? Last year s conference we spoke of it, this year we ll explore it over three sessions The State wants airports to be successful and to make money Airports generate revenue locally and nationally Hayward Executive Airport Airports are job centers 2

3 GA Airports Are Economic Engines Think Like Entrepreneurs You have what the community needs, show it! You are your airports best champion Diversify your partnerships Prepare your airport to receive customers and investors Have a plan for success! 3

4 GA Airports Are Economic Engines Ready Your Advocates Provide your advocates with tools Prepare your civic leaders Prepare your staff Have your elevator commercials prepared Your Economic Development Director should know you well! 4

more than aviation businesses - Diversify Santa Monica Airport Airports can be

5 GA Airports Are Economic Engines Planes Fly to Markets, Not Airports Airports have assets enticing to business and investment interests Airports are well suited to more than aviation businesses - Diversify Santa Monica Airport Airports can be event venues Marketing and branding are necessary business tools Paso Robles Airport 5

AOPA s Government Advocacy web-tools Alliance for Aviation

6 GA Airports Are Economic Engines Don t Fly Solo While Marketing and Branding NBAA s No Plane-No-Gain campaign AOPA s Government Advocacy web-tools Alliance for Aviation web-tools ACRP Report 28: Marketing Guidebook for Small Airports 6

7 GA Airports Are Economic Engines Quick Links ACRP: Alliance for Aviation Across America AOPA: Barker Hangar: Buchanan Field Caltrans Aeronautics: NBAA: Paso Robles Airport: 7

8 GA Airports Are Economic Engines Caltrans Aeronautics Contacts Gary Cathey, Division Chief Terry Barrie, Chief, Office of Aviation Planning Derek Kantar, Aviation Planner Main Phone:

9 GA Airports Are Economic Engines Part I How To Be An Entrepreneurial Airport Manager Presentations by: Seth Merewitz, Partner Best Best and Krieger, LLP Seth Wurzel, Consultant Capitol Public Finance Group, LLC Mary Hansen, Airport Manager Yuba County Airport 9

10 How to Be An Entrepreneurial Airport Manager Association of California Airports Conference September 16, 2010 Lake Tahoe, CA Presented By: Seth Merewitz, Partner Best Best & Krieger LLP (916)

11 Pre-Flight 1. Preparation a. Create a Mindset for Economic Success Airport Managers as Entrepreneurs. Facilitators, Not Regulators. 11

12 1. Preparation Pre-Flight b. Prepare for Development and Investment Jurisdiction has stated clear Goals and Policies for Airport Economic Development. There is alignment between the Airport, Planning Department, Economic Development Department, etc. The airport is part of the community planning process and not an afterthought. Shared desire to Monetize your Assets! 12

13 Pre-Flight 2. Inspection a. What Are Your Assets? What are the value of those assets? Existing assets (developed and undeveloped) have a monetary value. Infrastructure (utilities, roads, etc.). 13

14 3. Review Conditions a. Political Challenges Political hurdles; It s somebody else s responsibility. NIMBY. Pre-Flight Airport BANANA s (build almost nothing anywhere near anything (aviation). 14

15 Pre-Flight 3. Review Conditions b. Physical Challenges Infrastructure. Toxics. Wildlife Issues. Noise, Safety and Crime. 15

16 Pre-Flight 3. Review Conditions c. Regulatory Challenges/Due Diligence FAA easements. Encroachments. Title Issues. Grant Obligations and Covenants. 16

17 1. Airport Staff is Prepared a. Don t Fly Solo Pre-Takeoff Have a team assembled and ready to evaluate opportunities. Airport staff knows the local decision making process. 17

18 Pre-Takeoff 2. Airport Staff has Built Coalitions and Prepared Others a. Build a Vision Have an Economic Development Action Plan. Development of Marketing and Branding. Know your Internal and External Champions. Understand your local and regional markets and market conditions. Understand marketing outside the fence. Coalition Building. 18

19 In-Flight Keys to Success Attracting Economic Development and Capital to your Airport Seth Wurzel Capitol Public Finance Group, LLC September 16,

20 Where does the money come from? Airport s Goals: Facilitate vertical development by maximizing value and reinvest back into the Airport Development takes Upfront Money Key Concept #1: Value is in the land Ground Lease and/or Land Sale Revenue Cash comes from selling interests in land to investors who do vertical development Page 20

21 How do you Maximize Value? The Airport s Role Key Concept #2: Reducing Risk = Creating Value Reducing Risk means: Upfront Planning IE design standards, clear development approval process, overlay zoning, Environmental Review, etc. Infrastructure Feasibility Studies What are the hurdles? Find solutions! Obtaining FAA Review and Approvals Developing a Financing Plan Set up Land Secured Financing Policies to enable public financing of infrastructure Page 21

22 Alignment of Interests Working Toward a Common Goal Key Concept #3: Align the Interests between the Public Entity and Private Partner The Term Sheet: The financial structure between the Airport and the Developer. Should incentivize both the developer and the Airport to work toward a common goal Should recognize the timing and level of investment. Page 22

23 Example Deal Structure: - Recognizes the value provided by each party Pr ovides Expertise Capital Developer Airport (or Parent Agency) Provides Land & Facilities Capital and/or Financing Mechanism for Improvements (Land Secured Financing) Airport Venture Generates revenue Land Sales or Ground Leases - Initial Incentive Stage provides the needed certainty for each party to protect from downside. 1st Stage: I ncentive Return s Developer Receives % Discount off fee value for land (Provides incentive and competitive advantage in market) Airport Receives % of fee simple value in cash (Represents up front payment for raw land value to ensure minimum return) - 2 nd Stage provides return of upfront capital for Infrastructure Investment. - 3 rd Stage provides upside incentive and aligns goals between investor and public entity. 2nd Stage: Return o n Inf ra st ruc tu re Remainder of Land payments go to: -Fund infrastructure -Return invested capital (to developer or agency (with preferred return) -Distribution of residual profits 1st Priority to 2nd Capital Provider (Developer or Parent Agency) Return of shortfall capital contributed plus preferred %. 2nd Priority to 1st Capital Provider (Developer or Parent Agency) Return of shortfall capital contributed plus preferred %. 3rd Stage: Sharing of Residual Profits Developer Airport % of Residual Profits % of Residual Profits Sharing of Residual Profits ensures Alignment of Interests Page 23

24 Clearly Communicate Priorities Key Concept #4: Identify and Share Priorities Clearly identify priorities of the Airport Why is the Airport interested in new development? Fiscal Stability Operations (sustainable revenue for Airfield O&M ) Job Creation Property Tax Revenue Stream Others?? Page 24

25 What is Each Party Working For? What are the benefits of Airport development? For the Airport / Jurisdiction New Jobs Property tax revenue Economic Diversity Others? For the Developer (Primarily Profit Driven) Land development opportunity Vertical development opportunity Land development opportunity creates a platform for creating vertical assets Page 25

26 Financing Hurdles Key Concept #5: Infrastructure and/or Services Financing How are public Infrastructure and Services Financed? Land secured financing Special Taxes and/or Assessments Tax and/or assessment create revenue stream for to fund a service or pay debt With sufficient development in place, Developer or Airport investment is repaid with issuance of municipal bonds backed by taxes. Develop a Financing Plan now to help navigate funding the Infrastructure and Services in the future. Page 26

27 Pre-Landing 1. Airport and Jurisdiction are Ready to Receive a Proposal Resources are identified to assist with asset sales, lease, transfer agreements, etc. Airport and other public stakeholders have an understanding of goals, levels of service, risk management, etc. A marketing, branding, and related public relations program is ready. 27

28 Pre-Landing 2. How Airports Help Themselves Understand competitive advantage of your property. They learn what investors want and need and adapt to minimize investor risk. They ve tested the development waters by engaging investors and champions prior to opportunities (local brokers, chamber of commerce). 28

29 Pre-Landing 2. How Airports Help Themselves Regulatory hurdles are understood; Plan for mitigating them already considered. Pre-entitle the property (planning reviews, CEQA/NEPA, utilities, ROW, easements, etc.). Funding sources and funding strategy (grants, local match, AIP grants, private capital). RFP/RFQ. 29

30 1. Key Elements for Success Post-Flight Perceived as fair deal for public and private benefits. Transparency in process. Managing public and private risks. Political and stakeholder support. 30

31 Post-Flight 2. Reminders for Public Officials It must be a real partnership, with shared burdens and shared rewards for both the public and private participants. There must be real incentives for the private sector or they will not participate. The public sector must use its resources effectively and judiciously, focusing on projects where there can be success. 31

32 Post-Flight 2. More Reminders for Public officials Keep it simple for the private sector by minimizing the bureaucratic procedures. Remember that "Land is King"--it provides the public with the opportunity to control the projects. Public-private partnerships are a necessary and important part of the process. 32

33 Post-Flight 3. Keys to Successful Partnerships a. Statutory and Political Environment. b. Public Sector s Organized Structure. c. Detailed Business Plan (Contract). d. Stakeholder Support. e. Pick Your Partner Carefully. 33

34 Post-Flight 4. Ten Steps for Safer Soaring a. Maintain Personal Proficiency. b. Use Checklists Effectively. c. Properly Prepare for Each Flight. d. Conduct Positive Control Checks Frequently. e. Know the Economics; Shared Risks and Responsibilities. f. Always Plan for Emergencies. g. Maintain Situational Awareness. h. Use Effective Collision Avoidance Techniques. i. Eliminate Obstructions. j. Make Safety the Primary Goal. 34

35 QUESTIONS? Seth Merewitz, Partner Best Best & Krieger LLP (916) Seth Wurzel Capitol Public Finance Group (916)

Business Plan Diversity & Inclusion Forum

Business Plan Diversity & Inclusion Forum 2018 Business Plan 2017 Diversity & Inclusion Forum Action Items and #1 Organizational Value Align operations with member needs 1. Re-evaluate the return on investment computation to quantify and articulate