Transcript ppoint - Association of California Airports

GA Airports Are
Economic Engines
Association of California Airports
2010 Conference
Presented By:
Derek Kantar, Aviation Planner
CalTrans HQ, Division of Aeronautics
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GA Airports Are Economic Engines
Why This Topic Now?
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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
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GA Airports Are Economic Engines
Think Like Entrepreneurs
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You have what the community needs, show it!
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You are your airports best champion
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Diversify your partnerships
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Prepare your airport to receive customers
and investors
Have a plan for success!
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GA Airports Are Economic Engines
Ready Your Advocates
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Provide your advocates with tools
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Prepare your civic leaders
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Prepare your staff
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Have your ‘elevator commercials’ prepared
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Your Economic Development Director should know you
well!
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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
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GA Airports Are Economic Engines
Don’t Fly Solo While Marketing and Branding
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NBAA’s No Plane-No-Gain campaign
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AOPA’s
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Alliance for Aviation web-tools
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Government Advocacy web-tools
ACRP Report 28:
Marketing Guidebook for Small Airports
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GA Airports Are Economic Engines
Quick Links
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ACRP: www.trb.org/ACRP/Public/ACRP.aspx
Alliance for Aviation Across America
www.aviationacrossamerica.org/Myths_Realities.aspx
AOPA: www.aopa.org/advocacy/
Barker Hangar: www.barkerhangar.com
Buchanan Field
www.ca-contracostacounty.civicplus.com/static/depart/airport/index.htm
Caltrans Aeronautics: www.dot.ca.gov/hq/planning/aeronaut/
NBAA: www.nbaa.org/advocacy/npng/
Paso Robles Airport:
www.prcity.com/government/departments/publicworks/airport/events.asp
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GA Airports Are Economic Engines
Caltrans Aeronautics Contacts
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Gary Cathey, Division Chief
Terry Barrie, Chief, Office of Aviation Planning
Derek Kantar, Aviation Planner
Main Phone: 916-654-4959
www.dot.ca.gov/hq/planning/aeronaut/
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GA Airports Are Economic Engines
Part I
How To Be An Entrepreneurial Airport Manager
Presentations by:
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Seth Merewitz, Partner
Best Best and Krieger, LLP
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Seth Wurzel, Consultant
Capitol Public Finance Group, LLC
• Mary Hansen, Airport Manager
Yuba County Airport
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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
[email protected]
(916) 496-0588
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Pre-Flight
1. Preparation
a. Create a Mindset for Economic Success
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Airport Managers as Entrepreneurs.
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Facilitators, Not Regulators.
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Pre-Flight
1. Preparation
b. Prepare for Development and Investment
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Jurisdiction has stated clear Goals and Policies
for Airport Economic Development.
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There is alignment between the Airport,
Planning Department, Economic Development
Department, etc.
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The airport is part of the community planning
process and not an afterthought.
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Shared desire to Monetize your Assets!
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Pre-Flight
2. Inspection
a. What Are Your Assets?
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What are the value of those assets?
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Existing assets (developed and undeveloped)
have a monetary value.
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Infrastructure (utilities, roads, etc.).
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Pre-Flight
3.
Review Conditions
a.
Political Challenges
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Political hurdles; It’s somebody else’s
responsibility.
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NIMBY.
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Airport BANANA’s (build almost nothing
anywhere near anything (aviation).
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Pre-Flight
3. Review Conditions
b. Physical Challenges
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Infrastructure.
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Toxics.
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Wildlife Issues.
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Noise, Safety and Crime.
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Pre-Flight
3.
Review Conditions
c. Regulatory Challenges/Due Diligence
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FAA easements.
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Encroachments.
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Title Issues.
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Grant Obligations and Covenants.
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Pre-Takeoff
1. Airport Staff is Prepared
a. Don’t Fly Solo
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Have a team assembled and ready to evaluate
opportunities.
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Airport staff knows the local decision making
process.
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Pre-Takeoff
2. Airport Staff has Built Coalitions and Prepared Others
a. Build a Vision
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Have an Economic Development Action Plan.
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Development of Marketing and Branding.
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Know your Internal and External Champions.
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Understand your local and regional markets
and market conditions.
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Understand marketing “outside the fence”.
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Coalition Building.
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In-Flight
Keys to Success
Attracting Economic Development and
Capital to your Airport
Seth Wurzel
Capitol Public Finance Group, LLC
September 16, 2010
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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
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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
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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
investment.
the
timing
and
level
of
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Airpo rt
(or Parent Agency)
Developer
Example Deal Structure:
- Recognizes the value provided
by each party
- Initial Incentive Stage provides
the needed certainty for each
party to protect from downside.
- 2nd Stage provides return of
upfront capital for Infrastructure
Investment.
Pr ovides
Expertise
Capital
Provides
Land & Facilities
Capital and/or Financing
Mechanism for Improvements
( Land Secur ed Financing)
Air port Venture
Generates revenue Land Sales or G round Leases
1 st St age:
I nc ent ive Ret urn s
Developer
Airport
Receives
% Discount off fee value for land
Receives
% of fee simple value in cash
(Provides incentive and competitive
advantage in market)
(Represents up fr ont payment for
raw land value to ensure minimum
return)
Remainder
of Land payments go to:
-Fund infrastructure
-Return invested capital (to developer
or agency (with preferred return)
-D istribution of residual profits
2 nd S tag e:
Ret urn o n Inf ra st ruc tu re
- 3rd Stage provides upside
incentive and aligns goals
between investor and public
entity.
1st Priority to 2nd Capital Provider
(De velope r or Parent Agency)
Return of shortfall capit al cont rib uted pl us
preferred %.
2nd Pr ior ity to 1s t Capital Pro vider
(Develope r or Parent Agency)
Return of shortfall capital contributed plus
preferred %.
3rd S tag e:
Sh arin g of Re sidu al P rofits
Developer
% of Resi dual Profits
Air port
% of Res idu al Profit s
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Sharing of Residua l Profits e nsure s A lignme nt of I nte re sts
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??
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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
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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.
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Pre-Landing
1. Airport and Jurisdiction are Ready to Receive a
Proposal
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Resources are identified to assist with asset sales,
lease, transfer agreements, etc.
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Airport and other public stakeholders have an
understanding of goals, levels of service, risk
management, etc.
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A marketing, branding, and related public relations
program is ready.
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Pre-Landing
2. How Airports Help Themselves
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Understand competitive advantage of your
property.
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They learn what investors want and need and adapt
to minimize investor risk.
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They’ve tested the development waters by
engaging investors and champions prior to
opportunities (local brokers, chamber of
commerce).
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Pre-Landing
2. How Airports Help Themselves
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Regulatory hurdles are understood; Plan for
mitigating them already considered.
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Pre-entitle the property (planning reviews,
CEQA/NEPA, utilities, ROW, easements, etc.).
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Funding sources and funding strategy (grants, local
match, AIP grants, private capital).
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RFP/RFQ.
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Post-Flight
1. Key Elements for Success
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Perceived as fair deal for public and private
benefits.
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Transparency in process.
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Managing public and private risks.
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Political and stakeholder support.
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Post-Flight
2. Reminders for Public Officials
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It must be a real partnership, with shared burdens
and shared rewards for both the public and private
participants.
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There must be real incentives for the private sector
or they will not participate.
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The public sector must use its resources effectively
and judiciously, focusing on projects where there
can be success.
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Post-Flight
2. More Reminders for Public officials
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Keep it simple for the private sector by minimizing
the bureaucratic procedures.
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Remember that "Land is King"--it provides the
public with the opportunity to control the projects.
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Public-private partnerships are a necessary and
important part of the process.
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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.
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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.
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QUESTIONS?
Seth Merewitz, Partner
Seth Wurzel
Best Best & Krieger LLP
Capitol Public Finance Group
[email protected]
[email protected]
(916) 496-0588
(916) 641-2734
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