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60 Guidebook for Developing and Leasing Airport Property may be zero or even less. Conversely, in the case of a private development that includes construc- tion of speculative lease space, without a specific tenant, the project may require a higher return on investment as deemed appropriate for the reward of that speculative risk. Speculative devel- opment may be a goal of the airport sponsor, and, in those cases, the return on investment may well be in excess of 10%. In all cases, though, the airport sponsor will need to judge the appro- priateness of the return on investment expected from the developer, and base its endorsements and approvals on its own evaluation of the proposed balance between risk and reward. 5.2.2 Financial Effects of Lease Components The terms of the agreement or agreements that govern an airport development project can have a profound effect on project financing. Agreement terms speak directly to risk, and can affect the rate of return required by the developer and the developer's lender to take on a given risk. The terms of the agreement(s) define the flexibility of the developer to satisfy all of the proj- ect requirements, including the expected return on investment and profit, even if the project has setbacks. Because setbacks include vacancy of the tenant or subtenant, built-to-suit facilities may represent more risk than perhaps an aircraft storage facility that falls within a general grouping of facilities with similar attributes. This is especially true in the case of a third-party developer that borrows a portion of the project funds based on the security of its tenant, but also applies to a tenant that borrows money to build its own facility, or to the airport sponsor that will need to service its own debt. The developer and the lender must be comfortable that the project terms are generous enough to allow for recovery if a vacancy does occur. They must also be convinced that the terms include ample enough time necessary for the replacement of a tenant or subtenant to still meet the objectives of the project pro forma. Lease Term The lease term must be long enough to allow the developer/tenant to fully amortize their ini- tial investment in the proposed improvements. If the lease term is too short, interested tenants may not see the financial benefit from entering into an airport development project. Flexibility in the length of the lease term can be achieved through extension provisions written into the lease. These can be 5- to 10-year extension clauses that effectively extend the lease term to a length that is mutually beneficial for both the airport sponsor and the tenant. This is a particularly beneficial tool when an airport sponsor is limited by statute (state or local) from issuing lease terms for a period long enough to allow a tenant to amortize its facility investment. Maintenance Requirements Appropriate maintenance, and more importantly, who is responsible for that appropriate maintenance, is an important term of the agreement(s). Maintenance is important to ensure that the full useful life is achieved, that tenant health and safety is maintained, and for the protection of the investment through the term of the agreement(s) and beyond. Because maintenance is costly, a description of who is responsible for maintenance, in great specificity, both inside and outside of the building, is important to include within the language of the lease. Allowable Use An understanding of the facility uses that the airport sponsor will allow is an important agree- ment term and definitely speaks to project financing. As discussed above, the developer's risk is affected by the market for replacing a tenant or subtenant. So the more specialized the facility, or the more restrictive the allowable uses, the smaller the market for tenants and the greater the risk to the developer/lender. Greater risk may require a longer lease term, higher expectations for return on investment, and can affect the amount of money the developer can afford to pay the airport sponsor.