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78 Guidebook for Developing and Leasing Airport Property Collin County Regional Airport (TKI) Airport Type: General Aviation Tenant: EDS/Hewlett Packard Tenant Type: Corporate Hangar Complex Project Type: New Facility Facility Location: Airside SOURCE: Collin County Regional Airport. SOURCE: RW Armstrong, 2009. Project Overview Collin County Regional Airport is owned by the City of McKinney and is located in the north- east corner of the Dallas-Fort Worth Metroplex. It is the only airport capable of handling business class aircraft in the county and was looking to attract EDS/Hewlett Packard's (EDS/HP) corporate flight department. EDS's corporate headquarters are located in Plano, TX, approximately 15 miles from the Airport. Collin County Regional Airport encouraged the McKinney Economic Develop- ment Corporation (MEDC) to assist in attracting the flight department by providing financial incentives. Through public records, the Airport and MEDC were able to estimate a minimum tax impact that EDS/HP could bring to the Airport (based aircraft are taxed on approximately 50% of their value). They used this estimate to determine the financial incentives that could be offered to EDS/HP to assist in the pursuit. An agreement was achieved through a complex arrangement between the Collin County Regional Airport, the City of McKinney, EDS/HP, MEDC, and Collin County Regional Investments (CCRI). The Airport leases the land to CCRI, who developed the hangar complex. The facility is in turn subleased to EDS/HP. MEDC provides a rent subsidy directly to EDS/HP, and the City of McKinney pays EDS/HP for the land leased to accommodate a required storm water detention facility. Tax abatements and other incentives (detailed in the fol- lowing sections) were also involved in reaching a successful agreement. Key Stakeholders The following is a list of key stakeholders responsible for the development and ultimate exe- cution of the lease arrangement: Airport Sponsor: The City of McKinney was interested in attracting EDS/HP's corporate flight department and was able to offer some incentives to appeal to the company. The City also pays to accommodate a required storm water detention facility.

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Case Studies 79 Collin County Regional Investments: CCRI, a private developer, agreed to construct the facil- ity and sublease it to EDS/HP. They also purchased two 15,000 gallon, above ground fuel storage tanks for EDS/HP's exclusive use. The FBO manages EDS/HP's fuel system for $0.08/gallon. McKinney Economic Development Corporation: MEDC was instrumental in bringing EDS/ Hewlett Packard to TKI. MEDC pays EDS/HP's facility rent payments and purchased a fuel truck for EDS/HP's exclusive use. Texas Department of Transportation (TxDOT): TxDOT matched an amount provided by the City to pay for the taxi lane constructed adjacent to the EDS/HP hangar complex. Key Lease Elements The end product of this corporate hangar project is a comprehensive agreement between the City of McKinney, MEDC, CCRI, and EDS/HP. It is a complex deal, but it brought these entities together to benefit the Airport, the City, Collin County, McKinney Independent School District, and Collin County Community College District (the four taxing entities). Agreements: The lease consists of agreements between the City and CCRI and between CCRI and EDS/HP. City leases the land to CCRI. Lease term is 40 years with a fixed rate for 10 years. Rate is adjusted on the 10th anniversary, and adjusted every 5 years, thereafter. A portion of applicable ad valorem taxes are abated for 10 years: $31 million appraised value (2005) = 25% abatement, Amounts exceeding $31 million = 40% abatement, and Required amount decreases by $1 million to $22 million in 2015 (10th anniversary). CCRI subleases the land and the facility to EDS/HP for 10 years. Lease default would result in loss of future tax abatements and force repayment of abated taxes for preceding years. Financial Considerations for the Tenant The City of McKinney and MEDC were able to offer EDS/HP incentives based on a minimum tax impact. EDS/HP receives a rent subsidy of $34,650 per month directly from MEDC. The City pays $7,040 per year for the land leased to accommodate CCRI's storm water detention center, and constructed a taxi lane to allow EDS/HP aircraft to access the hangar facility from the Air- port's Air Operations Area. Finally, MEDC provided EDS/HP up to $100,000 to purchase a fuel truck for the exclusive use of fueling EDS/HP aircraft. Airport Benefits and Revenue Because of the creative incentive package the City of McKinney and MEDC were able to offer EDS/HP, the Airport succeeded in bringing the EDS/HP corporate flight department to TKI. The Airport collects $0.22 per square foot for the ground lease from EDS/HP. Additionally, the Air- port collects a fuel-flowage fee of $0.09 per gallon on approximately 350,000 gallons per year. The Airport's FBO receives $0.08 per gallon of fuel delivered to EDS/HP as a fuel system use fee for storage of EDS/HP fuel in their fuel farm. The City also receives the benefit of a tax base increase from basing business aircraft on airport property. EDS/HP is expected to generate approximately $681,500 per year in Business Personal Property and Real Estate tax. The local community reaps a large share of the benefits resulting from this proj- ect. There is little public expense or risk involved in the project, and part of the taxes received from EDS/HP help fund educational entities. The McKinney Independent School District receives $1.517/$100 and the Collin County Community College District receives $.086/$100.