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OCR for page 90
90 Guidebook for Developing and Leasing Airport Property Pittsburgh International Airport (PIT) Airport Type: Medium-Hub Tenant: Knepper Press Type of Business: Industrial Facility Location: Landside SOURCE: RW Armstrong, 2009. SOURCE: RW Armstrong, 2009. Project Overview Pittsburgh International Airport (PIT) is located in southwestern Pennsylvania and repre- sents 8,840 acres of land in area. Although 3,000 acres were identified for nonaeronautical development, only 1,200 acres were easily developable because of their rolling topography. The airport prioritized various sites on airport property as to desirability for development. One of the top sites became the Clinton Commerce Park due to its proximity to a major inter- state highway and desirability from a commercial real estate perspective and potential for warehousing and distribution. The project is in Phase I of five anticipated phases. At the writ- ing of this report, three buildings totaling more than 700,000 square feet are either completed or are under construction. Knepper Press, a printing company, is one of the tenants in the commerce park. The company was looking to expand and chose PIT because of the location, and because the site was shovel ready. Knepper Press built a 100,000-square-foot facility. They have utilized the initial facility and are leasing an additional 60,000 square feet in a neighboring building. Community support was essential to successfully funding this project. An assortment of fund- ing sources was utilized, including the State of Pennsylvania, Allegheny County, Findlay Town- ship, the school board, and a federal earmark. The equity value of the land itself was used as a match for the state grant. The project and the larger commercial park are expected to be a sig- nificant source of economic development for the state. Key Stakeholders The following is a list of key stakeholders responsible for the development of the Clinton Com- merce Park project:

OCR for page 90
Case Studies 91 Airport Sponsor: The Allegheny Airport Authority prioritized sites on airport property, one of which became Clinton Commerce Park. The Authority was also able to secure a grant using the value of the airport land for $3 million as debt coverage. Allegheny County: Collaborated with Findlay Township and West Allegheny School District to create a Tax Incremental Financing (TIF) District. Consequently, the Airport was able to issue debt of $5.5 million for project funding. Knepper Press: An anchor tenant of the Commerce Park. State of Pennsylvania: The state awarded the Airport a $7 million grant to help fund project and provided Knepper Press with tax breaks for new employees as an incentive. Federal Government: The federal government earmarked $100,000 to fund the Clinton Com- merce Park Project. Key Lease Elements Leases at Clinton Commerce Park are strictly land leases. Each company owns its respective facility. So as not to compete with local developers, the Airport does not construct buildings. Because companies cover the cost of constructing their facilities, the land leases allow for com- panies to recoup the costs of their investments. The lease term is for 29 years with two 10-year options to renew. Throughout the term, the Airport is responsible for funding improvements to the commerce park, and the companies are responsible for maintenance and insurance. The lease agreements contain clauses ensuring that the companies' operations will not interfere with aviation operations, and will preserve the environment. Considerations for the Tenant Because Knepper Press pays ground rent only, and owns its facility, it is able to lease part of the facility to third parties. Knepper Press has leased enough land to expand the facility up to 175,000 square feet, enabling it to increase operations. Knepper Press also receives a tax break from the state for new employees, and was not charged ground rent during the con- struction period. Knepper Press was looking to relocate from its previous facility, and Clinton Commerce Park was an attractive location. The Airport is not far from its previous location, offering a promi- nent and recognizable facility, convenient for out-of-town clients due to its proximity to the passenger terminal. Benefits to the Airport The Airport collects revenue on the land leases within Clinton Commerce Park. There is currently $48 million in private investment, and as the project matures, revenue is expected to grow significantly. Because the companies located in the commerce park have a large number of fixed assets, it is anticipated that the businesses will remain at the Airport long term and have a positive impact on Pennsylvania's economy by bringing more business to the area. Fifteen new jobs have been created, and 110 jobs were retained at Knepper Press. Clinton Commerce Park is expected to afford additional employment opportunities at the Airport.