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16 lease and kept the facility for overflow in the event that its that integrated carriers such as FedEx might be interested in Louisville hub was either at capacity or not available. How- additional ramp space. ever, the Menlo Facility has not been used even once since UPS terminated operations and has been vacant for 4 years. Redevelopment or reuse of the UPS facility turned out to be a complex undertaking because of a number of factors: REUSE OPTIONS UPS still owns the facility and is not likely to sell or lease it to a direct competitor. Because UPS continues to own the building and to pay its The property is very large, specialized, expensive ground lease, the city of Dayton has had time to find a good (with respect to its ground lease rate), and has access reuse for the property and develop community support along to a primary runway. the way. Even before UPS officially closed the facility, the FAA would prefer that the property remain as an aero- airport hired MergeGlobal, Inc., to consider redevelopment nautical facility. options and prepare a costbenefit analysis (Figure 12). Negotiations on the property will involve multiple parties including the prospect, UPS, the airport, the city, and the FAA. Buy-in by the community is also important. RISK MANAGEMENT As part of the initiative to reuse the property, the city of Day- ton and MergeGlobal identified the major risks and key miti- gants. This approach allowed the city to head off problems before they happened. Table 5 summarizes potential risks and solutions observed in 2005. They are still relevant. TABLE 5 KEY RISKS AND POTENTIAL SOLUTIONS, DAYTON MENLO FACILITY Key Risks Potential Solutions 1 UPS does not Work closely with UPS to achieve a good cooperate with reuse that is also acceptable to them reuse initiatives 2 Recruiting and Clearly communicate and quantify the Day- signing on several ton cost advantage and growth potential nonexclusive ten- FIGURE 12 MergeGlobal alternatives for the Dayton UPS ants is complex Menlo Facility 2005. 3 Competitive offers Seek long-term competitive commitments from other area from new tenants to ensure initiative's The consultants recommended that DAY pursue a multi- airports longevity purpose approach by developing an international air freight 4 Airside facilities Launch a marketing effort to recruit more gateway, a less-than-truckload (LTL) cross-dock facility, will be air carriers and freight forwarders to the underutilized airport and distribution center facilities, preferably in coopera- Source: MergeGlobal, Inc. and city of Dayton, Ohio. tion with UPS. The rationale was that the facility was big enough to support both an international air freight gateway and warehouse operation. Pursuing multiple tenants reduced As DAY pursued various options to reuse the facility, air- financial risk and also allowed the city of Dayton to recruit port staff kept stakeholders informed of progress. Although different tenants simultaneously. The multipurpose approach the FAA would have preferred that the property remain in also addressed the possibility that UPS might want to keep use as an aeronautical facility, it was aware that the city of control of the facility or use part of it. An LTL cross-dock Dayton has not been able to secure a 100% aeronautical with warehouses was not as expensive as a conversion of the tenant. (Other DAY cargo facilities and hangars, privately building to a heavy maintenance facility, so a maintenance owned, were challenged to keep occupancy up during the option was not recommended. MergeGlobal also considered recent recession.) Although the city of Dayton annexed the reuse of the facility as another domestic air freight opera- airport, it is actually surrounded by the city of Vandalia. tion as a low probability; however, MergeGlobal thought At one time, many of the employees of the Menlo Facility