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51 being frozen during cold months are critical. It is important PLANNING FOR FLEXIBLE USE to check and maintain fire suppression systems so that they are operable. From an airport planning perspective, vacancies within ter- minals and other aeronautical properties mean that future airport facilities could better incorporate the risk of capac- VACATED PROPERTIES REQUIRE ADDITIONAL ity reduction or expansion and new technology into facility SOURCES OF OPERATING AND CAPITAL FUNDS design. For example, many of the iconic passenger termi- nals designed at JFK International Airport were demolished Typically for airport-owned aeronautical facilities, capital because rehabilitation was either too expensive or difficult to budgets that replace obsolete structures such as passen- address larger passenger volumes, bigger aircraft, new secu- ger terminals include a budget for demolition of the older rity requirements, and infrastructure needed to install infor- structures. mation technology requirements. Flexible design includes a few important principles that incorporate the possibilities for Facilities that unexpectedly revert to the airport sponsor expansion, appropriate contraction, or reuse: require unplanned expenditures for maintenance, renova- tion, marketing, and/or demolition. Potential sources for · Consider aviation trends when planning for a new operating and capital budgets include facility or setting design standards for development. · Design spaces for resizing. · General operating funds, · Design systems for both expansion and subdivision. · Security deposits, · Encourage common-use solutions in terminals versus · Letters of credit designating the airport sponsor as customized propriety space. beneficiary, · Engage stakeholders and tenants in the design process. · Temporary rentals, · Evaluate the impacts of resizing on airport cost centers. · Airport Improvement Program (AIP), · Economic Development Administration grants, · Amortization through a capital project. RISK ANALYSIS FOR VACANCIES Vacant property ownership is often unplanned and A reasonable response to turbulent economic conditions is unbudgeted, and the lowest cost option can be demolition. implementation of a structured, consistent, and continuous Unless airports can find ways to finance adaptive reuse, risk management process that is applied to airport property many vacant properties will continue to be either demol- management. The process would include-- ished or used for a succession of interim uses. · Development of an exit strategy for each leased prop- erty on the airport. MARKETING A VACANT BUILDING · Anticipation of the risk of vacancy during lease nego- tiations and addition some kind of financial protection Airports that have found replacement tenants reported that in the event of lease rejection through bankruptcy. facilities took a long time to lease. Tenants often came from · Identification, assessment, and prioritization of tenants other locations on the airport or in the region, but sometimes and properties at risk annually. they arrived unexpectedly from their own internal search for · For the highest risks, formulation of a plan to raise property. Some airports have business development manag- awareness of the risk, develop mitigation plans, and ers that engage in extensive trade show presence and Internet incorporate into the budget cycle. promotions. Once there are active prospects, these manag- ers may also serve as liaison with the prospect to facilitate Figure 42 describes a sample vacancy-risk graph that inspections and remodel estimates. In most of the case stud- visually portrays the likelihood and impact to airport rev- ies where replacement tenants were found, the airport also enues, operations, and jobs of various events that could lead renovated the property to meet current building codes and to vacancies. For example, a corporate hangar vacancy (F) mitigate any safety or environmental hazards. is likely but would have a relative low impact overall. On the other hand, bankruptcy of a signatory carrier might be less Keeping the FAA Airport District Office informed likely but would have a large impact. These are general esti- throughout the marketing process is an effective way to mates only. In each case, unique factors such as the tenant's demonstrate best efforts toward attracting an aeronautical financial strength, the size of the space, rent, remaining lease replacement tenant or mixed-use solution before seeking a term, and suitability for reuse will affect both the likelihood conversion to nonaviation use. and the impact of vacancy.