National Academies Press: OpenBook

Guidebook for Developing and Leasing Airport Property (2011)

Chapter: Chapter 1 - Introduction

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Page 5
Suggested Citation:"Chapter 1 - Introduction." National Academies of Sciences, Engineering, and Medicine. 2011. Guidebook for Developing and Leasing Airport Property. Washington, DC: The National Academies Press. doi: 10.17226/14468.
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Page 6
Suggested Citation:"Chapter 1 - Introduction." National Academies of Sciences, Engineering, and Medicine. 2011. Guidebook for Developing and Leasing Airport Property. Washington, DC: The National Academies Press. doi: 10.17226/14468.
×
Page 6
Page 7
Suggested Citation:"Chapter 1 - Introduction." National Academies of Sciences, Engineering, and Medicine. 2011. Guidebook for Developing and Leasing Airport Property. Washington, DC: The National Academies Press. doi: 10.17226/14468.
×
Page 7
Page 8
Suggested Citation:"Chapter 1 - Introduction." National Academies of Sciences, Engineering, and Medicine. 2011. Guidebook for Developing and Leasing Airport Property. Washington, DC: The National Academies Press. doi: 10.17226/14468.
×
Page 8
Page 9
Suggested Citation:"Chapter 1 - Introduction." National Academies of Sciences, Engineering, and Medicine. 2011. Guidebook for Developing and Leasing Airport Property. Washington, DC: The National Academies Press. doi: 10.17226/14468.
×
Page 9

Below is the uncorrected machine-read text of this chapter, intended to provide our own search engines and external engines with highly rich, chapter-representative searchable text of each book. Because it is UNCORRECTED material, please consider the following text as a useful but insufficient proxy for the authoritative book pages.

Airports are considered to be some of the most important tools in world commerce today, and, as such, are significant economic engines in most any community. However, airports are unique in their federal and local obligations, as they are highly regulated facilities that require large amounts of land. The land airports encompass can be seen as a valuable resource to be used to ben- efit a diverse group of stakeholders. This Guidebook for Developing and Leasing Airport Property will present best practices for airport land and facility leasing, so that the airport sponsors can consider, adapt, and embrace general themes to fit their unique requirements and operating characteristics. The reality of today’s competitive environment for on-airport development projects, coupled with the need for developers to move through the public-sector process quickly, begs for examples of creativity and hybrid solutions that blend innovative approaches with tried-and-true ways of leasing and developing airport property. Third-party development, innovative financing, and tax- exempt debt structure provided by private-sector entities, along with the myriad of local and state incentives are just a few of the variables that make a black-and-white airport leasing policy inade- quate and outdated. This Guidebook acknowledges the central issues of this topic: airport management and potential tenants need to understand the key aspects of commercial property development and business agreements, and a public-sector entity may respond differently to risk than a private-sector entity. Public-sector organizations that own/operate airports may also have different motivations to develop and could enter the negotiation from very different perspectives. Negotiating and conclud- ing an airport business agreement requires special expertise and an understanding of the diversity represented by businesses and organizations that typically pursue on-airport development. This Guidebook will examine some of the more prevalent themes within contemporary agreements and development projects. While a wealth of information and strategies for developing airports exist, it is important to note that airports should identify relevant standards upon which to base their own best practices. Each airport will have its own set of the development requirements that are molded by the resources of the airport and the community and are tempered by the airport’s tolerance for risk. Further, a development opportunity that might be appropriate for one airport might be completely unaccept- able to another because of tenant mix, community goals, environmental sensitivities, or for one of many other variables. 1.1 Purpose of This Guidebook The objective of this Guidebook is to provide documented research for airport management and other relevant stakeholders to use in formulating airport leasing and development policies to support public and private investments for both aeronautical and nonaeronautical uses. The 5 C H A P T E R 1 Introduction

Guidebook also provides the airport sponsor with a checklist of items to assist in collecting and refining those terms necessary to analyze the project and form the lease agreement appropriately. In addition, a PowerPoint template that allows the airport sponsor to provide the pertinent infor- mation to any relevant stakeholders is included as part of this Report and is available on the Report web page at http://www.trb.org/Main/Blurbs/64688.aspx. The study team also utilizes 10 case study projects that present a cross section of U.S. airports to provide examples of best management prac- tices for leasing and development agreements. Broad explanations of best practices are provided in the text, while specific case study details are located within adjacent text boxes. Detailed depictions of each of the 10 case study projects are listed in Appendix A. 1.2 How to Use This Guidebook The chapters of this Guidebook provide information tailored specifically for airport sponsors to assist in the development of airport property, while simultaneously addressing the typical concerns and interests of stakeholders and potential tenants. With this information, the reader has a tem- plate for completing the development process in an efficient manner, which will lead to cost effective development, leasing, negotiating, and regulatory adaptation. The study team also undertook a detailed analysis of substantive issues that pertain to both public- and private-sector participants in an airport development project. These issues were high- lighted and illustrated by real-life examples revealed in the study. Throughout the Guidebook the reader will find text boxes with examples of unique approaches and best practices found in the indi- vidual case studies. These examples are used to illustrate and highlight the specific lease and devel- opment approaches from each case study and how these can be applied to the specific lease and development topics being addressed in the main Guidebook text. The Guidebook itself is organized into the following chapters that are designed to act as building blocks for the reader, taking them from understanding the core components of a lease document, through the planning and financ- ing phase of an airport development project: • Chapter 1: Introduction—An introduction to the guidebook that explains its purpose, how the Guidebook should be utilized, and the methodology enlisted. • Chapter 2: Anatomy of a Lease—An overview of the different types of leases typically prevalent on an airport with a detailed listing of the essential and optional elements that should be included in each. • Chapter 3: Airport Owner/Sponsor Role—An in-depth look at airport development principles and considerations. Chapter 3 covers planning and regulatory issues to be considered by the airport sponsor and provides insight into stakeholder dynamics and sociopolitical issues that affect airport development and leasing. • Chapter 4: Project Development Considerations—Identifies the substantive issues surround- ing airport development and leasing. This chapter also illustrates nuances that affect the final agreements between airports and tenants of the study projects. • Chapter 5: Finance Overview—Addresses certain financial perspectives and tools that the air- port sponsor may utilize when considering an airport development project. Discusses the inter- relationships between financing, valuation, and lease elements, and how these relationships affect each party entering into the lease agreement. • Chapter 6: Summary of Best Practices—Identifies best practices and checklists for airport spon- sors to consider, and approaches that can be adapted to suit individual airport needs when developing airport property. • Appendices—Include case study project summaries, a list of aviation acronyms prevalent within the aviation industry, a glossary of relevant terms, and a bibliography. 6 Guidebook for Developing and Leasing Airport Property

Along with the hard copy of this Guidebook, an online version is available at http://www. trb.org/Main/Blurbs/64688.aspx. The online version includes the Guidebook in electronic format. The paper version is best suited for those interested in more detail, providing point-by-point expla- nations of relevant issues. The online version will serve individuals who regularly seek quick access to certain sections of the Guidebook. In addition to the Guidebook, two PowerPoint presentations (a landside, nonaeronautical in nature, and an airside, aeronautical in nature, version) can also be found online at http://www.trb.org/Main/Blurbs/64688.aspx for further reference and use by the airport sponsor when communicating the guidelines and best practices. 1.3 Research Approach The research conducted for this Guidebook is based on a two-pronged approach that consists of first examining current literature relating to commercial leasing practices and guidelines (both air- port and standard commercial leases), and second, conducting 10 case studies of airports using best practice airport lease and development policy to be used as benchmarks (either in whole or in part) by airport sponsors. The following five steps summarize the foundation of the Guidebook’s study methodology: Step 1 Development of a research plan that includes a compilation of existing research, trade and news publications, and other appropriate materials that describe creative solutions in response to a competitive development environment. A bibliography was developed using several means of information retrieval. Step 2 Preparation of a glossary of terms relevant to leasing and developing airport property. The glossary is tailored to the airport sponsor. Its goal is to provide a tool for effective commu- nication and consistency in preparing documents, and it includes terminologies for real estate development and banking industries as well. Step 3 Identification of 10 case study projects/airport sponsors to be used as representative case studies that highlight best management practices. Step 4 Identification of affected stakeholders, including those within the airport sponsor organi- zations, tenants and users of the airport, potential investors and developers of airport facil- ities, as well as local parties that may have a vested interest in airport development. Step 5 Compilation of a detailed description, analysis, categorization, and summary of substan- tive issues that affect public and private leasing and development transactions. The literature review was conducted in order to identify existing materials related to leasing, sale, and development of airport property. A variety of sources are cited, including aviation, financial, real estate, and appraisal industry publications, airport websites, and relevant federal regulations. The glossary of terms and bibliography developed from the literature review can be found in the Appendices C and D of this Guidebook, respectively. To compile the list of 10 benchmark case studies, project nominations were first sought from state aviation officials and FAA airport district office managers. Criteria for nomination included consideration of whether a project stimulated economic activity, created revenue for the airport sponsor, employed a diversity of innovative alliances or stakeholders, utilized creative financing, and/or optimized public and private investment. The second step in culling the list of case studies required contacting officials and representa- tives from each of the nominated airports. A questionnaire was mailed to the top executives of 30 of the nominated airports and e-mailed to the top executives of the other 51 nominated airports (a list of the nominated airports can be found in Appendix E of the Guidebook and a copy of the questionnaire can be found in Appendix A). The intent of the survey was to gather additional Introduction 7

information about the nominated project(s) from their respective airports so the details of the projects could be considered for inclusion in the Guidebook. The study team compiled the data collected on the nominated airports and proposed to the study panel 10 case study projects that the team felt captured the spirit of the Guidebook and the diver- sity of projects desired. The list of 10 case study projects was further refined to respond to the com- ments of the study panel, and, in the end, the collection of case study projects represented a contemporary collection of well-rounded development from which other airports can learn. The study team and the study panel based final selection of the 10 case study airports on four criteria: relevance to the study, the airport’s ability/willingness to participate in the study, geo- graphic diversity to provide a cross section of airport examples throughout the country, and allocation within the five sizes of airports (general aviation, non-hub, small-hub, medium-hub, and large-hub). The selected case study airports and associated projects are listed below by air- port type with a brief synopsis of the project and identification of key stakeholders involved with each. General Aviation Airports: • Collin County Regional Airport, Texas (TKI) – Project: 32,000-square-foot corporate hangar complex for EDS/Hewlett Packard – Stakeholders: Collin County Regional Airport, City of McKinney, Collin County Regional Investments (CCRI), McKinney Economic Development Corporation (MEDC), and the Texas Department of Transportation • Monroe County Airport, Indiana (BMG) – Project: Hangar complex construction – Stakeholders: Monroe County Airport, Airport Board, Leaseholders Non-Hub Airports: • Coastal Carolina Regional Airport, North Carolina (EWN) – Project: Tidewater Air Services FBO/general aviation (GA) Terminal – Stakeholders: Airport Authority, Tidewater Air Services, State of North Carolina, local busi- ness entities • New Bedford Regional Airport, Massachusetts (EWB) – Project: Reversion from old plumber training facility to flight training facility – Stakeholders: Bridgewater State University, City of New Bedford, New Bedford Economic Development Council, New Bedford Redevelopment Authority, Division of Capital Asset Management, Delta Air Lines Small-Hub Airports: • Albany International Airport, New York (ALB) – Project: HondaJetTM sales and maintenance facility – Stakeholders: Albany International Airport, New York State Dormitory Authority, HondaJet • Baton Rouge Metropolitan Airport, Louisiana (BTR) – Project: Coca-Cola® bottling plant – Stakeholders: Greater Baton Rouge Airport District, The City of Baton Rouge-Mayor’s Office, Baton Rouge Area Chamber, Louisiana Economic Development Medium-Hub Airports: • Pittsburgh International Airport, Pennsylvania (PIT) – Project: Clinton Commerce Park, a 100-acre warehouse park – Stakeholders: Pittsburgh International Airport, State of Pennsylvania, Allegheny County, Allegheny Conference on Community Development, Findlay Township School Board, FAA, Pennsylvania Department of Transportation, Corps of Engineers, Colombia Gas 8 Guidebook for Developing and Leasing Airport Property

• Anchorage International Airport, Alaska (ANC) – Project: Alaska CargoPort™ – Stakeholders: Anchorage International Airport, Alaska CargoPort, State of Alaska, Alaska Industrial Development Authority Large-Hub Airports: • George Bush Intercontinental Airport/Houston, Texas (IAH) – Project: Consolidated rental car facility (CRCF) – Stakeholders: The City of Houston, Houston Airport System (HAS), a limited liability cor- poration formed by the rental car companies occupying the CRCF • Tampa International Airport, Florida (TPA) – Project: Redevelopment of closed US Airways Maintenance Facility – Stakeholders: Tampa International Airport, PEMCO, Chamber of Commerce, City of Tampa, Hillsborough County, Enterprise Florida, Workforce Florida, Committee of 100, MacDill Air Force Base Interviews were conducted with airport management representatives at each airport to identify the key and unique aspects of the lease agreement, gather relevant documents and data, and iden- tify stakeholders involved in project development and the lease agreement. In most cases, site vis- its were also conducted to gather additional information and perspective. Detailed summaries of each case study can be found in the Appendix A of the Guidebook. The summaries include a detailed synopsis of the following: • Project Overview, • Key Stakeholders, • Key Lease Elements, • Financial Considerations for the Tenant, and • Airport Benefits and Revenue. Introduction 9

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TRB’s Airport Cooperative Research Program (ACRP) Report 47: Guidebook for Developing and Leasing Airport Property explores issues associated with developing and leasing available airport land and summarizes best practices from the perspective of the airport sponsor.

The guidebook includes a diverse set of case studies that show several approaches airports have taken to develop and lease property for both aeronautical uses and non-aeronautical uses.

The project that developed the guidebook also produced two presentation templates designed to help airports in effective stakeholder communication regarding developing and leasing airport property. The templates, designed for a non-technical audience, provide content, examples, and definitions for a presentation to community stakeholders. The templates, one for aeronautical use development presentations, and the second for non-aeronautical use development presentations are available only online.

An ACRP Impacts on Practice related to ACRP Report 47 is available.

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