Strategies for Reuse of Underutilized or Vacant Airport Facilities (2011)

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44 CHAPTER TWELVE RICKENBACKER INTERNATIONAL AIRPORT—MILITARY BASE REUSE AIRPORT SPONSOR AND INTERVIEW PARTICIPANTS Airport Name Rickenbacker International Air- port (LCK) City, State Columbus, Ohio Airport Sponsor Columbus Regional Airport Authority (CRAA) Persons Interviewed Rod Borden, Senior Vice Presi- dent and Chief Operating Officer John Byrum, Vice President and Chief Financial Officer THE SITUATION Rickenbacker Air Force Base, originally the Lockbourne Army Air Base, is considered to be one of the best conver- sion efforts in the United States of a military air base to a public airport. Today, the airport serves as a dedicated cargo airport, a multimodal logistics hub, a charter passenger ter- minal, and a U.S. foreign-trade zone (FTZ; see Figure 37). In addition, the airport remains host to the Rickenbacker Air National Guard. The Guard base and several other military units remain in a “cantonment area” on the airport where the U.S. Department of Defense has retained ownership. FIGURE 37 FedEx aircraft on Rickenbacker apron. CRAA has taken an active role in developing nonaero- nautical land within the airport property and has acquired land in the area for development or resale. The Rickenbacker area has numerous industrial parks, several individual com- mercial property owners, more than 150 companies, and more than 39 million square feet of development. As of 2010, the airport was generating enough revenue to break even operationally; however, there is a need to develop a long- term revenue surplus for capital projects. This case study examines the historical context for reuse of this military air base. The discussion is divided into three time periods: base closure and transfer, transition period, and current business model and activity. Base Closure and Transfer In 1978, the Air Force announced Rickenbacker was to be closed and that the Strategic Air Command functions would be transferred. At the time, the base consisted of approxi- mately 5,000 acres, including an estimated 265 buildings with approximately 3.7 million square feet of floor space. In April 1980, Rickenbacker Air Force Base closed, and the facility was turned over to the Ohio Air National Guard and renamed Rickenbacker Air National Guard Base. At the height of the Vietnam War in 1967, the population on the base peaked at 18,000 service people. The Franklin County Commissioners recognized that closure of the base would have a “significant impact on the central Ohio area, and ... early reuse of the base would be in the best inter- est of these communities.” As a result, the commissioners formed a steering committee in late 1978 to propose alterna- tive ways of using the military property. In March 1979, the committee proposed that the county commissioners create a port authority to receive and redevelop the property released by the military. The following month, the Franklin County Board of Commissioners voted to establish the Rickenbacker Port Authority (RPA). The mission of RPA, as defined in the resolution, was to receive and redevelop any land released for civilian use and to enter into a joint-use agreement with the Air Force to maintain the operation of the airfield. The commissioners envisioned that the property would be a good site for an industrial park.

45 The full transfer of the base to the RPA took several years. In 1982, the RPA and the federal government entered into a joint-use agreement to permit civil aircraft to use the airfield. The RPA agreed to assume responsibility for air- field operation and maintenance by January 1987. Under this agreement, the Air Force was to be airfield manager and RPA a tenant until the transition to RPA control, when these roles would be reversed. The government agreed to coordinate the operation of any military aircraft with sched- uled civil operations, except in the event of the need for prompt military aircraft movements. The military was to provide fire protection for both military and civil operations, but only as long as such services were needed for military activity. As reimbursement for the government’s costs, RPA agreed to pay a joint-use fee of $150,000 per year plus any expenses incurred for fire fighting and other services. In October 1990, the Department of the Air Force transferred full control of the airport to RPA. However, as early as 1984, the RPA had already begun to prepare the base for rehabili- tation, reuse, and development (http://www.rickenbacker. org/about/history.asp). Transition to Full Public Control It took approximately 5 years to transfer the land manage- ment to RPA. In that time, little preventive maintenance was done to runways, buildings, or other facilities. In 1984, the RPA was able to begin redeveloping LCK. Many buildings were in poor condition. Some had serious environmental hazards. For example, the cost of demolishing the base hos- pital, which contained asbestos and polychlorinated biphe- nyls, was estimated to be $1 million. The RPA faced some hard decisions to determine which buildings would remain and which would be torn down. It prepared an initial master plan. Ultimately, more than 50 buildings were demolished to ready the property for devel- opment. Because the RPA had received the property as a transfer of surplus government property, the deed stipulated that even with a master plan in place, it had to go through the release process with the FAA. Because the size of the property was large, 5,000 acres of land at Rickenbacker, the release process of a small portion of the acreage for demoli- tion of buildings proved noncontroversial for the FAA. To initiate development of the property, Franklin County solicited for a master contract to develop LCK. In 1985, it entered into a long-term lease with Turner Construction that gave exclusive rights to develop the entire airport for 75 years. In 1986, a public–private partnership was negoti- ated between the RPA, Turner, and Flying Tigers to build an all-cargo hub and bulk-freight sorting facility. The county raised $22 million in special purpose bonds to construct a ramp, and Flying Tigers was offered free landing fees for 10 years. However, in 1989, Flying Tigers was sold to FedEx, which closed the cargo hub and consolidated operations at its other locations. Because of the way the partnership was structured, taxpayers had to pay for the remaining balance due on the ramp bonds. Several other milestones occurred during this transition period: • In 1987, LCK established FTZ No. 138, which was par- ticularly effective as long as personal property taxes were exempt within the FTZ. (This exemption no lon- ger exists.) • After 1991, much of the rehabilitation of the base was paid for through federal conversion grants under the Military Airports Program. • Ten years into the Turner Construction lease, the RPA bought out the remaining portion of the lease for $2 million (four $500,000 annual payments) and took control of base redevelopment. • To assist with development at Rickenbacker, the Franklin County Commissioners and RPA created the Franklin Community Improvement Corporation in 1994 as a private, nonprofit corporation. Current Business Model and Activity During the early years of reuse, LCK ran at a loss up to $4 million annually. Today, LCK breaks even operationally. Nevertheless, the RPA realizes that not only does the airport have to break even, but also a goal of $3–$5 million surplus is needed per year to take care of ongoing capital replace- ment and maintenance needs. Without a revenue stream from passenger service, Rickenbacker strives to (1) lever- age its assets; (2) redefine itself through a comprehensive, long-term plan; and (3) find alternative means for generating additional revenues. In 2002, the city of Columbus, Franklin County, and the Columbus Municipal Airport Authority approved the merger of RPA and the Columbus Municipal Airport Authority, forming the new CRAA, which became effective January 1, 2003. Under the new authority, LCK has engaged in a num- ber of land development initiatives to • Acquire additional land adjacent to the airport for development and/or resale, and • Engage in public–private partnerships where CRAA can provide raw land, improved land, or actually con- struct a building and sell or lease it. Within the CRAA system of airports, LCK has become the de facto cargo and charter passenger airport. The authority is improving land to build out the Rickenbacker Global Logistics Park. In 2008, the CRAA collaborated with Norfolk Southern Corporation to build and open the Rickenbacker Intermodal Terminal adjacent to LCK (Figure 38). The intermodal ter- minal is based on an “inland port concept” where rail, air,

46 and highway come together. Both Rickenbacker and Norfolk Southern contributed land to the deal. A $30 million earmark assisted in construction of the facility, and CRAA gets addi- tional fees from the railroad. There is not much crossover between rail and air, but the rail activity has spurred peripheral development in the area, including a logistics center. LESSONS LEARNED The LCK reuse is a work-in-progress even after 25 years. Many lessons have been learned in the process: • Reuse of a large property requires a comprehensive plan that includes a land use component, a governance plan, feasibility analysis, financial plan, a business strategy, and marketing action plan. • If the base is not used for passenger service, the more diversified the portfolio of nonaeronautical activities, the better the chances of developing alternative rev- enue streams. • It is important to make early decisions about what buildings and functional areas will be kept and what will be demolished. Be selective and stay consistent with the comprehensive plan. It is easy to spend money in nonproductive areas. • As capital is raised, maintain the discipline to reinvest in other revenue-producing activities or assets. • Work with the communities in the region to promote an understanding of the economic benefits of the airport so that direct and indirect benefits are appreciated even if the airport is operating at a loss. • It is important that base reuse plans consider whether the base becomes the community’s main airport. In the case of Austin–Bergstrom International, it ultimately made more sense to redevelop Bergstrom AFB than to construct a new and expanded green field airport. However, in this instance, the discussion of whether Rickenbacker should become the main airport was not part of the formal reuse planning effort. It was, how- ever, discussed at length by community leadership multiple times during the 1980s and early 1990s. At that time, it was determined that Port Columbus was viable with respect to both its capacity and the functional and economic life cycle of its facilities. As a result, dis- carding the substantial investment in Port Columbus’ facilities and making an additional substantial invest- ment to replicate those facilities at Rickenbacker could not be justified. • The reuse and redevelopment of LCK took longer than anyone expected to break even and develop a positive return. FIGURE 38 Intermodal terminal adjacent to Rickenbacker.