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A I R P O R T C O O P E R A T I V E R E S E A R C H P R O G R A M ACRP RESEARCH REPORT 176 2017 Research sponsored by the Federal Aviation Administration Subscriber Categories Aviationâ â¢â Economicsâ â¢â TerminalsâandâFacilities Generating Revenue from Commercial Development On or Adjacent to Airports Stephanie Ward Lynn Wilson a n d Regan Schnug Mead & Hunt, Inc. Middleton, WI i n a s s o c i a t i o n w i t h Tom Thatcher L. R. KIMbaLL Ebensburg, PA Diana Fainberg dIana e. FaInbeRg assocIates, LLc Teaneck, NJ a n d Kathleen Yodice Law oFFIces oF YodIce assocIates Frederick, MD
AIRPORT COOPERATIVE RESEARCH PROGRAM Airports are vital national resources. They serve a key role in trans- portation of people and goods and in regional, national, and interna- tional commerce. They are where the nationâs aviation system connects with other modes of transportation and where federal responsibility for managing and regulating air traffic operations intersects with the role of state and local governments that own and operate most airports. Research is necessary to solve common operating problems, to adapt appropriate new technologies from other industries, and to introduce innovations into the airport industry. The Airport Cooperative Research Program (ACRP) serves as one of the principal means by which the airport industry can develop innovative near-term solutions to meet demands placed on it. The need for ACRP was identified in TRB Special Report 272: Airport Research Needs: Cooperative Solutions in 2003, based on a study spon- sored by the Federal Aviation Administration (FAA). ACRP carries out applied research on problems that are shared by airport operating agen- cies and not being adequately addressed by existing federal research programs. ACRP is modeled after the successful National Cooperative Highway Research Program (NCHRP) and Transit Cooperative Research Program (TCRP). ACRP undertakes research and other technical activi- ties in various airport subject areas, including design, construction, legal, maintenance, operations, safety, policy, planning, human resources, and administration. ACRP provides a forum where airport operators can cooperatively address common operational problems. ACRP was authorized in December 2003 as part of the Vision 100â Century of Aviation Reauthorization Act. The primary participants in the ACRP are (1) an independent governing board, the ACRP Oversight Committee (AOC), appointed by the Secretary of the U.S. Department of Transportation with representation from airport operating agencies, other stakeholders, and relevant industry organizations such as the Airports Council International-North America (ACI-NA), the American Associa- tion of Airport Executives (AAAE), the National Association of State Aviation Officials (NASAO), Airlines for America (A4A), and the Airport Consultants Council (ACC) as vital links to the airport community; (2) TRB as program manager and secretariat for the governing board; and (3) the FAA as program sponsor. In October 2005, the FAA executed a contract with the National Academy of Sciences formally initiating the program. ACRP benefits from the cooperation and participation of airport professionals, air carriers, shippers, state and local government officials, equipment and service suppliers, other airport users, and research organi- zations. Each of these participants has different interests and responsibili- ties, and each is an integral part of this cooperative research effort. Research problem statements for ACRP are solicited periodically but may be submitted to TRB by anyone at any time. It is the responsibility of the AOC to formulate the research program by identifying the highest priority projects and defining funding levels and expected products. Once selected, each ACRP project is assigned to an expert panel appointed by TRB. Panels include experienced practitioners and research specialists; heavy emphasis is placed on including airport professionals, the intended users of the research products. The panels prepare project statements (requests for proposals), select contractors, and provide technical guidance and counsel throughout the life of the project. The process for developing research problem statements and selecting research agencies has been used by TRB in managing coop- erative research programs since 1962. As in other TRB activities, ACRP project panels serve voluntarily without compensation. Primary emphasis is placed on disseminating ACRP results to the intended users of the research: airport operating agencies, service pro- viders, and academic institutions. ACRP produces a series of research reports for use by airport operators, local agencies, the FAA, and other interested parties; industry associations may arrange for workshops, training aids, field visits, webinars, and other activities to ensure that results are implemented by airport industry practitioners. ACRP RESEARCH REPORT 176 Project 03-39 ISSN 2572-3731 (Print) ISSN 2572-374X (Online) ISBN 978-0-309-44651-8 Library of Congress Control Number 2017948409 Â© 2017 National Academy of Sciences. All rights reserved. COPYRIGHT INFORMATION Authors herein are responsible for the authenticity of their materials and for obtaining written permissions from publishers or persons who own the copyright to any previously published or copyrighted material used herein. Cooperative Research Programs (CRP) grants permission to reproduce material in this publication for classroom and not-for-profit purposes. Permission is given with the understanding that none of the material will be used to imply TRB, AASHTO, FAA, FHWA, FMCSA, FRA, FTA, Office of the Assistant Secretary for Research and Technology, PHMSA, or TDC endorsement of a particular product, method, or practice. It is expected that those reproducing the material in this document for educational and not-for-profit uses will give appropriate acknowledgment of the source of any reprinted or reproduced material. For other uses of the material, request permission from CRP. NOTICE The research report was reviewed by the technical panel and accepted for publication according to procedures established and overseen by the Transportation Research Board and approved by the National Academies of Sciences, Engineering, and Medicine. The opinions and conclusions expressed or implied in this report are those of the researchers who performed the research and are not necessarily those of the Transportation Research Board; the National Academies of Sciences, Engineering, and Medicine; or the program sponsors. The Transportation Research Board; the National Academies of Sciences, Engineering, and Medicine; and the sponsors of the Airport Cooperative Research Program do not endorse products or manufacturers. Trade or manufacturersâ names appear herein solely because they are considered essential to the object of the report. Published research reports of the AIRPORT COOPERATIVE RESEARCH PROGRAM are available from Transportation Research Board Business Office 500 Fifth Street, NW Washington, DC 20001 and can be ordered through the Internet by going to http://www.national-academies.org and then searching for TRB Printed in the United States of America
The National Academy of Sciences was established in 1863 by an Act of Congress, signed by President Lincoln, as a private, non- governmental institution to advise the nation on issues related to science and technology. Members are elected by their peers for outstanding contributions to research. Dr. Marcia McNutt is president. The National Academy of Engineering was established in 1964 under the charter of the National Academy of Sciences to bring the practices of engineering to advising the nation. Members are elected by their peers for extraordinary contributions to engineering. Dr. C. D. Mote, Jr., is president. The National Academy of Medicine (formerly the Institute of Medicine) was established in 1970 under the charter of the National Academy of Sciences to advise the nation on medical and health issues. Members are elected by their peers for distinguished contributions to medicine and health. Dr. Victor J. Dzau is president. The three Academies work together as the National Academies of Sciences, Engineering, and Medicine to provide independent, objective analysis and advice to the nation and conduct other activities to solve complex problems and inform public policy decisions. The National Academies also encourage education and research, recognize outstanding contributions to knowledge, and increase public understanding in matters of science, engineering, and medicine. Learn more about the National Academies of Sciences, Engineering, and Medicine at www.national-academies.org. The Transportation Research Board is one of seven major programs of the National Academies of Sciences, Engineering, and Medicine. The mission of the Transportation Research Board is to increase the benefits that transportation contributes to society by providing leadership in transportation innovation and progress through research and information exchange, conducted within a setting that is objective, interdisciplinary, and multimodal. The Boardâs varied committees, task forces, and panels annually engage about 7,000 engineers, scientists, and other transportation researchers and practitioners from the public and private sectors and academia, all of whom contribute their expertise in the public interest. The program is supported by state transportation departments, federal agencies including the component administrations of the U.S. Department of Transportation, and other organizations and individuals interested in the development of transportation. Learn more about the Transportation Research Board at www.TRB.org.
C O O P E R A T I V E R E S E A R C H P R O G R A M S CRP STAFF FOR ACRP RESEARCH REPORT 176 Christopher J. Hedges, Director, Cooperative Research Programs Lori L. Sundstrom, Deputy Director, Cooperative Research Programs Michael R. Salamone, Manager, Airport Cooperative Research Program Theresia H. Schatz, Senior Program Officer Hana Vagnerova, Senior Program Assistant Eileen P. Delaney, Director of Publications Sharon Lamberton, Editor ACRP PROJECT 03-39 PANEL Field of Policy and Planning Frederick R. Busch, Jviation, Denver, CO (Chair) Douglas Davies, DMD Real Estate Group, Chandler, AZ Steven L. Domino, RS&H, Salt Lake City, UT Gary P. Mascaro, City of Scottsdale â Scottsdale Airport, Scottsdale, AZ Kent McLemore, ATKINS, Houston, TX Edward W. Moran, Esq., Lee County Port Authority, Ft. Myers, FL Chunyan Yu, Embry-Riddle Aeronautical University, Daytona Beach, FL Renee Hendricks, FAA Liaison Monica Starnes, TRB Liaison
ACRP Research Report 176: Generating Revenue from Commercial Development On or Adjacent to Airports is a comprehensive, practical guidebook for developing or redevelop- ing airport and adjacent properties for commercial and industrial purposes so that the development can contribute to overall airport revenues. This guidebook is intended for use primarily by airports but may also be a reference for local government entities, economic development agencies, commercial developers, and land use planners. Recognizing differences in airport and community economics and characteristics, avail- able expertise and potential opportunities, the guidebook includes methods, considerations and specific checklists for preparing and implementing a commercial development plan. It addresses advantages and disadvantages of on-airport versus off-airport land development opportunities, as well as marketing and legal issues, among others. It also includes case studies that include successful and unsuccessful examples of commercial development on and around airports. The development of commercial and industrial properties on or adjacent to airports has historically been viewed as a compatible land use development exercise, not an airport revenue generation exercise. Nationally, insufficient attention has been given to such develop- ment as a source of airport revenues. Insufficient revenue streams have been a contributing factor in the decline of U.S. public use airports over the past few decades. ACRP Report 44: A Guidebook for the Preservation of Public Use Airports identified 16 reasons why some airports prosper and others struggle or fail. Many of these reasons are grounded in economic and financial factors. In short, simple business failures can be a major cause for airport closures. Public use airports that rely solely on aviation-generated and related revenues have a poten- tially narrow and undiversified revenue stream, making them particularly susceptible to cyclical market downturns and trends. While the development of on-airport or adjacent property can potentially offer additional revenue, many considerations need to be addressed in addition to land use compatibility. These considerations include a thorough and realistic market analysis, compliance with FAA sponsor assurances, and ensuring that development does not impinge on the airportâs ability to accommodate long-term aviation activity. Yet many airports and their communities do not have the expertise necessary to conduct a thorough analysis of an airportâs ability to generate additional revenue through the development of available land. This often leads to unrealistic revenue generation expectations or to unrealized potential. Under ACRP Project 03-39, research was conducted by Mead & Hunt, Inc., in association with L. R. Kimball, Diana E. Fainberg Associates, and the Law Offices of Yodice Associates. The information in the guidebook was gathered by interviewing representatives of at least F O R E W O R D ByâTheresiaâH.âSchatz StaffâOfficer TransportationâResearchâBoard
ten different airports varying in type and size throughout the country, and discussing overarching topics related to land development and the airportsâ development experi- ences. Interviews were also conducted with industry professionals in the Airport Owners and Pilots Association (AOPA), developers, airport managers, FAA Regional Directors, and others. As part of this guidebook, several toolkits have been developed for both site evaluation and implementation. To download customizable (Microsoft Word) files con- taining the checklists in the appendices, go to the TRB website (www.trb.org) and search for âACRP Research Report 176â.
1 Chapter 1â Introduction 1 1.1 Overview 4 1.2 The Guidebook 9 1.3 Other ACRP Work on This Topic 10 1.4 Organization of Content 12 1.5 Summary 13 Chapter 2â Fundamentals 13 2.1 Overview 14 2.2 Aviation Planning 18 2.3 Community Planning 20 2.4 Aviation Funding 22 2.5 Development Plan 24 2.6 Grant Obligations 25 2.7 The Five Tiers 28 2.8 Summary 29 Chapter 3â LegalâConsiderations 29 3.1 Introduction 31 3.2 FAAâs Airport Compliance Manual and AIP Handbook 33 3.3 Airportsâ Federal Obligations 34 3.4 Federal Grant Obligations and Responsibilities 35 3.5 Federal Obligations from Property Conveyances 36 3.6 Grant Assurances 42 3.7 Lease Agreements 43 3.8 Buy American Preferences and Other Federal Contract Labor Requirements 44 3.9 TTF Agreements and Operations 45 3.10 Environmental and Mineral Rights Considerations 47 3.11 An Airportâs Consideration of State and Local Law Restrictions 49 3.12 An Airportâs Consideration of Potential Liability and Insurance Coverage 50 3.13 Application of FAA Safety Considerations and TSA Security Requirements to Development 51 3.14 Other ACRP Resources 52 3.15 Summary 53 Chapter 4â Self-AssessmentâToolkit 53 4.1 Introduction 54 4.2 Airport Ownership 57 4.3 Management Structure/Report/Decision-Making 59 4.4 FAA Grant Obligations 62 4.5 The ALP and the Airport Master Plan 67 4.6 Airport Strategic Business Plan/Budgeting Process C O N T E N T S
71 4.7 Identifying Customer Base/Revenue Sources 73 4.8 Dominant Industry or Company 75 4.9 Business Trends and Projections for Airport Revenue 78 4.10 Funds for Development 80 4.11 Risk Tolerance for Development Projects 83 4.12 Development Goals 86 4.13 Community Context 90 4.14 Summary 91 Chapter 5â SiteâEvaluationâToolkit 91 5.1 Introduction 94 5.2 ALP 98 5.3 Land Availability 101 5.4 Location and Access 104 5.5 Physical Site Features 108 5.6 Infrastructure 109 5.7 InfrastructureâSanitary Sewer Systems 112 5.8 InfrastructureâStormwater Systems 115 5.9 InfrastructureâWater 119 5.10 InfrastructureâPower/Telecom 122 5.11 Surrounding Land Use 126 5.12 Regulatory Constraints/Permitting 135 5.13 Market Conditions 138 5.14 Workforce Attraction 141 5.15 Local/Regional Context 143 5.16 Development Incentive Programs 146 5.17 Summary 148 Chapter 6â ImplementationâToolkit 148 6.1 Introduction 150 6.2 Financial Analysis 151 6.3 Preliminary Development Plan 155 6.4 Project Pro Forma 158 6.5 Development Program Overview 159 6.6 Project Hard Costs 162 6.7 Project Soft Costs 164 6.8 Funding Sources and Typical Revenue Opportunities 166 6.9 Miscellaneous Revenue 167 6.10 Detailed Pro Forma 169 6.11 Reality Check 170 6.12 Development and Management Plan 171 6.13 Using the Toolkit for One Airport 172 6.14 Development Program Refinement 174 6.15 Internal Project Management Structure 176 6.16 Community Outreach Strategy 178 6.17 Identifying Stakeholders 180 6.18 Creating a Message 182 6.19 Outreach Portfolio 184 6.20 Revealing Project Plans to the Public 186 6.21 Permits and Approvals 191 6.22 Consulting NeedsâBuilding the Project Team
193 6.23 Incentives 195 6.24 Funding and Financing 198 6.25 Development and Partnership Strategies 203 6.26 Marketing 206 6.27 Construction Management/Property Management/Operation 210 6.28 Summary 212 Chapter 7â Off-AirportâConsiderationsâandâRevenue 212 7.1 Introduction 214 7.2 Developing Airport Revenues from Tier 4 and Tier 5 Properties 216 7.3 Through-the-Fence Operations (Tier 4 Property) 220 7.4 Community Land Use Planning for Revenue Generation 223 7.5 Economic Development and Business Attraction 226 7.6 Public Finance Tools and Other Opportunities for Airport Revenue Generation 230â AbbreviationsâandâGlossary 239â BibliographyâandâReferences A-1 Appendix Aâ Chapterâ4âChecklists B-1 Appendix Bâ Chapterâ5âChecklists C-1 Appendix Câ Chapterâ6âChecklists D-1 Appendix Dâ Chapterâ7âChecklists Note: Photographs, figures, and tables in this report may have been converted from color to grayscale for printing. The electronic version of the report (posted on the web at www.trb.org) retains the color versions.