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From page 83... ... 5 1 Chapter 5 Airport Entrepreneurial Activity – Part II 5.1 Introducon 5.2 Revenue Parcipaon in Real Estate Development 5.3 Revenue Parcipaon in Mineral Estate Development 5.4 Wrap up 5.5 Addional References Chapter 4 described a revenue development strategy that involves airport provided services and shared use of services, facilies, and systems. Today, development of non aeronaucal facilies, such as a tenant logiscs and warehouse facility, is likely to involve an airport sponsor and other business partners. Read the entire page →
From page 84... ... INNOVATIVE REVENUE STRATEGIES – AN AIRPORT GUIDE 5 2 speculave (spec) building on ACAA property. Read the entire page →
From page 85... ... CHAPTER 5 – AIRPORT ENTREPRENEURIAL ACTIVITY – PART II 5-3 These approaches apply to a wide variety of property development ac vi es. Figure 5-1 presents examples of facili es and mineral development for which an airport sponsor may consider project par cipa on beyond a tradi onal ground lease. Read the entire page →
From page 86... ... INNOVATIVE REVENUE STRATEGIES – AN AIRPORT GUIDE 5 4 5.2 REVENUE PARTICIPATION IN REAL ESTATE DEVELOPMENT This sec on describes and evaluates different ways that an airport sponsor can par cipate in non aeronau cal real estate development. FN 2: DIRECT OWNERSHIP Extent of Airport Use Revenue Potential Airport Assumption of Risk Capital Required Complexity to Implement Political & Institutional Challenges Key Low Moderate High Not Relevant Overview Depending on the circumstances, direct ownership is a valid op on for considera on, whether in the context of real estate development, concessions, parking, mineral extrac on, or other capitaliza on of an airport's assets. Read the entire page →
From page 87... ... CHAPTER 5 – AIRPORT ENTREPRENEURIAL ACTIVITY – PART II 5 5 have the opon to operate businesses on their own or to contract with third pares to operate businesses based on these assets. Most airports contract out such operaons, but a few airports have begun operang these assets directly. Read the entire page →
From page 88... ... INNOVATIVE REVENUE STRATEGIES – AN AIRPORT GUIDE 5 6 Whether federal funding is available for airport run operaons, if such funding is not available to the private sector Whether the airport sponsor's operang businesses would lose tax exempt status FN 1: PARTICIPATING LEASES AND EQUITY PARTICIPATION Extent of Airport Use Revenue Potential Airport Assumption of Risk Capital Required Complexity to Implement Political & Institutional Challenges Overview Real estate development by airports typically has followed a tradional model when leasing land for commercial development. This opon involves a ground lease for a set limit term and a ground rent calculated using the real estate's appraised value. Read the entire page →
From page 89... ... CHAPTER 5 – AIRPORT ENTREPRENEURIAL ACTIVITY – PART II 5 7 may have acreage available for further development. Colorado's Centennial Airport, as well as Dallas/Fort Worth Internaonal, Denver Internaonal, Edmonton Internaonal, El Paso Internaonal, Pisburgh Internaonal, Rickenbacker Internaonal, and Salina Municipal airports, are excellent examples of airports with extensive land acreage available for development. Read the entire page →
From page 90... ... INNOVATIVE REVENUE STRATEGIES – AN AIRPORT GUIDE 5 8 FN 3: PUBLIC PRIVATE PARTNERSHIPS (P3s) Extent of Airport Use Revenue Potential Airport Assumption of Risk Capital Required Complexity to Implement Political & Institutional Challenges Overview Public private partnerships (P3s) Read the entire page →
From page 91... ... CHAPTER 5 – AIRPORT ENTREPRENEURIAL ACTIVITY – PART II 5 9 required. Finally, and arguably most significantly, bondholder approval will need to be obtained for any assets covered by outstanding bonds. Read the entire page →
From page 92... ... INNOVATIVE REVENUE STRATEGIES – AN AIRPORT GUIDE 5 10 Denver Internaonal Airport (DIA) has oil and gas development and acve agriculture on the airport. Read the entire page →
From page 93... ... CHAPTER 5 – AIRPORT ENTREPRENEURIAL ACTIVITY – PART II 5 11 FAA has determined that revenue derived from the sale of an airport's natural resources constutes "airport revenue."3 Therefore, it is subject to the revenue diversion rules requiring that such revenue be ulized only at the airport [see Grant Assurance 25 as to permied use of Airport Revenues] Read the entire page →
From page 94... ... INNOVATIVE REVENUE STRATEGIES – AN AIRPORT GUIDE 5 12 gas prices fall below a certain dollar amount, companies may find it more economically viable to cap a well and cease producon for the period of me that the market is depressed. In order to ensure that the landowner -- in this case the airport -- is not harmed by such capping acvity, it is necessary to include a connuing producon clause requiring the driller to connue drilling for as long as a well is producing in certain paying quanes. Read the entire page →
From page 95... ... CHAPTER 5 – AIRPORT ENTREPRENEURIAL ACTIVITY – PART II 5 13 state's regulatory agency. Addionally, adequate insurance and security is necessary to secure any indemnificaon to which the airport may be entled for damages arising out of fires, accidents, polluon, or other causes that might be brought about by a company's operaons on airport property. Read the entire page →
From page 96... ... INNOVATIVE REVENUE STRATEGIES – AN AIRPORT GUIDE 5 14 be limited to designated porons of the airport that are not planned for development pursuant to the airport's master plan. FAA Regulaons (FARs) Read the entire page →
From page 97... ... Table 5 2: Approaches to Revenue Parcipaon Code Approaches to Revenue Participation Extent of Airport Use Revenue Potential Airport Assumption of Risk Capital Required Complexity to Implement Political & Institutional Challenges Finance and Property Management – FN FN-1 Participatory Leases and Equity Participation FN-2 Direct Ownership FN-3 Public-Private Partnerships FN-4 Joint Development FN-5 Mineral Estate Participatory Leases Source: KRAMER aerotek inc., 2014 Read the entire page →
From page 98... ... 5.5 ADDITIONAL REFERENCES KRAMER aerotek inc., ACRP Synthesis 19: Airport Revenue Diversificaon, Transportaon Research Board of the Naonal Academies, Washington, DC, 2010 LeighFisher, Kaplan Kirsch & Rockwell LLP, and LeighFisher/Eno Transportaon Foundaon, ACRP Report 66: Considering and Evaluang Airport Privazaon, Transportaon Research Board of the Naonal Academies, Washington, DC, 2011 5 16 INNOVATIVE REVENUE STRATEGIES – AN AIRPORT GUIDE Read the entire page →

From page 83...

... 5 1 Chapter 5 Airport Entrepreneurial Activity – Part II 5.1 Introducon 5.2 Revenue Parcipaon in Real Estate Development 5.3 Revenue Parcipaon in Mineral Estate Development 5.4 Wrap up 5.5 Addional References Chapter 4 described a revenue development strategy that involves airport provided services and shared use of services, facilies, and systems. Today, development of non aeronaucal facilies, such as a tenant logiscs and warehouse facility, is likely to involve an airport sponsor and other business partners.