1 GA Airports Are Economic GA Airports Are Economic Engines Engines Association of Association of California Airports California Airports 2010 Conference 2010 Conference Presented By: Presented By: Derek Kantar, Aviation Planner Derek Kantar, Aviation Planner CalTrans HQ, Division of Aeronautics CalTrans HQ, Division of Aeronautics
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1 GA Airports Are Economic Engines Association of California Airports 2010 Conference Presented By: Derek Kantar, Aviation Planner CalTrans HQ, Division.
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GA Airports Are Economic GA Airports Are Economic EnginesEngines
Association of California AirportsAssociation of California Airports
– Upfront Planning IE design standards, clear development
approval process, overlay zoning, Environmental Review, etc.
– Infrastructure Feasibility StudiesWhat are the hurdles? Find solutions!
– Obtaining FAA Review and Approvals– Developing a Financing Plan
Set up Land Secured Financing Policies to enable public financing of infrastructure
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Alignment of InterestsWorking Toward a Common Goal
Key Concept #3: Align the Interests between the Public Entity and Private Partner
– The Term Sheet: The financial structure between the Airport and the Developer.
Should incentivize both the developer and the Airport to work toward a common goal
Should recognize the timing and level of investment.
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Developer
ProvidesExpertiseCapital
Airport(or Parent Agency)
ProvidesLand & FacilitiesCapital and/or FinancingMechanism for Improvements
( Land Secured Financing)
Airport VentureGenerates revenue Land Sales or Ground Leases
1st Stage:I ncentive Returns
DeveloperReceives
% Discount off fee value for land
(Provides incentive and competitiveadvantage in market)
AirportReceives
% of fee simple value in cash
(Represents up front payment forraw land value to ensure minimumreturn)
Remainder
of Land payments go to: -Fund infrastructure -Return invested capital (to developer or agency (with preferred return) -Distribution of residual profits
2nd Stage:Return on I nfra structure
1st Priority to 2nd Capital Provider(Developer or Parent Agency)
Return of shortfall capital contributed pluspreferred %.
2nd Priority to 1st Capital Provider(Developer or Parent Agency)
Return of shortfall capital contributed pluspreferred % .
3rd Stage:Sharing of Re sidual Profits
Developer
% of Residual Profits
Airport
% of Residual Profits
Sharing of Residual Profits ensures Alignment of I nterests
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Example Deal Structure: - Recognizes the value provided by each party
- Initial Incentive Stage provides the needed certainty for each party to protect from downside.
- 2nd Stage provides return of upfront capital for Infrastructure Investment.
- 3rd Stage provides upside incentive and aligns goals between investor and public entity.
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Clearly Communicate Priorities
Key Concept #4: Identify and Share Priorities
• Clearly identify priorities of the Airport
Why is the Airport interested in new development?
– Fiscal Stability Operations (sustainable revenue for Airfield O&M )