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
GA Airports Are Economic Engines. Association of California Airports 2010 Conference Presented By: Derek Kantar, Aviation Planner CalTrans HQ, Division of Aeronautics. GA Airports Are Economic Engines. Why This Topic Now? - PowerPoint PPT Presentation
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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 )