Planning, Design, and Financing

April 21, 2008
Denver meeting brings together consultants, airports, and regulators

DENVER — Each year, the Airport Planning, Design & Construction Symposium attracts the people who plan, design, and operate our nation’s airports. Among this year’s hot topics was airport financing, with
discussions on how new airports in Florida and Utah are being funded, along with a look at how the current financial crisis in the U.S. is impacting airports. Planning was heavy on the agenda, focusing on the growing need for regional thinking and for a thorough environmental approach. Industry reps and FAA also addressed the growing concern over runway incursions and emphasized a need for improved airfield awareness and training.

The symposium is co-hosted by the American Association of Airport Executives and the Airport Consultants Council.

Dr. Stephen D. Van Beek, president and CEO of the Eno Transportation Foundation, a planning think-tank, says that there is a push by U.S. Department of Transportation Secretary Mary Peters to have industry pursue more public/private funding agreements, with the intent of reducing the federal financing role with airports. At the same time, he says that Congress remains reluctant to pursue transportation funding solutions.

Meanwhile, he cautions that the turbulence in the world’s financial and insurance markets is creating “angst and instability”.

Regarding the latter, Denver International’s deputy manager Stan Koniz relates how the dramatic swings in auction securities caused his staff to have to scramble to refinance some of its bonds via more traditional means. The “auction bond meltdown,” he says, is something that became a crisis in just a few weeks. Of Denver International’s long-term debt of some $3.2 billion, some $760 million was auction rate debt, the interest rate on which went from 2.5 percent to 10 percent in a matter of days during February, costing DEN as much as $75,000 extra per day.

Koniz says that the ratings agencies were behind the curve in terms of not alerting airports soon enough about the pending crisis. The lesson learned, he relates, is that “creative financing has its drawbacks.”

Funding airports at Panama city, St. George
Two high-profile industry projects are new airports being built in Panama City, FL and St. George, UT. Both were the subject of discussion, notably on how each project was financed.

Darin Larson, program manager for PBS&J, says of the Panama City initiative, “It’s really an environmental project that just happens to have an airport as part of it.” The new site is some 20 miles from the current airport and half of its 4,000 acres are large environmental impact areas. As a result, the airport has had to mitigate another 10,000 acres to offset the loss of wetlands. It is also several years behind schedule due to environmental lawsuits.

Sasha Page, vice president with Infrastructure Management Group (IMG), has been involved with the financing plan put together for Panama City. IMG was part of a Bechtel Infrastructure team hired by the airport to conduct a financial feasibility analysis. According to IMG, it developed a financial plan for the new airport that includes FAA and state grants; proceeds from the sale of the existing airport property; a bond issuance leveraging an FAA letter of intent (LOI); a general airport revenue bond supported by airport revenues; passenger facilities charges (PFCs); and other sources of innovative financing, including the donation of land from a private developer.

Page explains that the goal was to pursue one-third federal, state, and local funding. The 4,000 acres were donated by the St. Joe Company, a real estate developer, and the property was valued at $40 million. The Panama City/Bay County International Airport was able to sell its 700 acres on its current site ‘as is’, generating some $50 million in a deal consummated with Leucadia Corporation just prior to the real estate downturn in Florida. “If we had sold it six months later we would have gotten half of that,” says Page.

The State of Florida, meanwhile, made the project eligible for its State Infrastructure Bank grant program, providing an “implicit guarantee” for some $45 million in financing.

At St. George Municipal Airport in Utah, airport manager Mike LaPier, A.A.E., says that the last major hurdle to getting a new airport built was overcome last year when FAA committed some $90 million to the project via a letter of intent that spans eight years. That followed a $17.2 million grant from FAA in 2006 to keep the project moving forward.

The current airport rests atop a mesa and cannot be expanded. St. George, meanwhile, is experiencing rapid growth. LaPier says that the U.S. Census Bureau ranks it as the fastest growing metropolitan area in the nation. With that growth have come increasing demands on all local infrastructure, as well as escalating real estate prices. LaPier estimates that land values for the new site jumped $13.5 million in 12 months.

St. George officials were able to generate an estimated $72.5 million for the new airport, with the bulk of that sum coming from the sale of the existing airport site. Another $15 million will come from a hotel tax implemented by the county, even though it is a city-owned airport.

An emphasis on planning
On the topic of planning, FAA senior airport planner Patrick J. Sullivan, P.E., emphasizes the agency’s regional airport planning capacity, part of its ongoing Operational Evolution Plan (OEP). The agency’s second study of systemwide needs, FACT II, issued in 2007 identified 86 non-OEP airports that offer the potential to help capacity in various metropolitan areas, says Sullivan. Of those, 66 are general aviation airports.

Sullivan says that cities need to work on achieving regional consensus on how best to meet airport capacity needs, and that the FAA’s airports and air traffic divisions have a role to play in those discussions.

Two examples offered at the Denver symposium were the Delaware Valley around Philadelphia, and San Diego County, which continues to seek alternatives to downtown Lindbergh Field.

Reiner Pelzer, senior aviation planner for the Delaware Valley Regional Planning Commission, explains that the current regional study, spurred by FAA, encompasses 12 counties, four states, and 30 public and private airports, including commercial airports in Philadelphia, Trenton, and Wilmington.

Pelzer relates that a recent jet demand study shows traffic exceeding the region’s capacity to house based aircraft. Most of the airports are land-locked, he says, while calls for a regional independent authority to oversee multiple airports “hit a brick wall” in Philadelphia.

One capacity-increasing alternative, says Pelzer, is the expected closure of the Willow Grove U.S. Naval Air Station. The Air Force has agreed to establish a joint interagency base at the 910-acre, 170-building base, and Pelzer says it is targeted for BRAC closure in 2011, at which time he expects Pennsylvania to assume ownership.

At San Diego, Sandi Sawa and Linda Johnson of the Regional Airport Authority, formed in 2003, explain that part of the new authority’s mandate is land use planning for the region. It includes 16 airports, four of them military. A referendum to establish a new commercial airport at Miramar was defeated.

After its formation, the authority, in an attempt to get citizens involved in the planning process, established the Airport Land Use Compatibility Plan — “a fairly controversial project,” relates Sawa. Its initial plan was released in March, 2005 to a poor public reception. That led to creation of a working group of 55 stakeholders, which continues to be involved as the authority attempts to create individual plans for each of the 16 airports in its region.

While Johnson says the San Diego experience may not be one that other cities can “plug and play,” a key lesson learned was the value that an independent facilitator can bring to creating trust and understanding between an authority and its constituents. Those who are involved feel vested in the process, she says, and planners in the region have established relationships with other planners.

Airfield safety
LaGretta Bowser of FAA’s air traffic division stresses that the agency is increasingly concerned about runway incursions at U.S. airports. Last fall the agency adopted ICAO’s definition of an incursion to include class D surface incidents. As a result, the 331 incursions experienced in 2006 would rise to 806 under ICAO guidelines. Bowser explains that the agency plans to institute a non-punitive incident reporting system similar to one that has success with pilots.

[In fact, in late March, FAA and the National Air Traffic Controllers Association signed an agreement to create the Air Traffic Safety Action Program (ATSAP) to allow for voluntary, non-punitive reporting of safety concerns on airfields.]

Jack Cole of the Air Transport Association echoes that runway safety has vaulted to the forefront of industry issues — “and rightly so,” he says. Cole calls for more human factors training and alertness management, combined with an acceleration of the application of new technologies.