2017 ACC Airports Technical Workshop June 21-22, Airport Master Plans. Track: Planning & Environment. #AirportsTechnical

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1 2017 ACC Airports Technical Workshop June 21-22, 2017 Airport Master Plans Track: Planning & Environment

2 Airport Master Plans Moderator: FAA Panelists: ACC Panelist: Bart Gover National Practice Leader-Aviation Planning Mead & Hunt Mike Hines Michael Lawrance Will Reinhardt Sharon Sarmiento, Ph.D. Principal Unison Consulting, Inc. Melissa Vasher Hanson Professional Engineers, Inc.

3 Activity Forecasting Sharon Sarmiento, Ph.D. Principal Unison Consulting, Inc.

4 Scope of Master Plan Forecasts Scope of Activity Activity Measures Forecast Detail Commercial: Passenger and all-cargo service Scheduled and charter Noncommercial: General aviation Military Enplanements Air cargo Aircraft operations Based aircraft Commercial activity: By airline and equipment type By traffic segment All activity: Aircraft fleet mix PMAD peak hour activity

5 Enplanements (Million) Annual Growth Rate Forecast method must capture trend drivers 40% Recession Peak of Reno Air Hub Recession Terrorist attacks End of hub Great Recession Airline capacity rationalization 30% 20% 10% 0% 15.7% 12.6% 6.2% 3.9% -10% -20% Reno Air American/TWA America West/US Airways All Others Southwest

6 FAA Forecast Method Recommendations Regression and trend analysis Share analysis Other techniques Exponential smoothing Comparison with other airports Discrete choice models Range forecasting for risk management

7 Scenario analysis Our Approach Example: Forecasting Passenger Traffic Hybrid framework Multivariate time series regression Risk analysis 7

8 Hybrid framework Supply Airline schedules Aircraft seat size Load factor Economic trends Regional National Yield trends Structural changes Demand

9 Hybrid framework Yield Trend 6.5 M Regression Model Multivariate time series regression Economic Trends EP EP = α + β 1 X 1 + β 2 X 2 + β 3 X 3 + ε Structural Changes Actual Forecast

10 Scenario analysis Hybrid framework Multivariate time series regression Yield Trend Economic Trends 6.5 M Scenario Analysis EP High Base Low 4.5 Risk analysis Structural Changes Actual Forecast

11 Scenario analysis Hybrid framework Yield Trend M Monte Carlo Simulation 95%ile 75%ile Multivariate time series regression Economic Trends EP 50%ile 25%ile 5%ile Risk analysis Structural Changes Actual Forecast

12 Scenario analysis Hybrid framework Multivariate time series regression Yield Trend Economic Trends 6.5 M Monte Carlo Simulation and Scenario Analysis EP Add Service + Organic Growth 5.0 Risk analysis Structural Changes Lose Service + Organic Growth Actual Forecast

13 Other Examples Cargo General aviation

14 Questions? Thank you Sharon Sarmiento, Ph.D. Principal

15 Non Aeronautical Development ACC Panelists: Barton F. Gover Mead & Hunt, Inc.

16 The Process, Challenges and Resources Federal Process What to release The 16 key questions/data requirements Common Challenges Documentation Timing Costs Resources

17 The Process Determining Why and What to Release Why is the airport interested in releasing the property? What type of release are you considering Aeronautical Use vs. Non-Aeronautical Use If Aeronautical likely only allow lease to avoid through-thefence issues If Non-Aeronautical determine if sale or lease is desired Options may have implications on how the proceeds may be used.

18 Legal Process Not Difficult, But Precision is Rewarded Understand Legal Status of Current property Future use Funding for original acquisition Errors, Misinterpretation, Inconsistency Abound

19 Authorization for Non-Aeronautical Development What is FAA s Proper Role What is FAA s Actual Role Process for FAA Approval Terminology is Important FAA review FAA approval FAA release FAA environmental review ALP Exhibit A Property Map

20 Tree PROPERTY IS SHOWN ON CURRENT ALP EXHIBIT A SHOWS: FEDERAL FUNDS OR DONATION Source of Funds EXHIBIT A SHOWS: LOCAL FUNDS ONLY ALP DESIGNATION: NON-AERONAUTICAL ALP DESIGNATION: AERONAUTICAL Use of Property ALP DESIGNATION: AERONAUTICAL ALP DESIGNATION: NON-AERONAUTICAL ALP CHANGE TO NON-AERONAUTICAL TEMPORARY, INTERIM OR CONCURRENT USE ONLY ALP CHANGE TO NON-AERONAUTICAL FAA RELEASE PROCESS LEASE GROUND AT FMV NO ADDITIONAL INVESTMENT OF AIRPORT $$ INVESTOR/ DEVELOPER Use of Revenue 2017 ACC Airports TAKES $$ Technical OFF AIRPORT Workshop June Washington, DC ADDITIONAL INVESTMENT OF AIRPORT $$ DEVELOPMENT PROCEEDS ARE AIRPORT $$

21 Legal Considerations Before Seeking Approvals Know Legal Obligations in Advance Property history FAA permission vs. forgiveness Required contractual clauses Educate Investors/Developers Keep ADO (Sometimes Region) Informed

22 The Process 16 Primary Questions/Data Points in Five Main Categories Why/what is being requested? What is the history of the property? What property is being considered? What are the financial aspects? What are the environmental implications?

23 The Process Why/What is Being Requested 16 Primary Questions/Data Points Why/what is being requested? Why is the request being made? (Excess property, noncontiguous property, etc.) What is being requested? (Lease, sale, non-aeronautical use, etc.) What justifies the request for release? What use or disposition will be made of the property/facilities? Benefits of release compared to maintaining property in existing condition.

24 The Process History of the Property 16 Primary Questions/Data Points What is the history of the property? How did the airport originally acquire the property? What state or federal requirements might need to be carried forward in any agreements? What specific property or facilities are involved? What is present condition of the property and current use?

25 The Process Defining the Release 16 Primary Questions/Data Points What property is being considered? Boundary descriptions Sketch of location Summary of facilities

26 The Process Financial & Environmental 16 Primary Questions/Data Points Financial Aspects Fair Market Value of property (sale or lease rate) What proceeds are expected and how will they be used? Summary of intangible benefits (existing revenues, future revenues, CIP) Environmental Aspects Method and degree of documentation (CATEX or EA) Environmental impacts of reuse options

27 Documentation of Request Completeness is a Virtue (Can t Be Too Much!) FAA rewards completeness Demonstrate understanding of agency document needs Refer to Compliance Manual (Order B) Respond to each item identified as basis for decision Environmental Review Highly variable Valuation/Appraisal Not Relevant to Request

28 The Process - Summary Land Release Package Land Release Summary Responses to the 16 questions Boundary Description Fair Market Value Appraisal Environmental Clearance Document

29 Anticipate Problems/Questions Understand Timetable There is none! Educate FAA, parties to transaction of uncertainties Future Use of Property Definite vs. uncertain plans affects everything FAA May Want Precise Flow-of-Funds Acquisition Disposition

30 Common Challenges Documentation Locating/reviewing historical documents Extent of environmental documentation necessary Agreement language and duration Costs Benefits of release vs. cost to obtain release Who pays for release and associated elements? Timing How early can you ask for release? How long will FAA approval take will a developer wait for the process?

31 The Resources FAA Grant Assurances #4 Good title #5 Preserving rights and powers #21 Compatible land use #25 Airport revenues #29 Airport layout plan/exhibit A #31 Disposal of Land FAA Order B Airport Compliance Manual Chapter 22 FAA Policy and Procedures Memo Guidance for Leases, Use Agreements and Land Releases

32 The Resources (Continued) ACRP Report 176 (Project 03-39) Generating Revenue from Commercial Development On or Adjacent to Airports Anticipated publication in late summer 2017 Focuses on toolkits Self Assessment Site Evaluation Implementation

33 Questions? Thank you Barton F. Gover National Practice Leader- Aviation Planning