Okaloosa County BOCC — July 21, 2015 — Final Presentation for the Proposed Conveyance of Federal Land for VPS Airport — reading text

Proposed Conveyance of Federal Land for VPS Airport Presented to the Board of County Commissioners 1 July 21, 2015  Background • At the May 19, 2015 BCC meeting, the Board voted 4-1 directing staff to: 1) research any reversion provisions running with the land that may prevent the conveyance of land the County leases on Eglin Air Force Base; and 2) present the purpose and need for requesting the conveyance and the process for attainment. • Following the Board’s directive, staff: • 1) researched relevant deeds and found no applicable reversion provision; and • 2) prepared the following presentation to make the business case for conveyance. Staff recommends that the Board through a resolution approve and authorize the Chairman of the Board and Staff to request a conveyance pursuant to United States Code USC Title 49 › Subtitle VII › Part B › Chapter 471 › Subchapter I › § 47125, which allows the Federal Government to transfer property interest in land or airspace to public agencies for the development and operation of a public use airport. 2 Warranty Deed Research  Original parcel was leased to the U.S. from May 24, 1935 to October 30, 1936  It was subsequently donated fee simple, free of all encumbrances and fully warranted the title (DB29 pages 297-298)  Legal description plotted on the following slide shows the parcel’s relationship to the airport parcel  There is no reversion language in the deed  Even if there were, it would not apply to the 130.83 acres of the current airport parcel located outside the original parcel, as depicted. 3 Deed Parcel Exhibit 4 Choctawhatchee National Forest  Congress transferred 340,890 acres to the United States War Department on June 27, 1940. (No warrant or deed of transfer was recorded)  The transfer provided that the land may be restored to national forest status by the President, when no longer needed for military purposes  Not applicable to the conveyance  The requested conveyance does not propose to alter the Air Force’s operational needs, but does enhance the public’s interest by the continued operation as an economically viable “joint-use” facility that also benefits and supports Eglin AFB’s military mission  The scale of the airport-use parcel proposed to be requested through conveyance is plotted to illustrate its diminutive footprint in relation to the total Eglin reservation 5 Scale of EAFB Reservation vis-à-vis Conveyance Parcel 6 Justification for Conveyance  VPS competes for airline service and passengers in a small and very crowded market served by three other airports PNS, ECP and MOB  Strategic financial analysis of operating revenue and cost trends indicates that VPS is competitively vulnerable to the loss of air service to competing airports  Eliminating the airport’s perpetual annually increasing land lease obligation would make VPS considerably more competitive and resilient  The airport is contending with unrealized growth forecasts, rising operating costs, intense competition for fewer airlines against airports with much richer incentives and the prevalent airline industry business model of “capacity discipline”  The US Airline Industry has profoundly changed…….four legacy airlines - Delta, American, United and Southwest Airlines have survived the post-deregulation bankruptcies, mergers and consolidations……Only the first three serve VPS……  The loss of any single airline will result in much higher operating costs for the remaining airlines….. Potentially triggering a ripple effect of airline attrition…..  These challenges have significantly increased the airport’s vulnerability for airline service retention.  FAA has rejected the proposed use of Airport Improvement Program (AIP) grant funds and Passenger Facility Charge (PFC) user fees to make lease payments. 7  0 100,000 200,000 300,000 400,000 500,000 600,000 700,000 800,000 2002 2003 2004 2005 2006 Actual 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 Unrealized MP Fcast. 2021 2022 2023 2024 2025 2026 2027 2028 2029 2030 2031 Rev. Market Fcast. 2032 2033 2034 A Crowded Marketplace = Unrealized Growth 2035 8 2036 2037 2038  Annual Lease and Landing Fee Payments to operate VPS $1,000,000 EUL Land Lease Payment $900,000 $877,174 JUA Landing Fee $800,000 $771,870 Total Annual Cost $700,000 $600,000 $491,675 $500,000 $400,000 $379,709 $300,000 $200,000 $100,575 $105,304 $100,000 $0 2001 2003 2005 2007 2009 2011 2013 2015 2017 2019 2021 2023 2025 2027 2029 2031 2033 2035 2037 Actual & Projected Passenger Enplanement Activity 500,000 20.00% 17.74% 450,000 391,263 15.00% 383,591 400,000 10.00% 8.39% 7.28% 6.56% 350,000 4.72% 5.00% 2.72% 1.96% 1.76% 0.91% 300,000 0 -0.35% 0.00% -3.16% -2.87% 250,000 -4.93% -5.00% 200,000 -10.00% -10.00% 150,000 -15.00% -16.54% 100,000 -20.00% 50,000 -24.56% -25.00% 0 -30.00% 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 Actual Enplanements AAGR Linear (AAGR) 9  To compete, VPS must reduce financial reliance on airlines (% share of O&M) – futile w/ land rent escalating at 3%/yr. 30% 25% 20% 15% 10% 5% 0% 2008 2009 2010 2011 2012 2013 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025 2026 2027 2028 2029 2030 2031 2032 2033 2034 2035 2036 2037 2038 Airline % of O&M W/O Land lease W/ Land lease Untenable impact on Airline Cost Per Enplaned Passenger (CEP) $9.00 $8.00 $7.00 $6.00 $5.00 $4.00 $3.00 $2.00 $1.00 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025 2026 2027 2028 2029 2030 2031 2032 2033 2034 2035 2036 2037 2038 Actual W/Land Rent Competing Postion Goal 10  Anemic Airplane Operations (A Takeoff or Landing =an Op.) 90 Approved JUA daily operations level 84 80 Jan. 2012,