Okaloosa County BOCC — July 21, 2015 — Proposed Resolution for Conveyance of Federal Land (USAF) to — agenda request

BOARD OF COUNTY COMMISSIONERS AGENDA REQUEST DATE: July 21, 2015 TO: Honorable Chairman and Members of the Board FROM: Sunil Harman SUBJECT: Proposed Resolution for Conveyance of Federal Land (USAF) to Okaloosa County for Airport Use DEPARTMENT: Airport BCC DISTRICT: 2 STATEMENT OF ISSUE: The Board of County Commissioners is requested to adopt a proposed resolution authorizing the Chairman to submit a request through the Federal Aviation Administration Administrator to the U.S. Secretary of Transportation to seek a conveyance of the land currently leased and used to operate Destin-Fort Walton Beach Airport (VPS) from the Department of the Air Force to the County, for the continued successful development, use and operation of the airport for public-benefit. BACKGROUND: On August 28, 1972 Okaloosa County entered into a land lease for 22 acres at $5,280 per year with the United States Air Force to site a joint-use airport terminal for the benefit of the military and its civilian employees. That initial lease was amended over the years to meet the growing requirements of the airport with additional acreage to 108.23 acres at $165,000 per year, for 30 years, beginning in February 26, 2001. That increase of 77.82 acres enabled the County, at the request of the Air Force, to construct the present terminal building with improved roadway access and increased public parking in 2004. In July 2007, the County entered into an Enhanced Use Lease (EUL) with the Air Force to further increase the leasehold to 130.83 acres. That additional 22.6 acres was needed to accommodate the construction of a consolidated rental vehicle service facilities, relocate the fuel farm and construct a replacement cargo building, apron and maintenance facility. Up until this time, federal law required lease payments to be deposited into the General Fund of the United States Treasury without benefit to Eglin. The EUL established an escrow account into which lease payments were deposited as “payment-in-kind” to fund operational capital improvements and maintenance projects at Eglin, contracted through the County. Furthermore, under the Joint-Use Agreement for the Airport’s use of Eglin's airfield, the landing fees paid to Eglin Air Force Base for commercial aircraft operations are treated as a reimbursement for the local operating costs and retained at the base level. The first annual rent payment under the EUL, beginning in October 2007, was established through negotiation at $318,000 with subsequent annual payments escalating at 3 percent per year through the duration of the lease. At that time, the completion of the new airport terminal and, robust master plan forecasts of growth in passenger enplanements and airline operations contributed to general optimism that the County's Airports enterprise could make the substantial EUL lease payments. Soon thereafter, the financial crisis of 2007-08, considered the worst financial crisis since the Great Depression devastated the global economy and the airline industry from 2007-2013. Locally, in May 2010 the new $300 million Northwest Florida Beaches International Airport was opened, after being constructed with State and Federal funds, on land entirely donated by the St. Joe Company and quickly saw service by Delta and Southwest Airlines, the latter drawn with revenue guarantee incentives backed by the St. Joe Company and Tourist Development Taxes. The local share for construction and only outstanding debt was covered and eventually satisfied from the environmental clean-up and sale of the old Panama City Airport site. To the west, Pensacola International Airport, already a strident competitor with all land owned and paid for by the Federal land surplus and grants program, undertook a $36 million renovation program and drew service from AirTran (later acquired by Southwest Airlines) and became the