Okaloosa County BOCC — November 15, 2016 — Okaloosa County Enhanced Use Lease Proposal — reading text

Board of County Commissioners State of Florida November 15, 2016 Jacklyn Crews Pujol Program Manager, Real Estate Development Portfolio Management Branch Air Force Civil Engineer Center Joint Base San Antonio Lackland, TX 78236-9853 Re: Okaloosa County Proposal to Amend Enhanced Use Lease (EUL), AFMC-EG-1-07-003 Dear Ms. Crews Pujol, Thank you for meeting with us to discuss our proposal for future partnerships at the Destin-Fort Walton Beach Airport. We are optimistic about building on our 58-year partnership optimizing Air Force resources while supporting Okaloosa County’s economic development. Commercial airlines started operating from Eglin Air Force Base in 1957 and were formalized in a joint agreement between the Air Force and Okaloosa County in 1972. To obtain revenue from this underutilized property, an EUL was granted by Eglin in 2001 to operate and maintain a regional airport on 108 acres. A new lease was granted in 2007 increasing the land to 130.8 acres; it was amended in 2013 extending the duration 25 years to run coterminous with another land lease between the County and Eglin. Eglin has leveraged $6+ million through this cooperative agreement to meet warfighter infrastructure requirements. At the same time, the airport has become the preferred aviation gateway to Florida's Gulf Coast. In reference to our Kickoff Meeting held on September 29, 2016 and the previous request letter dated November 3, 2015, Okaloosa County Enhanced Use Lease and Joint Use Agreement Proposal, at your request, please find the following proposal for your review. In addition to our EUL with the Air Force, Okaloosa County, Department of Airports (hereafter Airport) has continued to support Eglin’s airfield operations. After signing a leasehold for 3.7 acres in 2013, the Airport began construction of a $3.8 million Aircraft Rescue and Firefighting Facility (ARFF) that will house airfield response operations for the 96th Test Wing. The Airport also provided FAA grant proceeds of $411,983 towards the construction of a new waterline to support the ARFF. During the construction of the Destin Executive Airport Air Traffic Control Tower, the Airport added a Flight Data Input/Output (FDIO) system and second shout line to the Air Traffic Operations Center. The additional $169,500 in equipment and maintenance was added upon request of the Air Force to substantially enhance air traffic control and safety within the controlled Eglin airspace. As one of only 15 participants in the Military Airport Program (MAP), we have tremendous opportunities to partner on investments for airfield improvement projects. The MAP provides federal funds to support improvements such as pavement rehabilitations and navigational aids to joint-use airports like Eglin. However, the FAA restricts grants funds to airports with operational agreements of at least 20 years. With the current EUL terminating on June 23, 2038, there is less than two years for the Airport and Eglin to potentially capitalize on these opportunities. In order to leverage available Airport Improvement Program funding, we desire an amendment to the current lease term. We propose an extension of 50 years from the effective date of the amendment (new termination date of June 23, 2067). An extension in this range will 302 N. Wilson St • Crestview, FL 32536 1804 Lewis Turner Blvd., Suite 100 (850) 689-5030 • Fax: 689-5059 Fort Walton Beach, FL 32547 (850) 651-7105 • Fax: 651-7142 November 15, 2016 Page 2 afford the Airport opportunities to leverage FAA grant funding for Airport projects and potential partnering with Eglin on airfield improvements. The lease payment in 2007 was $318,000, subject to a 3% annual increase during the term of the agreement; currently, the annual payment is $414,918. As stated at the September 29th meeting, this increase is unsustainable and does not match market conditions. In fact, a 3% escalator is more than 50% greater than the average Consumer Price Index increase over the last nine years. Similar to our Joint Use Agreement (JUA) with the Air Force, we desire a payment schedule linked more directly to actual Airport operations. We propose a base annual payment of $400,000 and additional payments of $0.50 for each enplaned (departing) passenger over an annual level of 400,000 enplanements. The Airport has increased passengers by 18% YTD, adding 3 new air carriers with non-stop service to 9 additional cities. The Airport had 436,410 enplaned passengers in FY16 and we conservatively project 1.65% annual growth through 2066. The Airport is averaging 54% of allowable civil operations in the off season and 77% (65 operations/day measured against the allowable 84 operations/day). Concurrent with this EUL amendment, we are requesting a revised JUA with HQ USAF Operations, Plans, and Requirements. We are requesting the 84 daily operations cap be amended to no more than 2,555 monthly operations. Our proposed amendments will increase Air Force revenue, provide carriers flexibility, and ensure mission preservation. To attract new business, we continue to seek ways to lower operating costs for our carriers. By increasing non-aeronautical revenue, we lower operating costs, which in turn increases aircraft operations and results in more enplaned passengers. As part of this amendment, we request the ability to pursue the construction of a gas station and convenience store on our leasehold; this will benefit our customers as well as the surrounding community. The proposed project will follow all requirements and coordination with the Air Force necessary to conceptualize and design. We believe this proposal is a “win-win-win” for Eglin AFB, Okaloosa County, and the public. The government will receive guaranteed payments, the Airport will have the opportunity build upon its growing success, and the community will benefit from highly competitive travel opportunities. Additional benefits include external funding to improve and repair the airfield and its infrastructure and the ability to qualify for other mutually beneficial grants and opportunities. This realization is fundamental to our Tri-County Partnership Initiative and the ideals promoted by the AF Community Partnership Program. Thank you again for the years of support and for taking the time to review our proposal. We value our partnership and look forward to working toward our future together. Respectively Submitted, Charles K. Windes, Jr. Chairman Cc: Mr. John Hofstad, County Administrator Mr. Tracy Stage, A.A.E., Airports Director Brig. Gen. Christopher Azzano, Commander, 96 Test Wing Col. Craig Johnson, Commander, 96 CEG Mr. Timothy Bennett, Chief, Civil & Foreign Gov. Aviation Mr. Glenn Wagner, 96 CEG