Okaloosa County BOCC — August 6, 2013 — Resolution for Airport Revenue Refunding Bonds, Series 2013 — reading text

communications infrastructure, and a 12,000 square foot combination cargo and maintenance building. The Airport maintenance department, responsible for maintaining County-owned buildings, grounds, and apron areas, currently utilizes 4,000 square feet in the 12,000 square foot cargo maintenance building. Other Airports In addition to the Airport, the County also owns and operates two general aviation facilities, Bob Sikes Airport and Destin/Ft. Walton Beach Airport. Bob Sikes Airport. Bob Sikes Airport is located northeast of the City of Crestview and is approximately 18 miles north of the Airport. It is a public-use airport accommodating general aviation, air taxi and some military operations. Runway 17/35 at Bob Sikes Airport has a length of 8,005 feet, width of 150 feet, and has precision instrument approach capabilities. Both the runway and taxiway have been resurfaced and upgraded within the last 2 years. Approximately 50 aircraft are based at Bob Sikes Airport and a full service fixed base operator (FBO), Emerald Coast Aviation, supports local and transient operators. The Bob Sikes Airport location is home to several major defense-related companies, including L3 Communications and BAE Systems. 28 Destin/F't. Walton Beach Airport. Destin/Ft. Walton Beach Airport is located approximately 6 miles southeast of the Airport. The public use general aviation airport has a 5,000-foot runway and is supported by non-precision instrument approaches. Approximately 75 aircraft are based at Destin/Ft. Walton Beach Airport, and the airport's two FBOs, Regal Aviation and Destin Jet, provide fueling and aircraft parking services to local and itinerant aircraft. Southern Airways Express has recently begun commercial charter service from Destin to four cities in the southeast: Memphis, New Orleans, Birmingham and Oxford, Mississippi. Airlines Serving the Airport Since 1990, aviation activity at the Airport has produced stages of both strong growth and declines in operations. In terms of passenger service, the Airport has a history of serving mainly as a spoke airport or a destination point for a number of hub carriers. As of July 2013, the Airport had scheduled daily non-stop passenger service provided by four U.S. carriers: American Airlines, Delta Air Lines, United Airlines and US Airways. Delta Air Lines has the largest market share and currently operates 10 daily departures together with its affiliates. As a percent of total departures, Delta and its regional partners operate over 50 percent of the Airport’s total departures. Enplanements Over the long term, total enplaned passengers at the Airport have increased. From 2003 to 2012, total enplanements grew at an annual compound growth rate of 0.91 percent. Total annual enplaned passengers increased from 355,367 in 2003 to 385,428 in 2012. The 2006 figure decreased at a rate of 9 percent due to Delta's bankruptcy filing and subsequent cutback in service. The increase in 2011 and decrease in 2012 was as a result of Vision Airlines’ entry into and exit of the market as described under the subheading "Airline Market Share" below. (REMAINDER OF PAGE INTENTIONALLY LEFT BLANK) 29 Historical Enplanements Annual Fiscal Enplaned Percent Year Passengers Change 2003 355,367 - 2004 388,958 9.5% 2005 407,053 4.7% 2006 370,558 -9.0% 2007 411,116 9.0% 2008 391,027 -2.5% 2009 386,724 -1.1% 2010 370,534 -4.2% 2011 447,242 20.7% 2012 385,428 -13.8% 2012 (10 months ending July) 315,239 2013 (10 months ending July) 304,782 -3.3% Average Compounded Annual Growth Rate 2003-2012 0.91% Source: Okaloosa County Airports Department Airline Market Share For the Fiscal Year 2012, Delta Air Lines and its regional affiliates had the largest share of the Airport’s origination and destination ("O&D") passengers, accounting for nearly 53 percent of O&D passengers with service to Atlanta. American Airlines had the second-largest market share, with just under a quarter of the market at 20.7 percent, with service to Dallas/Ft. Worth. US Airways had the third largest share at 15.6% with separate daily flights to Charlotte and to Washington’s Reagan National Airport. Fourth place went to United, which had merged with Continental and continued service to Houston. Prior to its bankruptcy declaration, Delta had approximately 70% of the Airport's market share for Fiscal Years 2002-2005, but after merging with Northwest, it stopped service to Memphis. The Airport experienced a significant but temporary increase in enplanements in 2011 when Vision Airlines experimented with less than daily service to as many as 20 different cities. This overextended service effort proved to be unworkable and Vision withdrew from the market in March 2012. Set forth below is a table showing historical enplaned passengers by airline for Fiscal Years 2008-2012. 30 Historical Enplaned Passengers by Airline FY 2008 FY 2009 FY 2010 FY 2011 FY 2012 Enplaned Enplaned Enplaned Enplaned Enplaned Airline Passengers Share Passengers Share Passengers Share Passengers Share Passengers Share Delta 205,211 51.3% 189,831 49.1% 204,530 55.4% 207,182 46.2% 202,360 52.5% Northwest °82,515 20.6% 59,619 15.4% 7,666 2.1% 0 0.0% 0 0.0% American 83,164 20.8% 74,587 19.3% 71,283 = 19.3% 76,989 17.2% 79,782 20.7% United/Continental 15,764 3.9% 25,734 6.7% 37,161 10.1% 38,973 8.7% 40,113 10.4% US Airways 13,036 3.3% 36,550 9.5% 48,590 13.2% 50,507 11.3% 60,035 15.6% Vision . 75,219 16.8% _ 2,875 0.7% Airport Total 399,690 100.0% 386,321 100.0% 369,230 100.0% 448.870 100.0% 385,165 100.0% = Source: Okaloosa County Airports Department Top 10 Origin and Destination Markets Atlanta Hartsfield has historically been the top O&D market for the Airport because of its close proximity to the Airport, as well as its status as Delta Air Lines’ primary hub; however, beginning in 2006, Dallas began to overtake it and is now the top-ranked O&D market. Top 10 Origin and Destination City Markets — Fiscal Year 2012 Top 10 Origin and Destination City Markets — Fiscal Year 2012 Total O&D Cumulative Rank City Pairs Passengers Percent Percentage 1 DFW Dallas/Ft. Worth 62,489 16.21% 16.21% 2 DCA Washington DC 32,139 8.34% 24.55% 3 ATL Atlanta 20,408 5.29% 29.84% 4 STL St. Louis 18,722 4.86% 34.70% 5 DEN Denver 18,307 4.75% 39.45% 6 LAX Los Angeles 16,836 4.37% 43.82% 7 LAS Las Vegas 15,619 4.05% 47.87% 8 TAH Houston 15,484 4.02% 51.88% 9 ORD Chicago 15,434 4.00% 55.86% 10 CLT Charlotte 15,001 3.89% 59.75% Top 10 O&D Passengers 230,439 59.75 Remaining O&D Passengers 154,989 40.25% Total O&D Passengers 385,428 100.00% Source: Okaloosa County Airports Department (REMAINDER OF PAGE INTENTIONALLY LEFT BLANK) 32 Aircraft Operations Set forth below is a table showing Commercial Operations at the Airport for the fiscal years 2008-2012. Commercial Operations Fiscal Airport Year Operations 2008 16,062 2009 15,018 2010 18,692 2011 20,502 2012 15,724 Compounded Annual Growth Rate 2008 — 2012 % Source: Okaloosa County Airport Department Landed Weight The table set forth below presents the historical share of landed weight by commercial airlines at the Airport between Fiscal Year 2008 and Fiscal Year 2012. As shown, Delta carriers and Northwest had a combined 42 to 66 percent share of Airport landed weight between Fiscal Year 2008 and Fiscal Year 2012. This percentage fell over the period as the merged Delta cut direct flights to Memphis. (REMAINDER OF PAGE INTENTIONALLY BLANK) 33 Landed Weight’? FY 2008 FY 2009 FY 2010 FY 2011 FY 2012 Landed Landed Landed Landed Landed Weight Weight Weight Weight Weight Airline (1,000 Ibs) Share (1,000 Ibs) Share (1,000 Ibs) Share (1,000 Ibs) Share (1,000 Ibs) Share Delta 179,642 42.1% 207,066 43.6% 241,044 42.7% 236,845 41.9% 230,281 52.9% Northwest 102,821 4.1% 80,629 17.0% 12,080 2.1% 0 0.0% 0 0.00% American 80,356 18.8% 90,318 9.0% 86,947 15.4% 82,236 14.6% 82,596 19.0% United/ 64,180 15.0% 47,962 10.1% 41,061 7.3% 38,492 6.8% 41,154 9.4% Continental US Airways 49,062 10.3% 73,652 13.0% 64,567 11.4% 76,542 17.6% Vision 142,941 25.3% 5,084 1.2% Airport 426,999 100.0% 475,037 100.0% 454,784 100.0% 565,081 100.0% 435,657 100.0% Total ) Weight in 1,000 pound units. ® Columns may not add to totals shown because of rounding. Source: Okaloosa County Airports Department Passenger Facility Charges Passenger Facility Charges ("PFCs") are collected by air carriers serving an airport and are remitted to the airport less a small handling charge. PFCs are available to airports to finance certain projects that (1) preserve or enhance capacity, safety or security of the national airport transportation system, (ii) reduce noise resulting from an airport, or (iii) furnish opportunities for enhanced competition among air carriers. PFC applications are approved by the Federal Aviation Administration (the "FAA") for specific projects and for specific amounts for each project. The airport may only impose the designated PFC until it collects the authorized total amount of that application. Interest earnings on collections count against the application total. Under certain circumstances, the FAA grants approval to commence collection of PFCs ("impose only" approval) before approval to spend the PFCs on approved projects ("use" approval) is granted. Approval to both collect and spend PFCs is referred to as an "impose and use" approval. Collected PFCs may be spent on projects in approved applications, regardless of the Charge Effective Date (i.e., the date on which the FAA expects the airport to begin collecting PFCs) of the application. The County is currently collecting PFCs at the rate of $4.50 per passenger for each eligible flight segment flown (eligible flight segments are limited to the first two airports where PFCs are imposed for one-way tickets and the first two enplaning airports (outbound) and least two enplaning airports (inbound) on round-trip tickets) The County is currently authorized to impose and use up to $47,609,515 in PFCs through the Projected Expiration Date of July 1, 2031. (For purposes of the preceding sentence, "Projected Expiration Date" means the date on which the County is expected to have collected enough PFCs to pay for the projects and financing costs for which it has approved PFC applications.) As of June 30, 2013, the County had collected PFCs in the amount of approximately $18,343,391, which included interest earnings of $1,317,373. The County is now in the process of preparing a new PFC application to be filed with the FAA. If this application is approved, the number of PFC-eligible projects and 34 approved collections will be increased and a new project expiration date will be calculated. The PFCs are pledged to secure the Series 2013 Bonds, but are not pledged to secure the Series 2007 Bonds, which are secured by Customer Facility Charges. Set forth below is a table showing historical PFC Revenues received by the County. Historical PFC Revenues Fiscal Year Amount 2007 $1,501,007 2008 1,533,959 2009 1,525,101 2010 1,466,902 2011 1,496,214 2012 1,543,113 2013 (__ months ending ) Since 2003, PFC Revenues have been sufficient to pay debt service associated with the County's Series 2003 Bonds that form a part of the Refunded Indebtedness. No assurance can be given that PFCs will actually be received in the amount or at the time contemplated by the County. The amount of actual PFC Revenues collected, and the rate of collection, will vary depending on the actual levels of qualified passenger enplanements at the Airport. In addition, the FAA may terminate the County's ability to impose PFCs, subject to informal or formal procedural safeguards, if (1) the County fails to use its PFC Revenues for approved projects in accordance with the FAA's approval, the PFC Act or the PFC Regulations, or (2) the County otherwise violates the PFC Act or the PFC Regulations. The County's ability to impose a PFC may also be terminated if the Airport violates certain