Lake County Port Investment Task Force February 10, 2020 AGENDA - PowerPoint PPT Presentation

Lake County Port Investment Task Force February 10, 2020

AGENDA Welcome & Introductions Task Force & Project Overview Project Update Local Revenue Feasibility Study Questions Recommendations & Next Steps

TASK FORCE Purpose: Consensus building process to discuss and develop a solution for the required airport infrastructure investment. Members: • 2 mayors from communities • 2 Lake County Board within the WPD boundaries members • 2 mayors appointed by • 2 members appointed by the LCML outside of the WPD WPD Board boundaries • 2 corporate representatives • Lake County Partners

TASK FORCE Members: Waukegan Mayor Sam Cunningham – In District Mayor • Beach Park Mayor John Hucker – In District Mayor • Kildeer President Nandia Black - LCML • Fox Lake Mayor Donny Schmit - LCML • Lake County Board Member Diane Hewitt – District 2 • Lake County Board Member Mike Rummel – District 12 • Greg Petry - WPD • Bob Hamilton - WPD • Kevin Considine – Lake County Partners • Christina Lee, AbbVie – Corporate Representative • Dale Johnson, Abbott – Corporate Representative •

TASK FORCE Task Force Recommendations: • Requested background information • Conduct local funding analysis • Focus on airport investment/ delay harbor improvements • Other 2/14/2020 5

WPD BACKGROUND • Created by Illinois Statute in 1955 • Seven-member volunteer Board of Directors • Self-funded through fees & grants • Never levied a tax WPD Boundaries: Waukegan, Beach Park, Park City, North Chicago, Gurnee, 2 miles into Lake Michigan

AIRPORT • FAA designations: “National Asset” • 18,000 visitors annually and reliever for O’Hare • Proximity to UGN makes Lake • Serves national and global markets County a desirable business location • On-site U.S. Customs

AIRPORT ECONOMIC IMPACT • $156.5 million economic impact • 723 jobs and $54 million in payroll • $11+ million in tax revenues to state and local governments • 18,000 visitors generate $2.9 million in direct spending • 21,000 people are employed by Lake County corporations that use the airport

EXISTING CONDITIONS • Runway does not meet minimum FAA design and safety standards • Existing runway length and strength are inadequate for existing and future use.

RUNWAY REPLACEMENT • The main runway needs to be replaced at a total cost of $142 million. • State and federal assistance: 55-76% of the total project costs • $34-$64 million local match needed

AIRPORT CONSTRUCTION ECONOMIC IMPACT

PROJECT UPDATE • Environmental Assessment - Draft Document Delivered for Airport Review • IDOT – Green Bay Rd. Widening Project Moving Forward • FAA – Numerous Coordination Meetings and Document Review • Lake County Forest Preserve District – Continued IGA Coordination • Other

PROJECT UPDATE Stakeholder Outreach: Corporate Users: • Local Municipalities ABBOTT LABORATORIES based ABBVIE based • State Officials BAXTER HEALTHCARE based • Users BOEING COMPANY BRUNSWICK CORP. based • 11 Separate Stakeholder/ Resource CARDINAL HEALTH Agency meetings since last September CNH AMERICA based DASSAULT FALCON JET FORTUNE BRANDS based Awareness & Engagement GULFSTREAM AEROSPACE CORP JET AVIATION • Updated Fact Sheet KLEIN TOOLS based • Video in development REYES HOLDINGS based ULINE based • Earned media opportunities WW GRAINGER INC based

AIRPORT TOTAL ESTIMATED PROGRAM COST ESTIMATED COST PROGRAM PHASE Completion of Initial Planning $700,000 Land Acquisition $28,000,000 Management and Implementation Planning $2,000,000 Roadway Tunnel Construction $40,000,000 Illinois Route 131 Relocation $6,400,000 Construct Relocated Runway 5/23 $41,900,000 Construct Parallel Taxiway Bridge $8,900,000 Install New Runway 5/23 NAVAIDS $5,700,000 Conversion of Existing Runway 5/23 to a Taxiway $4,000,000 Construct a Parallel Taxiway A & Complete AO A $5,100,000 Fencing Estimated Total Project Cost $142,700,000

VIABLE FUNDING SOURCES STATE PUBLIC PRIVATE FEDERAL PARTNERSHIPS • Airport Improvement Program • State Match of Federal Funds (AIP) – Traditional • Local Funding Sources • Illinois Division of Aeronautics • Airport Improvement Program (IDA) State-Local • User Contributions (AIP) – Letter of Intent (LOI) • Illinois Department of • Other • FAA – Facilities and Transportation (IDOT) Equipment Program Highways Funding • AIP Supplemental Appropriation

SB FRIEDMAN INTRODUCTION SB Friedman Development Advisors is a Chicago-based consultancy working with the public and private sectors in a range of disciplines Market analysis and real estate economics • Development strategy and planning • Public-private partnerships and implementation • Project Team FRAN LEFOR ROOD, AICP RYAN SCHMITT, AICP ESTEFANY NORIA Senior Vice President Associate Project Manager Associate

OVERVIEW OF ANALYSIS • Project likely requires $34-65 million in local funding match • Up front local grant unlikely • Bond issuance will likely be required with dedicated revenue stream for repayment • Purpose of feasibility assessment: (1) Evaluate variety of potential local revenue options $ • Prepare order of magnitude revenue projections • Identify benefits and challenges of funding sources (2) Evaluate potential bonding authority and capacity of various political districts (3) Provide information for Task Force to decide which avenues to pursue

POTENTIAL LOCAL FUNDING SOURCES THERE ARE NO EASY • Range of revenues explored: General fund revenues FUNDING SOLUTIONS • Property taxes • Airport lease rates/user fees • ALL REVENUE SOURCES Motor fuel tax revenues • HAVE CHALLENGES Tax increment financing (TIF) • • Revenue sources can be combined to meet POLITICAL WILL, needs of project REBALANCING OF SPENDING • Local government entity/entities would need to PRIORITIES AND/OR take action NEW REVENUE STREAMS Allocate portion of existing revenue stream(s) • WILL BE NEEDED Create new dedicated revenue stream(s) for project • Issue bonds for project costs •

POTENTIAL LOCAL FUNDING SOURCES Airport-Generated Revenues Must consider competitive implications Potential to increase existing rates and fees to align with competitors • • Neighboring airports do not appear to charge landing fees • Potential to impose new landing fee on corporate/business operations • Replacement runway should provide advantages to users • WAUKEGAN CHICAGO KENOSHA POTENTIAL PROJECTED REVENUE NATIONAL AIRPORT EXECUTIVE AIRPORT REGIONAL AIRPORT NEW UGN FROM INCREASE (UGN) (PWK) (ENW) RATE OR FEE (30-YEAR PERIOD) [1] Lease Rate $0.51 $0.91 $0.21 $0.65-0.75 $1.3-2.2 M Average $/SF [2] Fuel Flowage Fee $0.14 $0.19 $0.15 $0.15-0.19 $0.3-1.6 M Per JetA gallon T-Hangar Fee $425 $594 -- $594 $0.2 M Large Hangar, Per Month Landing Fee -- -- -- $50-250 $4-20 M Per corporate user landing [3] [1] Discounted using 6.5% cost of funds. [2] $0.65-0.75/SF lease rate based on conversations with Waukegan National Airport. Current lease rate for Waukegan National Airport is weighted average per year in 2019. Lease rate for Chicago Executive Airport is average per year sourced from 2019 Comprehensive Annual Financial Report. Lease rate increase applies only to leaseholders with leases equal to or greater than 1.8 acres after current lease expiration dates. [3] $50-250 fee based on conversations with Waukegan National Airport. Levied on half of total annual corporate operations, defined as Business Aviation operations. Per 2019 Update Forecast Working Paper, Business Aviation counts totaled 8,805 in 2017. Assumed annual inflation for corporate operations is consistent with inflation in 2019 Update Forecast Working Paper. Assumed fee increased 1% annually. Source: Chicago Executive Airport; City of Kenosha; Crawford, Murphy & Tilly; Ordinance 19-O-03; SB Friedman; Waukegan National Airport; Waukegan Port District Series 2019

POTENTIAL LOCAL FUNDING SOURCES Motor Fuel Tax (MFT) - Municipalities Assumes 7 communities dedicate a portion of new MFT allocation • MFT funds can be used for roadway and associated infrastructure components • Could generate $6-12 M over 20-year period [1] • • Requires communities to prioritize airport project over other transportation needs PORTION OF NEW MFT FUNDS COMMUNITY REASON FOR ALLOCATION ALLOCATED TO PROJECT Beach Park 5-10% Within WPD boundary Gurnee 5-10% Within WPD boundary Lake Forest 20-30% Corporate user headquarters North Chicago 20-30% Within WPD boundary; Corporate user headquarters Park City 5-10% Within WPD boundary Wadsworth 5-10% Within WPD boundary Waukegan 25-50% Within WPD boundary; Contains airport [1] Discounted using 6.5% cost of funds. Source: Bureau of Labor Statistics (BLS); Esri; Illinois Department of Revenue (ILDOR); Illinois Department of Transportation (IDOT); SB Friedman; U.S. Census