FINANCING and THE AIRPORT What is the Airport’s Point Of View? Presented by Diane Gillam Properties and Senior DBE Manager

FINANCING The first step is for a Request For Proposals (RFP) to be published. The RFP provides what the airport is looking for in a concessionaire. The RFP provides information such as the passenger profile, the number of flights, existing concessionaires, sales volume for the current concessionaires, etc. The biggest thing that the RFP provides is the selection criteria and value placed on each criteria.

FINANCING For example, when the Birmingham Airport Authority published RFPs in November, 2011, we listed the following: Financial Return to the Authority/Airport ACDBE Program Concept and Design of the Food and Beverage and Retail/News/Gift Concessions. Proposed Capital Investment Plan and Financial Capability Operations and Management Plan and Firm’s Experience Marketing Plan

FINANCING The Airport is trying to get the best partner for the duration of the contract. The Airport is generally looking for a beneficial concept to provide its traveling public.

WHAT ARE THE RULES AND REGULATIONS THAT APPLY FOR THE AIRPORT?

FINANCING If the Airport receives FAA funding, then they will be seeking ACDBE participation in any and all Proposals. The FAA provides rules and regulations that the airport must adhere to if it receives federal funding. Its Grant Assurances provides that there will be no discrimination in any aspect.

FINANCING All contracts must contain non-discriminatory language. The FAA does not allow long term contract (more than five years) without their prior written approval.

FINANCING 49 CFR Part 23 provides for a level playing field for disadvantaged individuals and to provide fair (i.e. nondiscriminatory) access to concession opportunities.

JOINT VENTURE If you are providing a Joint Venture, then the following must be provided: Identification of the participants in the Joint Venture as well as their capital investment and percentage of ownership Identification of the single, for-profit business enterprise to be undertaken by the joint venture.

JOINT VENTURE Capital to be contributed by each party. Term of the joint venture agreement and factors effecting the term. Accounting methods and distribution of profits/losses. Management of the joint venture’s business. Administrative matters. Dissolution.

JOINT VENTURE The FAA does not want the Prime to be the lender, but if the ACDBE cannot find financing, the regulations provide that the Prime must loan the money at market interest rates. The FAA provides language that the Prime Contractor will be the Lender of Last Resort if financing cannot be obtained through other means.

JOINT VENTURE The Non-ACDBE joint venture participant CAN loan capital to the ACDBE joint venture participant with some restrictions: The loan must be evidenced by a promissory note or loan agreement clearly stating the terms and conditions of the loan;

JOINT VENTURE The terms and conditions of such a loan should be comparable to prevailing market conditions offered by commercial lenders for similar type projects; The note should be a full recourse note and personally guaranteed by the ACDBE and/or secured by assets outside of the ownership interest or future profits of the joint venture;

JOINT VENTURE The loan should not be for 100% of the capital requirement. The ACDBE should invest capital from its own resources or through a third-party arms-length loan at market conditions; Generally 10%-20% of the capital required is recommended as a benchmark for the ACDBE to provide of their own money;

JOINT VENTURE The term of the loan should not be longer than the term of the contract under which the joint venture operates; There must not be provisions in the loan agreement either with the Prime or an outside financing entity which have the effect of limiting the ACDBE’s ability to control its business or independently perform its designated role in the joint venture’s business.

SHORT TERM LENDING PROGRAM The USDOT Office of Small and Disadvantaged Business Utilization (OSDBU) Financial Assistance Division (FAD) offers a SHORT TERM LENDING PROGRAM

SHORT TERM LENDING PROGRAM The Short Term Lending Program (STLP) enables small businesses to gain access to the financing they need to participate in transportation-related contracts. The STLP provides a loan guarantee on a revolving line of credit Primary collateral is receivables from transportation contract(s). Participants can apply for renewal for up to five (5) years.

SHORT TERM LENDING PROGRAM The Maximum Loan Amount is $750,000. Subcontract at any tier in transportation related field. Application fee shall not exceed $150.00 payable to the bank. Variable interest rate – currently WSF Prime Plus 2% (The current Floor rate is 6.5%) The Loan application processing turnaround is 30-45 days.

SHORT TERM LENDING PROGRAM The charge the applicant pays, a “Bank Fee” that is standard and reasonable in regard to their normal operating procedures may change (closing costs, legal fees, document origination, etc.)

SHORT TERM LENDING PROGRAM THE STLP ELIGIBILITY REQUIREMENTS ARE: Certified as a DBE/ACDBE under DOT certification guidelines (49 CFR, part 23 & 26) OR Certified by the US. Small Business Administration 8(a) Small Disadvantaged Business; HUBZONE Empowerment Contracting Program; and Service-Disabled Veterans.

SHORT TERM LENDING PROGRAM Have a current Transportation-Related Contract Must be current on Federal Taxes ** Startup businesses are not eligible to apply for the STLP. You must have an established track record **

SHORT TERM LENDING PROGRAM STLP ELIGIBLE ACTIVITIES: Maintenance Rehabilitation Restructuring Improvements OR Revitalization of any of the nation’s transportation modes – Public, Commercial, Federal, State, or Local Agency.

SHORT TERM LENDING PROGRAM FUNDS ARE NOT AVAILABLE FOR: EQUIPMENT PURCHASES; LONG-TERM DEBT; REFINANCE OF EXISTING DEBT; PAYMENT OF NON-CURRENT TAXES; DISTRIBUTIONS OR OTHER PAYMENTS TO STOCKHOLDERS; OR 100% CONTRACT MOBILIZATION

SHORT TERM LENDING PROGRAM FUNDS ADMINISTRATION Funds are borrowed against each invoice of the contract(s). Loan processing and servicing is performed by the Participating Lenders. The funds are borrowed and advanced to the borrower against each invoice of the contract(s) being financed – up to 85% of the invoice total.

SHORT TERM LENDING PROGRAM Each invoice is paid directly to the Participating Lenders by the Project Owner or Prime Contractor with a two-party check addressed to the Lender and the Borrower. Repayment occurs as the Participating Lender takes out amount drawn down from Principal including interest, and the bank releases the balance to the borrower.

SHORT TERM LENDING PROGRAM YOU CAN FIND ADDITIONAL INFORMATION ON THIS PROGRAM AT: https://www.transportation.gov/osdbu/ financial-assistance/short-term-lending-program

Thank you for your interest of the Airport’s Point of View. Let’s turn things over to our next Presenter…..