Public Private Partnerships and the MKE Concession Redevelopment Presented by Ismael Bonilla March 31, 2014 February __, 2017

Agenda Public Private Partnerships Existing P3s at Airports General Mitchell International (MKE) Concession Redevelopment

What is a Public Private Partnership (P3)? Arrangement between a public entity and private entity Private entity takes responsibility for public infrastructure or services Usually medium to long term agreement

Cons Pros Lose day to day control Can lose control of personnel Financial flexibility Outside Capital Savings for airlines Reduction of risk Fresh ideas Cons Lose day to day control Can lose control of personnel Higher capital costs

Types of P3s Service Contracts Management Contracts Airport owners contract out specific services (Maintenance services is the most common example) Management Contracts Airport owners contract out the management of facilities or systems (Parking operations is the most common example) Developer Financing and Operation Airport owner contracts with a developer to finance and operate a facility (Parking garages and rental car facilities are the most common examples) Full Privatization Airport owner sells the Airport or enters into a long term lease agreement (San Juan - Luis Munoz Marin International Airport)

Why Seek Private Partnerships? Lower Airport Federal/State Funding Complicated and time consuming process to obtain funding Restrictions by government and sometimes airlines on what you can use funding Need to invest in other areas of the airport Operator versus Developer…What fits your airport

Mall Area

San Juan – Luis Munoz Marin International Airport (SJU) Full privatization Puerto Rico received $615 million upfront from Aerostar Airport Holdings and they entered into a revenue sharing agreement 40 year lease which requires infrastructure investment In 2015, Aerostar updated the baggage handling system, parking facilities, wayfinding, airside improvements and concessions Aerostar operates Concessions Program and Parking

LaGuardia Airport (LGA) Deal is for development, financing and management through 2050 In June of 2016, the Port of Authority of New York and New Jersey entered an agreement with LaGuardia Gateway Partners LaGuardia Gateway Partners will develop a $4 billion terminal replacement $2.2 billion from LaGuardia Gateway Partners $1.8 billion from the Port Authority LaGuardia Gateway Partners will assume all construction risk The Port Authority and LaGuardia Gateway Partners will share revenues earned in the new terminal

Austin-Bergstrom International Airport (AUS) In 2016, AUS and Lone Star Airport Holdings announced their partnership Lone Star will invest $12 million to redevelop the previously unused South Terminal Increased passenger volume has lead to the need for additional space Redeveloped terminal will be used for the low cost carriers Lone Star will also operate and maintain the redeveloped terminal for 40 years

MKE Concession Redevelopment Create new post-security concessions (Concession Mall) and amenities Include concessions and amenities specific to the city of Milwaukee and the State of Wisconsin Improve the passenger’s travel experience Enhance concession program offering (Lounge, Spa) Consolidate security checkpoints into one central checkpoint creating more access to the Concession Mall

Structure of Winning Team at MKE Developer – Invest in base building and common area projects for concessions and security checkpoint Concession Manager – Manage all aspects of concession program Concession Operator- Operate food, retail, and service concessions Lease Administrator – Leasing role and rent collection

Development Tasks Finance, Design, and Construct Building Improvements Finance, Design, and Construct Leasehold Improvements Finance, Design, and Construct Consolidated Security Checkpoints Finance and Undertake Relocation of Museum Develop Post-Security Common Use Lounge

Management Tasks Manage all aspects of the current and future Food & Beverage, Retail and Services Concessions Implement development plan for current and future concession spaces Term will not exceed 20 years

Mall Area

County Compensation Structure The County has established a Concession Fee which is the sum of the Minimum Annual Guarantee Fee plus the Revenue Share Percentage Fee 1.) Minimum Annual Guarantee Fee $5.25 million annually, fixed for year 1 through year 5 Annual escalation equal to the greater of 2% or CIP-U beginning in year 6 2.) Revenue Share Percentage Fee The amount of revenues to be shared with the County after the minimum annual guarantee has been paid and the annual amortization of the development costs has been recouped

Questions?