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

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

3. 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

4. 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

5. 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)

6. 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

7. Mall Area

8. 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

9. 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

10. 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

11. 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

12. 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

13. 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

14. 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

15. Mall Area

16. 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

17. Questions?