Existing Airport Sells for $99 Million

We passed another major milestone this week, with the announcement of an agreement to sell the existing airport site to PCA Development of Pittsburgh for $99 million, including $61 million in cash and approximately $38 million in transfer fees paid over the next 90 years.

And remember - the redevelopment of the existing site is subject to state and local approvals. The developer will have to go through the DRI process, just like anyone else would have to do. The Airport Authority does not have any say in how the existing property is developed. But the people of Bay County do.

We'll have plenty of opportunity to have our say about the future of the property.

He are the details from the the Airport Authority press release:

"The Panama City – Bay County International Airport and Industrial District (Airport Authority) announced today it had named PCA Development, LLC, of Pittsburgh, PA, as the successful bidder for the sale of the existing 714-acre airport property in Panama City, Florida, at a purchase price of $99 million made up of $61 million in cash and an estimated $38 million in transfer fees to the Airport Authority from the future sale of property on the current site.

The final selection of PCA is contingent on the completion of a contract for sale and an irrevocable letter of credit consistent with the terms of the bid. A target limit of 45 days has been set for the negotiations. Also, the Airport Authority will continue discussions with Community Airport Development, LLC, (CAR) of Salt Lake City, UT, a second bidder in this process, to serve as a back-up in the event talks with PCA fail. If talks with both fail, the Airport Authority will continue discussions with RMC Investments, LLC, of Panama City Beach, FL, which earlier had submitted a bid, or reject all bids.

“This is a great deal for Bay County,” said Bill Cramer, Airport Authority vice chairman and leader of the Authority’s negotiating efforts. “Our objective from the beginning was to negotiate a bid and sale price that would enable us to build a first-class airport to serve our region for the indefinite future. We are very pleased with the terms reached. We believe the sale price fairly reflects the market value of the property and is a significant improvement over the prior bids.”

The sale of the existing airport property is a component of the financial plan for relocation of the airport to a site donated by The St. Joe Company (NYSE: JOE) at West Bay in northwestern Bay County. The net proceeds of the sale are to be used for the construction of the new airport.

The $61 million will be paid in a lump sum at the time of transfer of the property. There will be a 0.50% transfer fee on approximately 60% of the housing units sold by PCA. The remaining property will likely be affordable housing, assisted living or rental/hotel accommodations. The fees will be in place for up to 90 years. The total projected value of the transfer fees in total dollars is estimated to be $38 million over thirty years. The total projected value of the transfer fees over this time in constant dollars (present value) is estimated to be $14.7 million. Substantial funds will be available in the subsequent 60 years of the agreement to fund expansion and maintenance of the airport.

The final PCA bid of $61 million in cash and $38 million in improved income from transfer fees over 90 years was significantly better than an earlier bid with a total value of $75 million, which limited the income from transfer fees to 30 years.

“This successful bid provides cash when the property is transferred and the opportunity to share substantially in long-term revenues gained during the sale of property as the land’s value increases.” Cramer said. “We also will continue talks with other firms in the event the PCA talks fail.”

“It’s important to remember that the future use and development of the airport property will be decided by the purchaser, with appropriate input and oversight from Panama City officials,” Cramer said. “The development of the site will be subject to regulations governing developments of regional impact (DRI’s), which provide regional and state oversight, in addition to local processes and protections.”

“The Airport Authority will not oversee the future development of the property,” said Cramer. “However, PCA is known for the quality of their work, and we believe they will work closely with Panama City, Bay County, and state and regional officials to develop a project that benefits Panama City, Bay County and all of Northwest Florida.”

Completion of the sale of the existing airport property will finalize an important component of the financial plan to relocate the airport. The Florida Department of Transportation (FDOT) has committed $119 million in grants to the project since the relocation effort began. The Federal Aviation Administration (FAA) has committed a minimum of $72 million in federal funding for the project, with $25 million coming in the current federal fiscal year. The Airport Authority will also use its annual federal airport entitlement funds, totaling approximately $7 million, to help pay for relocation.

The St. Joe Company has agreed to donate 4,000 acres to the Airport Authority when all permits and funding for relocation are in place. Previously St. Joe announced it had recorded a conservation easement for 9,609 acres, to implement the Airport Authority's mitigation plan for environmental impacts of the relocation and construction of the Panama City-Bay County International Airport. The easement becomes permanent upon commencement of construction of the new airport."