Strategic Recommendations and Development Plan for Southern Illinois Airport Property

Home , Illinois Route 13, James Jabara

STRATEGIC RECOMMENDATIONS AND DEVELOPMENT PLAN FOR SOUTHERN ILLINOIS AIRPORT PROPERTY

Report To

From

GRUEN GRUEN + ASSOCIATES Urban Economists, Market Strategists, and Land Use/Public Policy Analysts

In Association With

HANSON PROFESSIONAL SERVICES INC.

August 2013

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STRATEGIC RECOMMENDATIONS AND DEVELOPMENT PLAN FOR SOUTHERN ILLINOIS AIRPORT PROPERTY

A Report to

THE SOUTHERN ILLINOIS AIRPORT AUTHORITY AND JACKSON GROWTH ALLIANCE

From

GRUEN GRUEN + ASSOCIATES Urban Economists, Market Strategists, and Land Use/Public Policy Analysts

In Association With

HANSON PROFESSIONAL SERVICES INC.

August 2013

APPLYING KNOWLEDGE CREATING RESULTS ADDING VALUE

C1352

INTRODUCTION

The Southern Illinois Airport has been a significant economic entity in Jackson County for many years. The potential for further economic growth was realized in the 1990’s when the cities of Carbondale and Murphysboro joined with the Southern Illinois Airport Authority and the Jackson County Board to form the Jackson County Business Development Corporation, now known as Jackson Growth Alliance, to promote economic development at the Southern Illinois Airport.

A major initiative of the Jackson County Business Development Corporation was to promote the development of an educational facility at the airport that would provide a permanent home for Southern Illinois University Carbondale’s Aviation Technology, Aviation Flight and Management and Automotive Technology programs. These efforts supported the work of SIU, the State of Illinois and the Southern Illinois Airport Authority that culminated in the opening of the $60 million SIU Transportation Education Center in 2012.

The Transportation Education Center presents tremendous economic development opportunities at the Southern Illinois Airport. In recognition of this potential, Sam Goldman initiated a project in 2011with a working title “Developing a High Tech Zone at Southern Illinois Airport with Special Focus on Manufacturing Innovation.” In August 2011, Sam Goldman led meeting of a small group of selected leaders to discuss the implementation of the project.

A start-up grant for this project was awarded in March 2012, by the Illinois Department of Commerce and Economic Opportunity. Jeff Doherty, Executive Director, Jackson Growth Alliance and Gary Shafer, Manager, Southern Illinois Airport, joined Sam Goldman to form the core group for developing the project. Assistance was provided by the staff of the Entrepreneurship and Business Development Center at SIUC.

Between April 19 and May 10, 2012, four luncheon meetings were held to share information and discuss activities with selected representatives of four groups: entrepreneurs, economic development leaders, educators and elected officials. Over 80 people attended the luncheons.

The Southern Illinois Airport has the assets to implement the nationally emerging concept for development around airports, namely “the airport city”, consisting of an airport-centered commercial core surrounded by aviation-linked businesses. Known as “Aerotropolis”, this concept is being implemented in cities across the country, bringing together airlines, aviation related businesses, universities, communication companies and myriad others important to a city’s future development. The Southern Illinois Airport already includes assets that will enable development including: the SIU Transportation Education Center with its aviation and automotive programs, broadband access to accommodate future technology needs, the Armed Services Readiness Center, the SIH/EMS Disaster Regional Preparedness Response Program, and other emergency related organizations.

The next milestone for developing a High Tech Zone at the Southern Illinois Airport came in September 2012 when the U.S. Economic Development Administration provided a Local Technical Assistance Grant to the Southern Illinois Airport and Jackson Growth Alliance in the amount of $62,000 for the Southern Illinois Airport High Tech Zone Feasibility Study. The federal grant was matched by funds from the Southern Illinois Airport Authority ($25,000), Jackson County Board ($25,000) and Jackson Growth Alliance ($12,000).

The core working group for the project, Sam Goldman, Gary Shafer and Jeff Doherty prepared a Request for Proposals for consulting firms to prepare the study. Eight high profile consulting firms from throughout the United States submitted proposals. After a thorough selection process, the firm of Gruen + Gruen and Associates, in conjunction with Hanson Engineers, was selected to perform the work and a professional consulting agreement was executed in January 2013.

The present report is a major step forward in achieving the goals discussed at the original organizational meeting in August 2011. It provides a plan for success in achieving the goal of making the Southern Illinois Airport an economic center in the southern Illinois region.

Gary Shafer Jeff Doherty Sam Goldman Manager Executive Director Chair Southern Illinois Airport Jackson Growth Alliance Jackson–Union Counties Regional Port District

TABLE OF CONTENTS

Chapter Page

I EXECUTIVE SUMMARY AND DEVELOPMENT PLAN...... …………1

INTRODUCTION ...... 1

WORK COMPLETED ...... 1

DEVELOPMENT PLAN RECOMMENDATIONS ...... 3

Objectives ...... 3

RECOMMENDATIONS ...... 3

1. Emphasize Competitive Advantages for Development ...... 3

2. Mitigate Constraints to Extent Within the Control of the Southern Illinois Airport Authority, Surrounding Municipalities, County, and Southern Illinois University to Influence ...... 3

3. Build off the Existing “Anchor” Occupant to Encourage Spillover Demands Which Benefit Both the Southern Illinois Airport Authority and Southern Illinois University ....7

4. Position Airport to be Able to Compete for Smaller MRO/Aviation Service Activities ...... 7

5a. Establish an Aviation and/or Automotive “On the Field” Applied Research and Developmental Center to Encourage Start-up Business Activity at the Airport and More Intense Use of Research Facilities Available at the Transportation Education Center ....9

5b. Encourage Partnerships to Pursue the Siting of Unmanned Aerial Systems Research and Testing at the Airport ...... 9

6. Complete the Planning and Implementation of an Emergency and Critical Response Center ...... 9

TABLE OF CONTENTS, CONTINUED Chapter Page

7. Integrate and Coordinate Marketing and Recruitment with Municipal and County Economic Development Efforts...... 11

8. Concentrate on Developing and Enhancing Southern Illinois Airport Land and Real Property Assets While Encouraging Adjoining Private Owners to Cooperate and Participate in the Economic Development and Real Estate Development Efforts ...... 12

LAND USE PLAN ...... 13

PRINCIPAL FINDINGS AND CONCLUSIONS ...... 21

Economic Base...... 21

The Geographic Market Area for Industrial and Employment Land Uses ...... 21

Competitive Advantages for Development ...... 22

Competitive Disadvantages for Development ...... 22

Industrial Market Overview and Supply Competition ...... 23

Facilities ...... 23

Nature of Demand Opportunities and Potential Sequence of Development ...... 23

Test Cell Applied Research and Development ...... 24

Dynameters Applied Research and Development ...... 24

Flight Training and Related Training ...... 24

Direct Spillover Demand Opportunity Related to Students, Staff and Faculty of Transportation Education Center ...... 25

Maintenance, Repair and Overhaul and Other Aviation Firms ...... 25

Aviation Research and Testing ...... 26

Applied Research and Developmental Center-Technology Transfer ...... 26

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Results of Survey of Advisory Committee Members of Department of Automotive Technology, Department of Aviation Management & Flight, and Department of Aviation Technologies ...... 27

Case Studies’ Review of Other Education- and Aviation- Related and Automotive-Related Developments ...... 28

Real Estate Economic Analysis of Prototypical Development Alternative ...... 30

Target Uses/Markets ...... 30

Cost Estimate ...... 30

Estimated Debt Service Requirements to Amortize Development Costs ...30

Net Income Unlikely to be Sufficient to Fund Total Amount of Debt Service...... 30

Conclusions about Feasibility of Development ...... 31

II STRUCTURE OF THE ECONOMIC BASE AND TRENDS ...... 32

INTRODUCTION ...... 32

COMPOSITION OF LOCAL AND REGIONAL EMPLOYMENT BASE...... 32

EMPLOYMENT BASE TENDS TO BE LOCAL SERVING IN NATURE ...... 34

NUMBER OF FIRMS BY INDUSTRY SECTOR AND DISTRIBUTION OF FIRMS BY EMPLOYMENT SIZE ...... 35

HISTORICAL EMPLOYMENT GROWTH BY INDUSTRY SECTOR ...... 38

LABOR FORCE AND COMMUTATION STATISTICS ...... 42

Educational Attainment of Labor Force ...... 44

Occupational Characteristics of Labor Force ...... 44

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TABLE OF CONTENTS, CONTINUED Chapter Page

III THE MARKET FOR POTENTIALLY DEVELOPABLE LAND USE OPTIONS ...... 46

INTRODUCTION ...... 46

PRIMARY GEOGRAPHIC MARKET AREA WITHIN WHICH THE SITE WILL COMPETE FOR INDUSTRIAL-AND OFFICE- SPACE USING BUSINESS ...... 46

GEOGRAPHIC ORIGINS OF POTENTIAL SOURCES OF DEMAND ...... 46

COMPETITIVE ADVANTAGES...... 47

COMPETITITVE DISADVANTAGES ...... 47

INDUSTRIAL MARKET OVERVIEW AND SUPPLY COMPETITION ....48

Jackson County/Carbondale Industrial and Business Parks ...... 48

Bicentennial Industrial Park ...... 50

Carbondale Business Park East ...... 50

Southern Illinois Research Park ...... 51

Murphysboro Technology and Industrial Park in Murphysboro ...... 51

Williamson County/ Marion Industrial and Business Parks ...... 52

REDCO Industrial Park ...... 52

Robert L. Butler Industrial Park ...... 52

Williamson County Airport Industrial Park ...... 52

City of Herrin ...... 53

Jefferson County/ Mount Vernon Industrial and Business Parks ...... 53

Rolland W. Lewis Industrial Park ...... 53

Mount Vernon Industrial Park ...... 53

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LAND AVAILABILITY ...... 54

IV PRINCIPAL CONCLUSION ABOUT NATURE OF POTENTIAL DEVELOPMENT OPPORTUNITIES AND SEQUENCE OF DEVELOPMENT ...... 56

Accessibility ...... 56

Control of Land ...... 56

Land Use and Zoning ...... 56

Facilities ...... 56

Existing Public Utilities ...... 57

Nature of Demand Opportunities and Sequence of Development ...... 57

TEST CELL APPLIED RESEARCH AND DEVELOPMENT ...... 58

DYNAMETERS APPLIED RESEARCH AND DEVELOPMENT ...... 59

FLIGHT TRAINING AND RELATED TRAINING ...... 59

DIRECT SPILLOVER DEMAND OPPORTUNITY RELATED TO STUDENTS, STAFF, AND FACULTY OF TRANSPORTATION EDUCATION CENTER ...... 60

MAINTENANCE, REPAIR, AND OVERHAUL AND OTHER AVIATION FIRMS ...... 61

AVIATION RESEARCH ...... 62

Greene County, Ohio ...... 62

Springfield, Ohio...... 62

Okaloosa County, Florida ...... 63

Washington State- Joint Center for Aerospace Technology Innovation ....63

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APPLIED RESEARCH AND DEVELOPMENTAL CENTER-TECHNOLOGY TRANSFER ...... 63

SURVEY OF AVIATION AND AUTOMOTIVE INDUSTRY PARTICIPANTS AFFILIATED WITH THE SIU AVIATION ADMINISTRATION, MANAGEMENTAND FLIGHT, AND AUTOMOTIVE TECHNOLOGY PROGRAMS TO OBTAIN INFORMATION AND INSIGHT ABOUT POTENTIAL DEMAND AND DEVELOPMENT OPPORTUNITIES ...... 64

COMPOSITION OF SURVEY RESPONDENTS ...... 65

Automotive Industry Location Decision Factors ...... 70

Aviation Industry Location Decision Factors ...... 70

ACCESSIBILITY TO TRANSPORTATION EDUCATION CENTER AT SOUTHERN ILLINOIS AIRPORT ...... 71

LIKELIHOOD OF LOCATING IN OR NEAR SOUTHERN ILLINOIS AIRPORT IN NEXT 10 YEARS...... 71

INDUSTRIES OR BUSINESS THAT WOULD FIND SOUTHERN ILLINOIS AIRPORT OR SOUTHERN ILLINOIS UNIVERSITY TEC AN ADVANTAGEOUS LOCATION ...... 72

IMPLICATIONS FOR ATTRACTION OF INDUSTRY OR ORGANIZATIONS TO SOUTHERN ILLINOIS AIRPORT ...... 72

V CASE STUDIES REVIEW OF OTHER EDUCATION- AND AVIATION-RELATED AND AUTOMOTIVE –RELATED DEVELOPMENTS ...... 73

INTRODUCTION ...... 73

KEY FINDINGS AND CONCLUSIONS ...... 75

RESEARCH PARKS WITH AVIATION FOCUS ...... 76

Florida Tech Research Park - Florida ...... 76

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Embry Riddle Research Park- Florida ...... 78

National Center for Aviation Training at Col. James Jabara Airport - Kansas ...... 79

INDUSTRIAL PARKS WITH AVIATION FOCUS ...... 81

Airpark Ohio ...... 81

Elizabeth City Aviation Research & Development Commerce Park – North Carolina ...... 82

Roswell International Air Center – New Mexico ...... 82

RESEARCH PARK WITH AUTOMOTIVE FOCUS ...... 84

Clemson University International Center for Automotive Research ...... 84

VI REAL ESTATE ECONOMIC ANALYSIS OF PROTOTYPICAL AIRCRAFT HANGAR DEVELOPMENT ...... 85

INTRODUCTION ...... 85

POTENTIAL USES/TARGET MARKETS ...... 85

PHYSICAL CHARACTERISTICS OF PROTOTYPICAL HANGAR DEVELOPMENT ...... 85

HANGAR DEVELOPMENT COST ESTIMATE ...... 86

REVENUE NEEDED TO FULLY AMORTIZE DEVELOPMENT COSTS ...... 86

ESTIMATE OF FUNDING SHORTFALL...... 87

Potential Magnitude of Rental Income ...... 87

Debt Sizing Analysis and Capital Funding Shortfall ...... 89

FUNDING SOURCES...... 90

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FAA Airport Improvement Program (AIP) Grants ...... 90

State of Illinois Series B Aeronautics Bonds and Road Funds ...... 90

Airport Revenue Bonds...... 91

Private or Institutional Donations ...... 91

LIST OF TABLES

Table No. Page

I-1 Summary of Land Use Development Program ...... 15

II-1 Comparison of Share of Employment by Economic Sector in 2011 ...... 33

II-2 Business Establishments by Sector for Jackson County: 2000-2010 ...... 36

II-3 Business Establishments by Sector for Williamson County: 2000-2010 ...... 37

II-4 Jackson County Total Public and Private Employment by Sector: 2001-2011 ...... 39

II-5 Williamson County Total Public and Private Employment by Sector: 2001-2011 ...... 41

II-6 Balance Between Labor Force and Job Base of Jackson County: 2010 ...... 43

II-7 Work Location of Employed Jackson County Residents ...... 44

II-8 Educational Attainment of Population 25-Years or Older: 2011...... 44

II-9 Distribution of Jackson County and Williamson County Labor Force by Occupation: 2000-2011 ...... 45

III-1 Industrial and Business Park Inventory in Carbondale ...... 49

III-2 Land Available in Carbondale and Marion ...... 55

IV-1 Industry Sector Make-up of Aviation Industry Respondents ...... 66

IV-2 Industry Sector Make-up of Automotive Industry Respondents ...... 67

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LIST OF TABLES Table No. Page

IV-3 Number of Respondents by Expansion Plans within the Midwest in Next 10 Years ...... 68

IV-4 Mean Rating of Locational Factors...... 69

IV-5 Likelihood of Locating a Facility Near the Southern Illinois Airport in the Next 10 Years ...... 71

V-1 Characteristics of Airport Studied and Comparison of Economic Bases ...... 74

VI-1 Characteristics of Prototypical Aircraft Hangar Development ...... 86

VI-2 Hangar Development Cost Estimate ...... 86

VI-3 Annual Debt Service if Entire Development Cost ($5,600,000) Could be Financed ...... 87

VI-4 Sample of Larger Hangar Space Rents ...... 88

VI-5 Debt Sizing Analysis Based on Range of Potential Rental Rates ...... 89

VI-6 AIP State Block Grant Funding in Illinois ...... 90

LIST OF FIGURES Figure Page

I-1 Land Use Development Plan ...... 14

I-2 Road Development Plan ...... 19

I-3 Airport Development Plan ...... 20

II-1 Location Quotient by Industry Sector for Jackson County by Using Southern Illinois as a Base ...... 35

II-2 Share of Manufacturing Firms by Employment Class Size in Jackson County ...... 38

II-3 Annual Employment Growth Rate for Select Industries in Jackson County and Williamson County ...... 42

LIST OF MAPS

Map Page

III-1 Land Available in Carbondale and Marion ...... 54

LIST OF APPENDICES

Appendix Page

A Synthesis of Aviation Industry News Articles on Location Announcements ...... 92

B Exhibit of Utilities in Proximity of Southern Illinois Airport...... 94

STRATEGIC RECOMMENDATIONS AND DEVELOPMENT PLAN FOR SOUTHERN ILLINOIS AIRPORT PROPERTY

CHAPTER I

EXECUTIVE SUMMARY AND DEVELOPMENT PLAN

INTRODUCTION

To provide an information base for the preparation of a development plan for the Southern Illinois Airport, this report by Gruen Gruen + Associates (GG+A) and Hanson Professional Services Inc. (Hanson) summarizes the assessment of potential market opportunities related to industrial, office, and residential uses. This report also summarizes the research completed to evaluate potential opportunities related to aviation uses, including case studies’ review of the characteristics and conditions that make education- and aviation-related and automotive-related economic development viable. In addition, this report summarizes an assessment of infrastructure conditions and a real estate feasibility analysis of a postulated prototypical development project.

Based on a synthesis of the research and analysis completed, this report also identifies a strategic action development plan for the Southern Illinois Airport and presents recommendations for implementing the plan.

WORK COMPLETED

To develop the information base, GG+A and Hanson completed the following principal tasks:

• Conducted interviews with the Southern Illinois Airport Authority Manager, Jackson Growth Alliance Executive Director and Chairman, City of Carbondale City Manager and Economic Development Coordinator, Murphysboro Chamber of Commerce Executive Director, Jackson and Union Counties Regional Port District Chair, Williamson County Regional Economic Development Corporation Director, Jefferson County Development Corporation Executive Director, the Southern Illinois Research Park Executive Director, and the Regional Hospital Coordinating Center Coordinator for Disaster Preparedness for the Region 5 Office.

• Conducted interviews with a Vice President of Hotel Builder’s of America, a local developer of hotel, office, and other types of building space; two Vice Presidents of Southern Illinois Healthcare; the Publisher of The Southern Illinoisan; two real estate brokers with the Barber Murphy Group; a broker with Colliers and a broker with Jones Lang LaSalle representing the Commemorative Air Force1;

• Conducted interviews with participants in the aviation industry including representatives of the Williamson County Regional Airport, Chicago Executive Airport, St. Louis Regional Airport, St. Louis Downtown Airport, Lewis University Airport; and a general manager of Stevens Aviation, and reviewed industry data and publications;

1 We also contacted eight companies that did not return our multiple telephone calls for information or refused to provide information. Five of the companies provide fixed base operators (FBO) and maintenance, repair and overhaul (MRO) services; one company is in aircraft painting; one company is in helicopter services; and one company is a flight training academy.

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• Conducted interviews with the chairs of the Department of Automotive Technology, Department of Aviation Management & Flight, and Department of Aviation Technologies of the College of Applied Sciences and Arts at Southern Illinois University;

• Conducted a survey of members of industry advisory committees of the Department of Automotive Technology, Department of Aviation Management & Flight, and the Department of Aviation Technologies;

• Analyzed time-series employment and other economic data as well as land use and real estate market data;

• Conducted an assessment of infrastructure conditions and capacity bearing on development potential;

• Conducted interviews with a Sedgwick County Kansas Commissioner, the Elizabeth City, North Carolina Economic Development Director, an Assistant Vice President for Research and Innovation at Embry Riddle University, and the Property Manager for the Roswell International Air Center to prepare a case studies’ review to examine the characteristics and conditions that make education- and aviation-related and automotive-related economic development viable;

• Evaluated the real estate economics and feasibility of a prototypical development project postulated for the Southern Illinois Airport; and

• Synthesized the results of the research and analysis to identify a strategic action development plan for the Southern Illinois Airport.

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DEVELOPMENT PLAN RECOMMENDATIONS

This section outlines the recommended elements of a strategic development plan for the Southern Illinois Airport Authority, including the priority decisions and actions to position Airport property for beneficial development.

Objectives

The Southern Illinois Airport Authority desires to preserve and enhance the fiscal and economic health and vitality of the Southern Illinois Airport and the communities which it serves and of which it is a part, including the academic community of Southern Illinois University.

RECOMMENDATIONS

1. Emphasize Competitive Advantages for Development

In marketing the Airport property available for development, emphasize the advantages and strengths associated with the location, including:

• accessibility to Highway 51 and Highway 13, a 4- and 6-lane highway leading to Interstate 57; • low land costs; • low labor costs; • affordable housing; • availability of support services; • presence of Southern Illinois University and the associated intellectual capital, trained labor and related resources; and • control of land by the Southern Illinois Airport Authority.

2. Mitigate Constraints to Extent Within the Control of the Southern Illinois Airport Authority, Surrounding Municipalities, County, and Southern Illinois University to Influence

To the extent within the control of the Southern Illinois Airport Authority, City of Murphysboro, City of Carbondale, and Jackson County as well as the Southern Illinois University to influence, mitigate the constraints on capturing potential demand and development opportunities.

2a. Mitigate Infrastructure Constraints

These constraints include those related to infrastructure including roadways and runways.

Road relocations and improvements are an essential component to future expansion of the Airport’s real estate available to aeronautical use and non-aeronautical use and to development of privately owned property adjacent to the Airport. The recent land purchases enable the Airport to proceed with the relocation of power lines along Airport Road and also provide the corridor to relocate

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Airport Road to the south, west of New Era Road. In addition, the Airport has purchased portions of the land needed to relocate New Era Road to the east. Within the current Airport property, the realignment of North Airport Road is planned to eliminate the current curved roadway alignment. The Airport Road, North Airport Road and New Era Road relocations will expand real estate available for both aeronautical and non-aeronautical uses for the facility.

Access to the Southern Illinois Airport from U.S. Route 51 to the east is via Airport Road and Fox Road. Both roads are rural sections that are not adequate to handle current and future traffic. During heavy rains in 2012, portions of both roads were underwater for 10 days, significantly restricting access to the Airport. While other roads provide access from the south to the Airport, Airport Road is the major roadway used by students of the SIU Transportation Education Center and serves the Armed Services Readiness Center and regional emergency response operations. Further, private development on land adjacent to the Airport will demand improved access to U.S. Route 51. Roadway improvements to Airport Road and Fox Road from New Era Road to U.S. Route 51 will enhance economic development opportunities within and adjacent to the Airport, eliminate roadway flooding, provide uninterrupted access for the Armed Services Readiness Center and regional emergency response operations located at the Airport, and provide improved and safer access to the SIU Transportation Education Center specifically and the Southern Illinois Airport in general.

The Airport has proactively had discussions with local city, county, and state officials to explore mutually beneficial opportunities and understand individual plans for future developments. While specific plans and funding for these projects are not in place, the encumbrances are methodically being removed to allow rapid development should the need for additional space arise. Funding for these road relocations will likely be through highway and economic grants. It is unlikely that FAA/IDOT Division of Aeronautics eligibility requirements will be met and should not be relied upon for funding.

The Airport has long held a plan to widen and extend the smaller parallel runway, Runway 18R-36L, to accommodate twin engine aircraft and ease congestion on the primary Runway 18L-36R. Recent land purchases on the south side of the Airport have enabled the Airport to pursue the developments (road and power line relocations) that must precede the runway extension. However, the construction of the Transportation Education Center (TEC) facility and associated increase in SIU student and faculty population has caused the Airport to shift priorities (and capital) to accommodate the increased vehicular traffic by self-funding several improvements that allow safer traffic and pedestrian flow. The Airport has also allocated funds for other needed capital developments, seizing opportunities for matching or shared funds from participating agencies that may have been otherwise lost.

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The added benefit of the extended runway is that in 10-15 years a DevelopInfrastructure Inventory Recommendations: of Hangar Space rehabilitation project for the primary runway will be required, to serve research, MRO, or training shifting traffic to the parallel runway when intersection work on activities• Relocate and forAirport responses Road toto the runways 18L-36R and 6-24 closes those runways temporarily. emergencies.South Funding for the runway 18R-36L extension and widening would • come from federal/state/local sources (currently 90/5/5 split Industry, Realign government, North Airport and Roaduniversity sources of funding will need to be Federal Aviation Administration (FAA)/Illinois Department of sought.• Acquire Property Needed for Transportation (IDOT)/Southern Illinois Airport Authority Relocation of New Era Road (SIAA)) but must be justified prior to receiving funding, estimated at $1.8 million total. Preliminary work for this runway includes the • Relocate New Era Road and relocation of Fox Farm Road, which action is currently prohibited Associated Power Lines due to environmental concerns. The Airport is actively pursuing • Reconstruct Airport Road and relief and solutions to these issues to enable the expansion of the Fox Road from New Era Road to facility to proceed. The project is depicted in Figure I-3 Airport U.S. Route 51 Development Plan. • Resolve Impediments to the The Airport is currently limited in “primary runway access” on the Relocation of Fox Farm Road east side of the field. Room exists between the Illinois Army • Complete Build-out (Widening National Guard – Carbondale Reserve Center and the Aircraft and Extension) of Runway 18R- Rescue and Fire Fighting / Snow Removal Equipment 36L. (ARFF/SRE) building to construct one or two (maximum) hangars, but all other developments adjacent to Runway 18L-36R must be situated on the west side of the runway and south of the existing vehicular entrance off North Airport Road. The future Airport Layout Plan includes the relocation of the primary constraint, New Era Road. However, associated projects are not included in the five-year program and would require additional land purchases to complete the corridor needed for the relocated roadway.

2b. Mitigate Facility Constraints-Facilitate Development of Hangar Building Space

The absence of available hangar space to accommodate larger aircraft and various research and MRO activities has caused the Airport to miss windows of opportunities to respond to user requirements and expressions of interest in locating at the Southern Illinois Airport. As indicated below, the real estate economics applicable to the development of a hangar building suggest that the private sector is unlikely to feasibly undertake the development on a speculative basis. Therefore, industry, government, and other sources of funding will need to be sought to cause the development of an inventory of hangar space.

Concurrently, while pursuing the development of additional hangar space to be in the position to respond to opportunities that may arise including needs for expansion of Southern Illinois University aviation activities, the Southern Illinois Airport Authority should encourage the three corporate aircraft users of an approximately 13,000 square-foot hangar facility to construct their own hangar facility and therefore put the Authority in the position to make the 13,000-square-foot hangar facility available to new users. If made available, some of the hangar space could be utilized to serve the "on the field" applied research and developmental center concept identified below.

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2c. Mitigate Institutional Constraints to Encourage Greater On-Site Applied Research and Training

Institutional constraints, including a shortage of Southern Illinois University faculty and staff capacity constraints (as opposed to physical or technical constraints) at the Transportation Education Center, will need to be remedied in order for “partnerships” and applied research and development “use” arrangements to be explored and pursued with private sector firms seeking to conduct research and development; other academic institutions with the potential ability to provide “visiting” researchers and instructors; and the Federal Aviation Administration or other sources of research funding.2 For example, because of such constraints, SIU did not respond to the requests for proposals previously issued for the Centers of Excellence for alternative jet fuels and environment.

Mitigating the institutional constraints (including lack of faculty and staff capacity to explore and pursue applied research and development arrangements including the development of additional dyno cell facilities, with private industry or other academic institutions) would increase the potential to attract additional dyno cell facilities, operators and users of the fuel test cell.

Capacity constraints related to faculty have limited the ability of Southern Illinois University to investigate, pursue, and serve Increase faculty and related additional training opportunities. These constraints will need to resources to encourage increased be remedied in order for the Airport and Transportation applied research and collaboration opportunities between SIU and other Education Center to capture and serve potential additional training academic institutions, government demands. organizations, and private sector entities. Remedying these institutional constraints suggest the importance of Southern Illinois University assigning a high-level Appoint high-level knowledgeable knowledgeable staff member responsible for encouraging and SIU representative to cultivate relationships and lead initiatives. facilitating relationships between industry and faculty in a variety of departments and the Transportation Education Center and the Encourage School of Engineering to Southern Illinois Airport Authority. This would include identifying participate in research activities at opportunities for the University’s School of Engineering Airport. department to contribute to the research and other academic opportunities available at the Transportation Education Center Integrate the Airport’s development process with local, regional, and and Airport. University participants and economic development efforts. A regular convening of representatives between the University, Southern Illinois Airport Authority, municipalities of Carbondale Establish “on the field” applied and Murphysboro, Jackson County, the Jackson Growth Alliance, research and developmental center. and Egyptian Electric Cooperative (an “implementation committee”) should occur to further plan, market, and implement the development of the Airport property and environs. One purpose would be to seek and structure funding for infrastructure and facility development as well as to encourage and assist the University to expand its existing programs and engage in complementary new programs and activities, including increased collaboration with

2 For example, NASA has announced an Education Research Program and has awarded $10.5 million to 14 colleges and universities to conduct research and technology development. http://www.aero- news.net/index.cfm?do=main.textpost&id=ce2650c1-6ec2-4d50-9396-b52cea0a18e8

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other academic institutions and industry participants. This could include an “on the field” applied research and developmental center for aviation and automotive technology transfer and commercialization that would complement the incubator facilities and activities at the Southern Illinois Research Park.

3. Build off the Existing “Anchor” Occupant to Encourage Spillover Demands Which Benefit Both the Southern Illinois Airport Authority and Southern Illinois University

The Southern Illinois Airport has sufficient aeronautical infrastructure and a major set of educational facilities conducive to flight training, aircraft maintenance, and related operations, strengths of which could be potentially built upon to expand flight training and related operations.

Encourage the Southern Illinois University Department of Aviation Management & Flight and Department of Aviation Technologies to pursue partnerships with airlines to combine academic coursework and workforce training to respond to the increased needs of airlines for flight training. Encourage foreign airlines to send their students to the Airport and University for aviation-related training.3

In order to attract new students and expand SIU activities and/or attract complementary operators/facility users, it will be necessary to add to the stock of services and amenities available to students, including temporary Strategies: housing, food service, recreational facilities, and ground transportation services. Pursue partnerships with airlines, both domestic and foreign, for As indicated above, additional hangar space will need to be available workforce and pilot training.

along with access to classroom and simulation facilities and ramp Improve the stock of services and space to accommodate aircraft. Given the seasonal weather changes amenities (housing, food service, and shifts in temperature, hangar space should have temperature recreation, ground transportation) controls with sufficient power supply. The process for obtaining available to students. necessary permits should be detailed as well as the availability of Provide additional hangar facilities economic incentives. that contain classroom and simulation space with ramp access. Emphasize to prospective flight training schools and associations the presence of an onsite control tower, runway length of 6,500 feet, an all-weather Instrument Landing System, and favorable fuel pricing.

4. Position Airport to be Able to Compete for Smaller MRO/Aviation Service Activities

To increase the likelihood of attracting smaller MRO, aviation service firms, component makers and rebuilders, and small aircraft manufacturers will require not only the physical facilities to accommodate them, but incentives to lower their costs and to induce potential operations to consider the location/opportunity available at the Airport. This will require coordinating with local

3 As an example, The University of North Dakota Aerospace Foundation in Grand Forks began a three year contract worth $3.3 million in 2001 with a Norwegian Airport Agency, Avinor, to train Norwegian students as air craft controllers. Another three year contract began in 2010 and was renewed for 2014. Avinor will bring a class of 28 Norwegian students to UND in September of 2013. http://www.prairiebizmag.com/event/article/id/15176/

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and regional entities to identify an incentives program, including incentives available from the State of Illinois.

Further investigate potential sources of state grants, incentives and financing such as: the High Impact Business (HIB) incentive program; the Business Development Infrastructure Program (BDIP); the Illinois Finance Authority Rural Development Loan Program and Participation Loans; and tax credits such as the Economic Development for a Growing Economy (EDGE) program, the Illinois Small Business Job Creation program, and the Illinois Angel Investment Credit program. Arrangements to provide local assistance, should also be made and incentives or abatements that reduce the tax burden of private business on Airport land (e.g. property tax abatements, local sales/use tax exemptions or rebates) should be considered. Incentives including fee waivers and tax abatements, etc. are benefits available under the Jackson County – Murphysboro- Carbondale Enterprise Zone. Portions of the Southern Illinois Airport are located within the Enterprise Zone. As part of the implementation plan process, steps should be taken to add all of the developable land at the Airport to the Enterprise Zone.

Emphasize the available aeronautical infrastructure and services, limited congestion, lower labor costs and cost of living, the availability of trained labor, and expertise available from Southern Illinois University.

To appeal to a wide range of potential users, and compete with other airports in St. Louis and Illinois, hangar space of at least 20,000 square feet should be available.4 It will be challenging in attracting MRO and other aviation firms given the level of competition from other airports that are pursuing such opportunities such as, to list just a few examples Chicago Rockford Regional Airport and Duluth International Airport.5

4 Spirit of St. Louis Airport in Chesterfield, Missouri is developing hangars in the 18,000-square-foot range to accommodate a variety of airplane sizes ranging from single-engine piston aircraft to mid-size corporate jets. http://www.bizjournals.com/stlouis/print-edition/2012/02/03/multi-phase-hangar-development- flies.html?page=all. Mena International Airport in Mena, Arkansas, which has a number of MRO tenants, has an aviation complex of nine hangars totaling 25,000 square feet of available hangar space. In Chicagoland, Hawthorne Global Aviation Services has announced plans to build a new 40,000-square-foot facility at the Chicago Executive Airport, including a 30,000-square-foot hangar for airline fueling and 10,000 square feet of lounge space for pilots and passengers. Last year Atlantic Aviation announced plans to expand operations at the Chicago Executive Airport into a third hangar facility containing 26,000 square feet of hangar space and 7,800 square feet of office space to house a corporate flight department. Existing larger hangars available for lease at the Aurora Municipal and DuPage Airports range from approximately 15,000 to 20,000 square feet in size. The Lewis University Airport has on-airfield land available that it has “set aside” for the development of larger (20,000+ square feet) corporate high tail hangars and office space. A corporate user has proposed building a larger hangar facility on the available land.

5http://www.rrstar.com/news/x460062541/MRO-deal-could-propel-Rockford- economy#axzz2XSGFzGeG. As noted in Appendix A, a review of aviation-related news articles suggest rural Midwestern locations (and confirmed by the industry surveys described in this report and limited response from representative types of firms contacted) are not preferred by some sectors and types of aviation-related activities.

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To encourage, support, and attract aviation and automotive-related start up business activities and applied research making more intense use of the facilities (such as the test cell) available at the Transportation Education Center, establish an “on-the field” applied research and developmental center and offer use of office space as well as available land.

5b. Encourage Partnerships to Pursue the Siting of Unmanned Aerial Systems Research and Testing at the Airport

Encourage partnerships including the Airport, the Southern Illinois University School of Engineering and Department of Aviation Management & Flight and Department of Aviation Technologies and other educational institutions and industry participants as well as the State of Illinois Department of Commerce and Economic Opportunity to pursue attracting and conducting research and testing related to unmanned aerial systems (“UAS”) at the Airport and Transportation Education Center. Additional research and training activities conducted at the Airport will generate direct and indirect positive economic impacts for the broader area.

This will require providing space for offices and labs, providing services to the entities doing research, providing for flight paths for testing, funding the facilities and services, and most important identifying universities, private industry, and others that would locate at the Airport. As indicated below, ample competing locations exist and can be expected to in time increase.

Participating in the Association for Unmanned Vehicle Systems International and other industry organizations and outreach to venture capital firms that invest in this space (such as O’Reilly AlphaTech Ventures, True Ventures, Andressen Horowitz, and Google Ventures) are two ways to promote the opportunity. In addition, outreach could be extended to large firms that could potentially benefit from the application of the technology such as agricultural related companies like Decatur-based Archer Daniels Midland Company and St. Louis-based Monsanto.

6. Complete the Planning and Implementation of an Emergency and Critical Response Center

An opportunity exists to consolidate much of the emergency and critical response services for the region at the Southern Illinois Airport in a Regional Emergency Response Center (RERC). Such a consolidation providing for a teaching lab, a permanent Emergency Management Center, a field hospital, and a regional response center for large-scale natural disasters, would promote essential coordination and communication not practical given the current distribution of various components in small localities throughout the region.

The location between the Public Works Building and National Guard facility containing 70,000 square feet of land and accommodating 50,000 square feet of building space could serve the RERC,

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The Southern Illinois Airport Authority should complete the planning it has initiated, coordinating with the various emergency and critical responders including the American National Guard, the Red Cross, Southern Illinois Healthcare/Memorial Hospital of Carbondale, Jackson County Emergency Management Agency, and Jackson County Ambulance Service. Southern Illinois University and John A. Logan College could also utilize the facility to teach emergency management, first responder, and safety and security classes.

The Southern Illinois Healthcare/Memorial Hospital of Carbondale (SIH/MHC) is designated by the Department of Health as the POD hospital for Emergency Medical Service for Region 5. One of SIH/MHC’s POD responsibilities is the provision of an Alternate Health Care Facility that will be activated in a disaster event for use by all hospitals and EMS agencies in Region V.

The Southern Illinois Airport Authority should also coordinate with the Mutual Aid Box Alarm System (MABAS) to construct the RERC. The MABAS currently stores one of their trailers at Southern Illinois Airport which contains over $250,000 worth of supplies to be used for a disaster event. The Red Cross also uses SIA as their home office and to store their current disaster medical supplies, so the support of MABAS and Red Cross is critical to construct the RERC.

The Southern Illinois Airport Authority should also build an aircraft taxiway and ramp adjacent to the armory to accommodate Guard and civilian aircraft and helicopters which will be another benefit of locating the RERC at the Airport because it will help facilitate the delivery of supplies, equipment, and patients during a disaster. Approximately 10,000 square feet of the hangar will be designated as a communications and command center for the Jackson County Emergency Management Agency, the Jackson County Ambulance Service, and SIH/MHC. It will also have teaching labs and emergency response briefing rooms.

The total estimated cost of building the RERC is $4,500,000. It will also cost an estimated $1,200,000 to build the adjoining ramp with funds already pledged by the FAA. The Jackson County Emergency Management Agency submitted an application to the FY 2008 Emergency Operation Center Grant Program and if received would use this $1 million grant to fund the portion of the building that would benefit the Regional Emergency Operation Center on a day-to-day basis. However, the grant application failed in 2008 to be considered.

The participating parties should reconvene to update and refine the program and verify facility requirements and to develop a strategy and make arrangements to pursue a combination of federal and state funding that would be combined with locally generated revenues on the facility and perhaps a contribution from SIAA tax supported bonds to fund the development of the RERC.

Potential sources of operating revenue include the existing Red Cross and SIH uses. Additional potential users from which revenues could be potentially generated include the Forest Service with a command center, the County Coroner with a forensics lab, and the county morgue.

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In addition, the FAA/Illinois Division of Aeronautics will fund a taxiway and ramp area to the RERC if (and only if) it includes an aircraft hangar. Therefore, that component of the planned development is critical. Such an aircraft hangar would permit Southern Illinois University to store their current large aircraft (which does not fit in any current building) and any future donation of a large aircraft (which could be accommodated if the aircraft hangar was built) as lack of space prevents the University from accepting additional large aircraft

The ‘hangar’ portion of the building would be emptied of classroom type uses, like the aircraft, and made available to emergency response agencies and the National Guard to use for moving supplies and people (injured and otherwise) in and out of southern Illinois during a natural disaster.

7. Integrate and Coordinate Marketing and Recruitment with Municipal and County Economic Development Efforts

Market the land available at the Airport for aviation and non-aviation development in an integrated and coordinated fashion with local municipal and county economic development efforts. As part of this integrated, coordinated marketing, perform the following:

• Develop a cohesive web site describing the property available and the competitive advantages associated with the location, including aeronautical infrastructure and services. References with links to the web site should be placed on local municipal and county economic development related web sites. The website should be specifically devoted to the development opportunities available at the Southern Illinois Airport. The website should have its own domain name (e.g., www.siarealestate.com). Much of the material created for a marketing flyer described below can be used for the content of the website;

• Choose a name for the land available for development of non-aviation uses under which the project will be promoted;

• Reach consensus on a streamlined and straightforward development approval and permitting process and incentives made available to induce development and attraction of employment- producing activities;

• In conjunction with the appropriate municipal and economic development entities, contact on a regular basis existing large building space users or businesses growing employment and/or expanding operations in the area, especially those in older facilities, to ascertain and monitor their potential need for new building space or whether suppliers or customers could potentially benefit from new space at or near the Airport property;

• Prepare a well-designed electronic flyer or package that communicates:

o The amount, condition, and location of developable land and building space available at the Airport, o The infrastructure characteristics of the Airport and aviation-related services available (including those that could be made available if important to prospective

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users), o Demographic and workforce attributes of the regional southern Illinois market, o The relative affordability of the location, with respect to labor, housing, and operating costs, o The nature and scale of research and training activities conducted on-site by SIU, o The status of necessary zoning, entitlement and FAA approvals, o Incentives available for qualified applicants, and o Who interested parties should contact to obtain additional information and further discuss the opportunities available;

• Create a formal property listing on commercial real estate websites such as Loopnet and CoStar. It would also be worthwhile to create a property listing on an aviation-specific website such as www.hangarhunter.com; and

• Develop a database of industrial-oriented brokers with major firms located in the St. Louis and Chicago metropolitan areas including Barber Murphy Group, CB Richard Ellis, Colliers, Jones Lang Salle, NAI Global, and Newmark Grubb Knight Frank. Conduct outreach to introduce the Jackson County area and project opportunities to these brokers.

Given the potential near-term demand for development of private non-aviation uses in particular do not appear to require more land than already owned by the Southern Illinois Airport Authority and the availability of ample land in nearby municipal industrial parks, the Southern Illinois Airport Authority or other public entities are not constrained by a land shortage. Scarce resources including funds obtained from government entities or other sources should be concentrated to create aviation-related building space and infrastructure needed to support the development and enhancement of the approximately 222-acres of developable land already owned by the Southern Illinois Airport.

It is not necessary at this time to expend additional resources on the acquisition of additional land currently owned by private interests. Adjoining property owners, however, should be encouraged to participate in the planning and enhancement of the area to position their properties for future development when opportunities arise.

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LAND USE PLAN

Potential areas for development at the Southern Illinois Airport are shown on Figure I-1. Figure 1-2 shows the roadway development plan.

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Figure I-1 depicts those areas that offer opportunities for both airfield-adjacent and non-aviation related land development. The land use development plan identifies 14 "buildable" sites. As summarized below in Table I-1, the buildable sites total 279 acres of land. Two non-buildable sites of approximately 50 acres must remain undeveloped due to environmental constraints and FAA regulations. Of the 14 potential buildable sites, 11 sites are currently controlled by the Airport. Three sites on the east side of the Airport have been identified as potential acquisition opportunities. The uses of these sites are subject to specific safety regulations and operating protocols.

TABLE I-1

Summary of Land Use Development Program Number of Sites Land Area # # Acres Aviation Development (Airport Controlled) 8 159 Aviation Development (Private Land) 3 57 Non-Aviation Development (Airport Controlled) 3 63 Developable Sites – Subtotal 14 279 Not Permitted for Development 2 50 Total Land Area 16 329 Source: Hanson Professional Services Inc.

The areas in the center of the Airport depict parcels that would be realized in the likely event that the existing North Airport Road is realigned directly north-south. Currently, this road is curved and splits the interior “N parcels”. The Southern Illinois Airport Authority is firmly committed to the realignment of the roadway and will accomplish this objective as soon as a source of funding is secured.

Area A-1, south of existing developments and west of Runway 18L-36R, has approximately 12 acres of space for development of various sized hangars. The postulated 40,000-square-foot hangar building would be situated in this area. Of the 12 acres, approximately 10 percent would be needed as automobile parking for each building, which is typical for most developments. Regardless of the particular size or use of any hangar that is constructed, ample area is available for constructing a ramp and taxiway access is immediately available as well. This site is well suited for fixed base operations, corporate hangars, maintenance/repair/overhaul (MRO) general aviation specialty shop facilities, or other aviation-related uses. Area A-3 immediately south of A-1 will serve the same purpose as A-1, but will not be available for aeronautical use until Airport Road is relocated.

Area A-2, including 24 acres south of existing T-hangars and along the parallel runway 18R-36L, is suitable for smaller corporate aircraft (piston twins, small jets) hangar development and additional T- hangar development. Once the Airport has exhausted the growth of the 18L-36R frontal property, this area could become converted to heavier aircraft use with upgrades to the parallel taxiway to 18R-36L. Area A-4, immediately south of A-2 will serve the same purpose as A-2, but will not be available for aeronautical use until Fox Farm Road is relocated.

The Area N-1 in the center of the property south of the new Transportation Education Center (TEC) is not available for aeronautical use, as runway access does not exist. This 30 acre area is ideal

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for residential, retail, car rental, restaurants, or other food service. This area would also be ideal for a business park or research and development activity associated with the TEC facility. This area would be accessible to the TEC by pedestrian or bicycle. N-2 is similar in potential use, but is south of existing Airport Road and would not offer the same pedestrian accessibility as N-1 until Airport Road is relocated.

Area N-3, southeast of the airfield, is also suited for non-aeronautical use. Once Airport Road is relocated, part of this 18 acre site area will become frontage property, but removed from the main body of the “Airport proper”. This area is well suited for a solar farm installation or other similar function. Area A-5 is a strategically located 3-acre area that would ideally house the RERC (see Figure I-3 below depicting the Airport Development Plan), as described in the Development Plan Recommendations. Area A-6 is designated for aeronautical use but could only accommodate such development in the event that both New Era Road and Airport Road are relocated.

Areas A-7, A-8, A-9, A-10, A-11 are future Airport development areas suitable for large-scale developments needing large amounts of land. The common feature of these parcels is that all are designated for aeronautical use; but again, can only accommodate such uses in the event that New Era Road is relocated and the area is accessible to the runway. As depicted in Figure I-1, some of these parcels are already owned by the Southern Illinois Airport Authority.

Areas U-1 and U-2 are areas that cannot be developed due to either environmental constraints or existing or future airport safety related (FAA) restrictions. These areas are mainly limited to crop cultivation.

It is estimated that each acre will cost $7,500 to acquire. FAA funding is unlikely for the remaining parcels identified as development areas. The climate has changed in recent years, and the focus of land acquisition reimbursement by the FAA has been of safety-related concerns. Grants or revenues raised through bond issuances represent more practical sources of revenue for acquisition. The singular improvement identified in the Land Use Development Plan and the Road Development Plan that requires additional land acquisition is the Relocation of New Era Road. This improvement will require approximately 57 acres of land to successfully move the existing roadway eastward and open up the southeast quadrant of the airfield to aeronautical use.

Several road improvements are mentioned in this section and depicted in Figure I-2 Road Development Plan. The opinion of probable cost of each item is:

Realign North Airport Road

Cost Estimate: $275,000

Potential Funding: As part of the non-aeronautical expansion plans of the Airport to develop the “N parcels”, it is unlikely that FAA or state Aeronautics funding could be used. The necessary land acquisition for this improvement has been completed.

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Relocate Fox Farm Road

Cost Estimate: $200,000

Potential Funding: As part of the expansion plans of the Airport to extend runway 18R, the Airport could use FAA entitlement money to fund the project. The project faces a singular environmental hurdle that may take several years and millions of dollars to resolve. This unfortunate circumstance prohibits that build-out of Runway 36L and limits expansion on the west side developments. The necessary land acquisition for this improvement has been completed.

Relocate New Era Road (construction of new road only – includes utility relocates)

Estimate: $2,000,000

Potential Funding: Provided an aeronautical use could be proven, the relocation could be funded with FAA discretionary or apportionment dollars. Other possible funding scenarios include Delta Regional Authority (DRA) grants. Land required for this improvement is discussed below. Relocate Airport Road to South

Estimate: $1,700,000

Potential Funding: FAA funding would be unlikely with the existing circumstances and policies in place. To be eligible, the reason for the road relocation must be driven by efforts to remove safety hazards. Currently, while the FAA realizes that the road passes through the Runway 36R Runway Protection Zone (RPZ), the policies do not stress removal of the roadway. Other funding sources would be similar in kind to those matching the Relocate New Era Road project. The necessary land acquisition for this improvement has been completed.

Extend and Widen Runway 18R-36L

Estimate: $1,800,000

Potential Funding: FAA funding (entitlement, discretionary, apportionment) would be used for this project. The Airport would need to demonstrate justification for the project through a feasibility study. The most ominous encumbrance to this project is the environmental concerns related to the relocation of Fox Farm Road. The necessary land acquisition for this improvement has been completed.

Reconstruct Airport Road to US Route 51 (5,700 linear feet)

Estimate: $2,000,000

Potential Funding: Funding sources would be similar in kind to those matching the Relocate New Era Road project and the Relocate Airport Road to south improvements. No substantial land acquisition

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Reconstruct Fox Road from [Relocated] New Era Road to US Route 51 (5,200 linear feet)

Estimate: $2,000,000

Potential Funding: This project is similar in scope, scale and funding sources as the prior project Reconstruct Airport Road to US Route 51. No substantial land acquisition would be required except for possible intersection improvements at Route 51 and the elevation of the bridge crossing the creek just west of Route 51. The estimate includes bridge replacement.

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PRINCIPAL FINDINGS AND CONCLUSIONS

Economic Base

Between 2001 and 2011, the Jackson County total employment base decreased by 256 jobs or less than one percent, from 38,380 jobs to 38,124 jobs. The total employment base has remained relatively stable through the Great Recession without any significant overall increases or decreases. The largest sector, government, increased employment by about two percent, or 251 jobs to over 13,700. Health services employment, the second largest sector, remained about the same over the 10-year period with about 4,100 jobs. Economic sectors likely to be associated with demand for industrial and business park space, including manufacturing, transportation and warehousing, and wholesale trade have low location quotients indicating they do not significantly export their goods and services outside the region. Such sectors make up only approximately five percent of the Jackson County employment base.

The number of very small businesses with fewer than five workers represents at least half of the local economic base. In 2010, 681 establishments had fewer than five employees, representing 56 percent of the total economic base in Jackson County. In 2010, 76 percent of all manufacturing establishments located in Jackson County employed fewer than 20 workers. Only 13 percent of businesses included 50 or more workers.

While total employment in Jackson County remained stable between 2001 and 2011, total employment in Williamson County grew by 3,400 jobs or 11 percent to nearly 35,000 jobs by 2011. Health services and the finance, insurance and real estate, leisure and hospitality, and professional and business services accounted for nearly all the employment growth over the 10 year period. Manufacturing employment declined by over 800 jobs. Transportation and warehousing which represents a small share of the economic base remained relatively stable with a slight increase in employment.

The Geographic Market Area for Industrial and Employment Land Uses

The primary geographic area within which the Southern Illinois Airport location area will compete for industrial space or other employment land uses is southern Illinois including other locations in Jackson County, Marion in Williamson County, and Mount Vernon in Jefferson County. Large industrial users considering a southern Illinois location tend to consider alternatives more proximate to the Interstate 57 corridor and Interstate 64 (with better highway accessibility to both Chicago and St. Louis) than available from locations in Jackson County.

Most sources of demand for industrial or other types of nonresidential building space originate from within the southern Illinois market area. Primary demand sources tend to be small space users (the

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Competitive Advantages for Development

The following factors represent the primary locational advantages or strengths of the location of the Southern Illinois Airport and broader market area of which it is a part:

• Accessibility to Highway 51 and Highway 13, a 4- and 6-lane highway leading to Interstate 57 (Canadian National Railway, over a mile east of the Airport, currently has no direct rail linkage to the Airport);

• Low land costs;

• Low labor costs;

• Affordable housing;

• Presence of Southern Illinois University and in particular to the site, the Transportation Education Center;

• Proximity to the Southern Illinois Airport (and other airports within the region). Accessibility to air transportation is the unique transportation advantage of the Airport property and environs; and

• Nearby healthcare, retail, hospitality and support services.

The development of Airport property which is subject to the City of Carbondale zoning jurisdiction will not be constrained by the lack of sufficient infrastructure.

Competitive Disadvantages for Development

The following factors represent the primary disadvantages or constraints on development:

• The site of the Southern Illinois Airport is not adjacent to interstate highways. Interstate 57, the north-south travel corridor through Illinois, is approximately 16 miles east of the Airport;

• The site does not adjoin a port or access to maritime commerce even though the Mississippi River is located on the west side of Jackson County; and

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Industrial Market Overview and Supply Competition

Many of the existing industrial parks are older with still an ample amount of land available for development. Approximately 700 acres of land (exclusive of land around the Southern Illinois Airport) is available for future industrial and business park development within the broader market area. A large amount of existing industrial building space is also available. Given the land supply and approximately 2.6 million square feet of available building space, the competition for attracting industrial and office users to land in or near the Southern Illinois Airport is likely to be intense.

Facilities

The Airport provides practical aeronautical facilities for commercial charter aircraft operators, student pilots, and general aviation private pilots. Few multi-engine aircraft are capable of using the parallel runway due to insurance or performance standards issues. Presently, all twin-engine traffic must be directed to the primary Runway 18L-36R.

Southern Illinois University (SIU) owns three buildings at the Southern Illinois Airport on land it owns and leases four buildings from the Southern Illinois Airport Authority. Representatives of the SIU Transportation Education Center indicated SIU does not have excess hangar space. The Airport does not currently contain substantial available hangar space.6

Nature of Demand Opportunities and Potential Sequence of Development

Private, speculative multi-tenant, office and industrial development opportunities are not likely to represent the initial sequence of development at the Southern Illinois Airport property and environs. Industrial or other typical nonresidential development is likely to occur on a build-to-suit or owner- occupant basis. Should a company from outside the region appear interested in establishing a local non-aviation related operation at the Airport property, a concentrated effort should be made to meet the company’s space and other locational requirements. Such actions, however, should be spurred by evidence of interest rather than a “shot gun" approach that attempts to reach numerous out-of-the- region companies.

6 The Northwest Florida Beaches International Airport complex needs new hangars in order to attract an aerospace company to the area. Bay County Economic Development Alliance Director Neal Wade said at the montlhly EDA meeting: “we have to have hangars to accommodate 747s (or smaller) or we will not compete”. http://www.newsherald.com/news/business/wade-hangars-needed-to-lure-aerospace-firm-1.170488

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Capturing potential spillover demands from the Southern Illinois University (SIU) Transportation Education Center will be critical. The most likely near term opportunities relate to the formation of partnerships with airlines. Examples of opportunities that may arise include the following:

Test Cell Applied Research and Development

The approximately 11,000-square-foot “test cell” facility built as part of the development of the Transportation Education Center is designed to operate airplane engines and test the effect of alternative fuel types on engine efficiency. Although the facility is not yet operating, inquiries from private firms expressing interest in utilizing the facilities have been received. The Federal Aviation Administration is also funding research regarding alternative fuels.

Dynameters Applied Research and Development

As part of the development of the Transportation Education Center, one relatively inexpensive dyno cell has been installed. Because the Transportation Education Center has only one small dyno cell the times which it could be used by private firms to test and validate their research may be limited. Advantages to users of dyno cells associated with the Transportation Education Center location include ample electrical power supply, a location not proximate to residences (the facilities generate noise), and availability of student labor to operate the cells.

Flight Training and Related Training

Opportunities in establishing flight training for pilots and other training may exist and increase. The Transportation Education Center includes a new regional jet simulator (a CRJ200 flight simulator) and aviation training programs. A new federal regulation requires that new airline pilots have completed 1,500 hours of flight time instead of the current 250 hours (except FAA is working on a reduction in these requirements for graduates of FAR Part 141 schools like SIU operates). In addition, new pilots will be required to replace retiring pilots and respond to increased demand for air travel. One airline has already expressed interest in cooperating with SIU to train pilots to help remedy the impending shortage. Firms such as FlightSafety, a professional aviation training provider for corporate and large commercial jets, however, tend to prefer locating in major metropolitan areas near airports with commercial service.

Opportunities, however, may exist to partner with airlines just as other universities have done with airlines to combine academic coursework and career tracks and to respond to the needs of airlines for flight training.

The 10,000-square-foot helicopter laboratory in one of the four Southern Illinois Airport Authority buildings leased by SIU contains 11 different model helicopters. While the trend has been to send instructors to the locations at which the individuals requiring training are located, the helicopter laboratory is a unique resource that could offer potential for on-site training.

Additional opportunities may exist for SIU to providing training to students from foreign countries. For example, a potential training program with students from Indonesia was previously considered.

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Direct Spillover Demand Opportunity Related to Students, Staff, and Faculty of Transportation Education Center

One direct spillover demand opportunity includes the potential development of student housing and food service. Multiple developers have expressed some level of interest in developing student housing. Given recent additions to the inventory of student housing and another potential new student housing in the south part of Downtown Carbondale it will be especially important to evaluate the relationship between supply and demand in the relevant market area for student housing as well as to evaluate the responses to the survey conducted by a developer interested in developing housing. Given that 90 percent of the enrolled students are male, the most critical question any surveys should answer is whether the students will accept a location near the Transportation Education Center, as opposed to locations on campus or south of the campus where greater opportunities for social interaction with other students may arise. In addition, assuming demand for the location is indicated, product feature preferences should be tested as it will be important to differentiate housing developed at the Airport from more built out, well-established student housing locations.

Maintenance, Repair and Overhaul and Other Aviation Firms

MRO users may find capacity of the airfield and support of available labor base from student workers at SIU advantages to locating at the Airport. However, research suggests that enticing MRO operators to leave current facilities is challenging, Jet Aviation, a major MRO and fixed based operator (FBO) consolidated and expanded at an airport located close to Downtown St. Louis (the St. Louis Downtown Airport in Cahokia, Illinois) because of its centrality to a larger metropolitan area. The FBO Westar moved from the Spirit of St. Louis Airport to expand and consolidate at the St. Louis Regional Airport. The greater fuel sales and other services associated with airports in metro areas with larger volumes of corporate jet operations helps explain why MRO and FBO related business prefer locations in larger metropolitan areas.

In the past, a company that wanted to overhaul MD 80 aircraft expressed potential interest. However, the Airport lacked sufficient hangar space, and SIU did not identify a way to share its hangar space without compromising its educational mission. In addition, an aircraft engine overhaul firm met with representatives of the Airport to consider a location on the field, but was enticed to an Indiana location due to a better state climate for business at that time. A rebuilder of vintage military aircraft also considered the Airport but opted for a location closer to its customer base in up-state Illinois and a manufacturer of small aircraft seriously considered the Airport but was enticed to Florida because of greater state incentives.

As indicated by the development of a cluster of aviation-related business that provide aircraft repair, painting, upholstery, maintenance, and modification needs at the Mena Intermountain Municipal Airport in western Arkansas7, rural airports with access to labor and ability to offer low prices to customers may be able to compete for small aircraft MRO firms. In addition, as suggested by the Mena Intermountain Municipal Airport experience, component manufacturers or rebuilders of components such as aircraft seats, interior materials, engine components, landing gear, etc., aircraft

7 www.swtimes.com, “Small Airports Contribute to Rural Economies”, by Rusty Garrett, March 17, 2013.

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salvage firms, and small aircraft manufacturers could find the advantages of the Southern Illinois Airport location beneficial. Several industry survey respondents also suggested these types as potential business development targets.

Aviation Research and Testing

Research and development for unmanned aerial systems is an industry priority. If the need for relatively unobstructed airspace and secure operations would not conflict with the operations of the Transportation Education Center, the Air Force Research Lab should be contacted to ascertain the Lab’s potential interest. One significant constraint, however, may be that the military prefers locations proximate to restricted military airspace.

Pursuing unmanned aerial systems and related research will require partnerships that include public and private entities. The body of the report contains examples of partnerships formed by other airports and the communities of which they are a part to attract research and testing related to unmanned aerial systems. Given the economic base, agricultural, emergency response, and medical supply applications are examples of non-military related research and testing especially relevant to the southern Illinois region.

Applied Research and Developmental Center–Technology Transfer

An aviation and/or automotive “on the field” applied research and developmental center represents another opportunity area that can be explored through the suggested “strategic doings” convening. An applied research and developmental center would promote technology transfer and/or the commercialization of the research and concepts (including applied research related to unmanned aerial systems) of SIU faculty and students or other academic and industry participants. Development of such a facility would be consistent with an "inside-out" development strategy, rather than exclusively focusing efforts and resources on the recruitment of external activities and employers. A successful applied research and developmental center will require the collaboration of existing local educators, students, entrepreneurs, and policy makers. The goal of an on-the-field center should be to support and guide new aviation and/or automotive start-up and accelerator business activities.

To jump start the applied research and developmental center, the Airport and SIU should consider holding and publicizing a contest to attract unique aviation technology and other experimental concepts to the center. The contest could for example be directed at current students and former alumni of SIU's aviation and engineering programs. This contest would be similar to the SIU Technology and Innovation Expo already in its fourth year, but focused on aviation and automotive-related technologies.

Many other universities sponsor business plan competitions8. Under this approach, aspiring entrepreneurs would complete applications and business plans. A panel of experts (comprised by SIU faculty from the business school, engineering school, and Department of Automotive

8 http://www.bizjournals.com/philadelphia/print-edition/2013/03/08/get-with-the-plan.html?page=all; see also: www.fiveventures.com .

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Technology, Department of Aviation Management & Flight, and Department of Aviation Technologies, Airport representatives, Jackson Growth Alliance, and other community leaders) would select a competition winner or group of winners which could then be provided space as well as access to available land at no cost (or reduced cost) for a period of time to develop their concepts. If funding can be identified and secured, contest winners might also be granted a capital expenditure allowance to purchase equipment and technology necessary to implement and test their concepts to the extent not already available at the Transportation Education Center. Selection criteria should focus on the likelihood of commercialization and concepts that have the potential to generate employment opportunities at the Airport.

A committee of SIU faculty, from not only the aviation and automotive fields but also disciplines such as finance and marketing, should be assembled to provide on-going guidance and instruction and other “in-kind” services to tenants of the "on the field" applied research and developmental center.

One potential source of funding to establish such an applied research and developmental center program would be USDA Rural Development which provides “Rural Business Opportunity Grants.”

Results of Survey of Advisory Committee Members of Department of Automotive Technology, Department of Aviation Management & Flight, and Department of Aviation Technologies

• Only one of the 18 respondents (both aviation and automotive) has an existing facility in southern Illinois. One aircraft component manufacturer respondent has a manufacturing plant in southern Illinois close to the St. Louis area and utilizes Mid America Airport in St. Louis;

• Five of the 14 aviation committee members reported that their business had never considered locating in southern Illinois. Of the four automotive committee member respondents, only one indicated that its company had considered a southern Illinois location. This company, however, choose locations in St. Louis (MO) and Paducah (KY);

• Reasons frequently cited by respondents for not considering a location in southern Illinois related to lack of sufficient population density, a location not in a major metropolitan area, and not an established market area for the core business;

• Two aviation committee member respondents indicated their firms do plan a Midwest expansion near their existing Ohio facilities. Another aviation committee member respondent indicated its firm would expand production (not a building or site expansion) of its existing assembly plant to meet potential increased demand of business. A fourth committee member said its firm would expand its space due to employment growth at its Chicago location. No other respondents indicated plans to expand in the Midwest within the next 10 years;

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• Of the location decision factors important to automotive industry respondents, the most highly rated factor is accessibility to highways. Accessibility to commercial service hub airports and availability of engineers and other professionals and accessibility to educational institutions are also rated highly important. Of the factors which most types of industrial businesses would consider in making a location decision, property taxes, special tax abatements, and ability of the building/location to accommodate current or future electrical, computer, and telecommunication requirement were rated as most important by automotive committee member respondents;

• Of the location decision factors important to aviation industry respondents, the most important decision factors relate to proximity to customers and electrical and telecommunications infrastructure. Other highly rated factors include labor costs, land costs and property rental rates, and availability of land or buildings for immediate use;

• None of the survey respondents indicated that the Transportation Education Center facilities or Department of Automotive Technology, Department, Department of Aviation Management & Flight, and Department of Aviation Technologies programs, faculty, and students would be a sufficient inducement to consider a location at Southern Illinois Airport;

• The results of the survey indicate it will be unlikely that respondent organizations will locate a facility within the next 10 years near the Southern Illinois Airport. The results of the survey indicate that proximity to customers in locations with significant concentrations of population and economic activity is especially important for certain aviation industry sectors; many types of aviation businesses depend upon proximity to customers more than proximity to sources of labor9. While the Southern Illinois Airport TEC provides a quality source of skilled labor, the Southern Illinois Airport is at a competitive disadvantage because, geographically, the region does not possess the population density for commercial air service or other customers that would generate activity for MRO/FBO firms. The location of the Airport does not provide for this “agglomerational” advantage. The location, however, with the intellectual capital and training available from SIU, does hold potential for the industry sector targets cited above related to training and some research and services.

Case Studies’ Review of Other Education- and Aviation-Related and Automotive-Related Developments

The following summarizes the key findings and conclusions drawn from the review of case studies:

9 For example, see June 6, 2013 Wichita Eagle article about the Wichita aviation cluster. www.kansas.com/2013/06/06/v-print/2834591/wichitas-aviation-industry-can.html.

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programs have frequently been an important component of the economic development process. General aviation airports exhibiting the most substantial development and business attraction tend to be located in regions with a history of extensive Military, Defense and NASA operations;

• In addition to proximity or adjacency to airports, the business parks tend to have superior access to other regional transportation system linkages, including highway accessibility;

• Aerospace programs, automotive programs, and research-related activities at universities appear to generate more spillover development activity than do technical aviation training programs. Access to the research, facilities, and talent of public institutions engaged in aviation R&D and automotive R&D appears to be a strong driver of private on-the-ground development. Less specialized activities (such as A&P Mechanics programs or pilot training) generate less economic spillover than R&D-oriented activities;

• It takes a long time to establish research relationships between industry and universities that result in on-the-ground development. It takes a great deal of time, persistence, and frequently funding support from government sources to establish aviation-related or automotive-related business parks. Most universities make and implement decisions at a more deliberative pace than private sector business and some government entities;

• It is risky to tie development to one or a small number of private users which are dependent upon aviation-related service contracts that can be cancelled and without which the need for building space would not arise; and

• Low-traffic air space can be a competitive advantage to attracting some aviation testing activities, such as unmanned aerial systems.

The implications developing the Southern Illinois Airport property and environs include the need for: 1. Southern Illinois University to have a knowledgeable high-level staff member responsible for encouraging and facilitating relationships between industry and faculty in a variety of departments and the Transportation Education Center and the Southern Illinois Airport Authority;

2. Ongoing cooperation between the University, Southern Illinois Airport Authority, municipalities of Carbondale and Murphysboro, Jackson County, the Jackson Growth Alliance, and Egyptian Electric Cooperative to further plan and implement the development of the Airport property and environs10; and

10 As one of many examples of the wide-ranging network of cooperation required to pursue and implement research and development, and economic development opportunities, see the link to the article that describes collaborative efforts to become a site for unmanned aerial vehicles testing in Washington state: http://www.bizjournals.com/seattle/news/2013/04/26/grant-county-touted-for-airborne- drone.html?surround=etf&ana=e_article. Places such as San Antonio and the Carolinas are creating programs and incentives to attract aviation-related businesses.

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3. The Jackson Growth Alliance and Southern Illinois Airport Authority to help the Southern Illinois University School of Transportation obtain funding from grants and other sources to augment resources from the University to expand its existing programs and engage in complementary new programs and activities.

Real Estate Economic Analysis of Prototypical Development Alternative

We completed a real estate economic analysis of the use of Southern Illinois Airport Authority property for the development of a large (40,000-square-foot) prototypical aircraft hangar building. The purpose of the analysis is to evaluate the financial feasibility of a prospective first phase development alternative that would permit responding to a wide variety and scale of use requirements. The results of the analysis demonstrate that to bridge a feasibility gap public support will be needed to facilitate the feasible development by the private sector. The kind of financial feasibility assessment described in this report can be used to evaluate future development proposals.

Target Uses/Markets

Potential uses or target markets for the development project would include flight training and related training, MRO operations, emergency response, and research activities.

Cost Estimate

Total development costs, including site and infrastructure improvements and soft costs, are estimated at $140 per square foot or $5.6 million for the 40,000-square-foot facility.

Estimated Debt Service Requirements to Amortize Development Costs

Debt service requirements to amortize the estimated development costs over 30 years at an annual interest rate of four to five percent would total $324,000 to $364,000 per year. This level of debt service equates to approximately $8 to $9 per-square-foot of hangar space annually. Amortization of the estimated development costs over a shorter 20 year period would require annual debt service payments of approximately $412,000 to $449,000. This equates to approximately $10.30 to $11.20 per-square-foot annually.

Net Income Unlikely to be Sufficient to Fund Total Amount of Debt Service

Assuming long-term, low interest rate financing could be secured, net annual rents of $2 to $3 per square foot would support approximately 20 to 30 percent of the total $5.6 million development cost. At these rent levels, the vast majority (i.e. 70 to 80 percent) of project development costs would need to be funded by non-repayable grants or donations. Higher net rents of $4 or $5 per square foot would support the financing of about 40 to 50 percent of development costs.

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Conclusions About Feasibility of Development

The analysis of the economic base, real estate market, historical airport development conditions, and a previously-completed appraisal suggest that net hangar rents in the lower $2 to $3 per square foot range are most likely to be realistic. Even if the potential sales value of the occupied potential development project was factored into the analysis, the returns would not be sufficient to attract and support private feasible investment and development. Therefore, government, aviation, and aerospace-related industry and/or non-profit sources of funding will be required to facilitate the viable development of the postulated first phase development project.

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CHAPTER II

STRUCTURE OF THE ECONOMIC BASE AND TRENDS

INTRODUCTION

This chapter presents an analysis of the structure of Jackson and Williamson County and historical employment trends by economic sector. This chapter also presents a review of the labor force and commutation characteristics of residents of Jackson and Williamson counties. The results of the analysis suggest intensely competitive conditions for retaining and attracting many types of users of office and industrial space, albeit increasing demand for healthcare/medical related space.

COMPOSITION OF LOCAL AND REGIONAL EMPLOYMENT BASE

Table II-1 summarizes the current distribution of employment by industry sector within Jackson County and Williamson County.

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TABLE II-1

Comparison of Share of Employment by Economic Sector in 2011 Jackson County Employment Williamson County Employment Industry Sector % % Agriculture 2.3 1.6 Mining 1.4 N/A Utilities 0.2 0.7 Construction 4.2 N/A Manufacturing 2.2 6.0 Wholesale Trade 1.3 1.7 Retail Trade 10.8 11.7 Transportation & Warehousing 1.7 3.0 Information 1.1 1.7 Finance, Insurance & Real Estate 5.9 10.2 Professional & Business Services, Admin, Support, Waste Management, Remediation Services & Management of Companies1 3.6 10.4 Education 1.3 0.6 Health Services 10.9 14.6 Leisure & Hospitality 8.7 9.6 Other Services 4.5 5.0 Government 36.0 16.8 Total2 96.1 93.6 1Management of companies and administrative and waste management services not reported due to suppression of data for confidentiality reasons. 2May not add to 100 percent due to suppression of data for confidentiality reasons. Sources: U.S. Bureau of Economic Analysis; Gruen Gruen + Associates.

Employment in the government (including public university), health services, and retail trade sectors comprise approximately 58 percent of the employment base in Jackson County and 43 percent of the employment base in Williamson County. Leisure and hospitality services comprise nearly nine percent and 10 percent of total employment in Jackson County and Williamson County, respectively.

Manufacturing activities comprise only two percent of total employment in Jackson County and a still relatively low but three times higher six percent of total employment in Williamson County. Financial activities and professional and business services employment comprise over 20 percent of total employment in Williamson County but less than one half of the share in Jackson County at 9.5 percent of total employment. The wholesale trade, agriculture, mining, utilities, information, and education sectors comprise less than two percent each of total employment in both counties. Transportation and warehousing employment comprises nearly more than twice the share of total employment in Williamson County (3.0 percent) than Jackson County (1.7 percent). The higher share reflects the better accessibility to interstate highway linkages in Williamson County than in Jackson County.

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EMPLOYMENT BASE TENDS TO BE LOCAL SERVING IN NATURE

Secondary data and results of the interviews summarized in Chapter III indicate that the Jackson County economic base emphasizes non-basic employment. That is, non-basic activities serve the demands of local consumers and industry. For example, local government operations, many healthcare services and retail trade sectors serve households within the region. Figure II-1 illustrates the location quotient sectors of the Jackson County economic base using southern Illinois as a reference point.11

11 Southern Illinois includes the counties of Jackson, Williamson, Jefferson, Perry, and Franklin. The location quotient technique compares the local economy to a larger reference economy. The location quotient technique is based upon a calculated ratio between the local economy and the economy of a larger geographic area. Industry sectors that include a location quotient greater than 1.0 tend to be basic industries (those which export their goods and services beyond the region). Industry sectors with a location quotient less than 1.0 generally include non-basic or locally-serving activities.

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FIGURE II-1: Location Quotient by Industry Sector for Jackson County Using Southern Illinois as Base

Educational services 1.75 Government and government enterprises 1.66 Construction 1.54 Professional, scientific, and technical services 1.31 Wholesale trade 1.14 Health care and social assistance 1.12 Arts, entertainment, and recreation 1.07 Real estate and rental and leasing 1.05 Accommodation and food services 0.99 Retail trade 0.94 Other services, except public administration 0.85 Information 0.83 Finance and insurance 0.66 Farm employment 0.65 Transportation and warehousing 0.44 Manufacturing 0.34

0.00 0.20 0.40 0.60 0.80 1.00 1.20 1.40 1.60 1.80 2.00 Location Quotient

As would be expected given the presence of Southern Illinois University, the government sector (which includes the University) generates a location quotient greater than 1.2 (indicating a significant share of this activity is supported by non-local demands). Educational services, construction, and professional, scientific, and technical services, all generate location quotients greater than 1.2 indicating that these sectors export their services or activities beyond the immediate area. Sectors likely to be associated with demand for industrial and business park space, including manufacturing, transportation and warehousing, and wholesale trade have low location quotients indicating they do not significantly export their goods and services outside the region.

NUMBER OF FIRMS BY INDUSTRY SECTOR AND DISTRIBUTION OF FIRMS BY EMPLOYMENT SIZE

Table II-2 summarizes the number of business establishments in Jackson County by economic sector.

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TABLE II-2

Business Establishments by Sector for Jackson County: 2000-2010 2000 2000 2010 2010 Change Shift # % of Total # % of Total # % of Total Forestry, Fishing, Mining, Utilities 13 0.9 12 0.9 -1 0.0 Construction 155 11.1 127 9.3 -28 -1.8 Manufacturing 34 2.4 38 2.8 4 0.4 Wholesale Trade 45 3.2 29 2.1 -16 -1.1 Retail Trade 264 18.9 220 16.1 -44 -2.8 Transportation and warehousing 30 2.2 39 2.9 9 0.7 Information 25 1.8 26 1.9 1 0.1 Finance, Insurance, & Real Estate 161 11.5 171 12.5 10 1.0 Professional/Business Services 115 8.2 119 8.7 4 0.5 Management of Companies & Enterprises 7 0.5 7 0.5 0 0.0

Admin, Support, Waste Management, Remediation Services 62 4.4 56 4.1 -6 -0.3 Education 8 0.6 10 0.7 2 0.1 Healthcare Services 138 9.9 180 13.2 42 3.3 Arts, entertainment, and recreation 16 1.1 16 1.2 0 0.1 Accommodation and food services 137 9.8 143 10.5 6 0.7 Other Services 163 11.7 169 12.4 7 0.7 Unclassified 21 1.5 1 0.07 20 1.43 Total Establishments 1,395 100.0 1,363 100.0 -32 0.0 Sources: U.S. Census Bureau, County Business Patterns; Gruen Gruen + Associates.

The number of establishments in Jackson County declined by only 32 from 1,395 in 2000 to 1,363 in 2010. Healthcare services is the only sector to experience a shift in the number of establishments relative to the total economic base by more than one percentage point, increasing from approximately 10 percent to 13 percent. The sector with the second largest number of establishments, finance, insurance, and real estate (FIRE), was the only other sector to experience an increase upward in the share of total establishments of one percentage point or higher. The FIRE sector comprised 11.5 percent of total establishments in 2000 and 12.5 percent of total establishments in 2010. The number of establishments in the FIRE sector, however, only increased by 10 firms. Retail trade, the sector with the largest number of establishments, experienced a loss of 44 establishments and a downward shift of 2.2 percentage points to 16 percent of total establishments. The number of establishments in the construction, wholesale trade, and administrative support sectors declined from 2000 to 2010. The other classified sectors experienced stable to modest increases in the number of establishments with no sector increasing by more than nine establishments over the past decade.

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Table II-3 summarizes the number of business establishments in Williamson County for 2000 and 2010.

TABLE II-3

Business Establishments by Sector for Williamson County: 2000-2010 2000 2000 2010 2010 Change Shift # % of Total # % of Total # % of Total Forestry, Fishing, Mining, Utilities 10 0.6 11 0.7 1 0.1 Construction 196 12.4 180 11.2 -16 -1.2 Manufacturing 51 3.2 46 2.9 -5 -0.3 Wholesale Trade 74 4.7 60 3.7 -14 -1.0 Retail Trade 322 20.4 287 17.8 -46 -2.6 Transportation and warehousing 44 2.8 52 3.2 8 0.4 Information 21 1.3 35 2.2 14 0.9 Finance, Insurance, & Real Estate 161 10.2 173 10.7 12 0.5 Professional/Business Services 107 6.8 122 7.6 15 0.8 Management of Companies & Enterprises 6 0.4 4 0.2 -2 -0.2

Admin, Support, Waste Management, Remediation Services 51 3.2 60 3.7 9 0.5 Education 4 0.3 16 1.0 12 0.7 Healthcare Services 164 10.4 207 12.8 43 2.4 Arts, entertainment, and recreation 29 1.8 31 1.9 2 0.1 Accommodation and food services 130 8.3 145 9.0 15 0.7 Other Services 185 11.7 180 11.2 -5 -0.5 Unclassified 16 1.0 2 0.1 -14 -0.9 Total Establishments 1,575 100.0 1,611 100.0 36 0.0 Sources: U.S. Census Bureau, County Business Patterns; Gruen Gruen + Associates.

While the numbers of establishments in Williamson County are somewhat higher than the number in Jackson County and slightly increased rather than slightly decreased, the patterns of change within the counties are similar. The healthcare sector experienced the highest increase in the number of establishments and again is the only sector which experienced an upward shift of one or more percentage points. No sector other than healthcare experienced an increase of more than 15 firms between 2000 and 2010.

The number of very small businesses with fewer than five workers represents at least half of the local economic base. In 2010, 681 establishments had fewer than five employees, representing 56 percent of the total economic base in Jackson County. In Williamson County, the share of establishments with fewer than five employees was 51 percent.

By employment class size for manufacturing firms, Figure II-2 shows that Jackson County economic base is characterized by small manufacturing businesses. According to County Business Pattern

GRUEN GRUEN + ASSOCIATES Hanson Professional Services PAGE 37 STRATEGIC RECOMMENDATIONS AND DEVELOPMENT PLAN FOR SOUTHERN ILLINOIS AIRPORT PROPERTY data, in 2010, 76 percent of all manufacturing establishments located in Jackson County employed fewer than 20 workers. Only 13 percent of businesses included 50 or more workers.

FIGURE II-2: Share of Manufacturing Firms by Employment Class Size in Jackson County

5% 8%

11% 1 to 9 10 to 19 20 to 49 8% 50 to 99 100+ 68%

HISTORICAL EMPLOYMENT GROWTH BY INDUSTRY SECTOR

Table II-4 shows the public and private employment in Jackson County for 2001, 2005, and 2011.

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TABLE II-4

Jackson County Total Public and Private Employment by Sector: 2001-2011 Average Annual Change Growth 2001 2005 2011 2001-2011 Rate Industry Sector # # # # % % Farm Employment 868 725 753 -115 -13.2 -1.4 Forestry, Fishing, & Related Activities 75 N/A 105 30 40.0 3.4 Mining 149 N/A 532 383 257.0 13.6 Utilities 143 99 74 -69 -48.3 -6.4 Construction 1,845 1,875 1,611 -234 -12.7 -1.3 Manufacturing 1,291 1,080 852 -439 -34.0 -4.1 Wholesale Trade 381 357 511 130 34.1 3.0 Retail Trade 4,290 4,875 4,108 -182 -4.2 -0.4 Transportation & Warehousing 613 631 651 38 6.2 0.6 Information 582 563 433 -149 -25.6 -2.9 Finance, Insurance, & Real Estate 1,855 1,907 2,227 372 20.0 1.8 Professional & Business Services, Admin, Support, Waste Management, Remediation Services & Management of Companies1 1,628 1,113 1,354 -274 -16.8 -1.8 Education 340 380 478 138 40.6 3.5 Health Services 4,174 3,833 4,143 -31 -0.7 -0.1 Leisure & Hospitality 3,458 3,578 3,301 -157 -4.5 -0.5 Other Services 1,721 1,821 1,703 -18 -1.0 -0.1 Government 13,457 13,112 13,708 251 1.9 0.2 Total Employment2 38,380 37,937 38,124 -256 -0.7 -0.1 1 Employment for Professional and Business Services and Management of Companies sector not reported due to reasons of confidential disclosure so figures shown are only for administrative and waste management services sector. 2Individual sectors may not add to total due to data suppression for confidentiality reasons Sources: U.S. Bureau of Economic Analysis; Gruen Gruen + Associates.

Between 2001 and 2011, the Jackson County total employment base decreased by 256 jobs or less than one percent, from 38,380 jobs to 38,124 jobs. The total employment base has remained relatively stable through the Great Recession without any significant overall increases or decreases. Employment increases occurred in the FIRE, government, educational, mining, wholesale trade, and transportation and warehousing sectors. The largest sector, government, increased employment by about two percent, or 251 jobs. Health services employment, the second largest sector, remained about the same over the 10-year period with about 4,100 jobs. Retail trade, the third largest employment sector, experienced a large increase from 2001 to 2005, climbing to approximately

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4,900 jobs. Employment in this sector has since fallen to 4,100 jobs, less than the 2001 employment level. Sectors that traditionally use industrial and business park space in the construction, manufacturing, wholesale trade, and transportation and warehousing sectors, collectively make up just under 10 percent of Jackson County employment. Employment in the construction and manufacturing sectors fell over the 10 year period but was offset by a small amount of growth in the wholesale trade and transportation and warehousing sectors.

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Table II-5 shows the public and private employment in Williamson County for 2001, 2005, and 2011.

TABLE II-5

Williamson County Total Public and Private Employment by Sector: 2001-2011 Average Annual Change Growth 2001 2005 2011 2001-2011 Rate Industry Sector # # # # % % Farm Employment 724 577 563 -161 -22.2 -2.5 Forestry, Fishing, and Related Activities N/A N/A N/A N/A N/A N/A Mining N/A N/A N/A N/A N/A N/A Utilities 210 226 243 33 15.7 1.5 Construction N/A 2,339 N/A N/A N/A N/A Manufacturing 2,933 3,002 2,072 -861 -29.4 -3.4 Wholesale Trade 719 696 591 -128 -17.8 -1.9 Retail Trade 4,173 4,339 4,053 -120 -2.9 -0.3 Transportation & Warehousing 908 977 1,031 123 13.5 1.3 Information 549 595 577 28 5.1 0.5 Finance, Insurance, & Real Estate 2,488 2,929 3,514 1,026 41.2 3.5 Professional & Business Services, Admin, Support, Waste Management, Remediation Services & Management of Companies1 1,319 3,134 3,619 485 15.5 2.4 Education 200 201 219 19 9.5 0.9 Health Services 3,282 4,330 5,039 1,757 53.5 4.4 Leisure & Hospitality 2,728 3,136 3,315 587 21.5 2.0 Other Services 1,793 1,839 1,727 -66 -3.7 -0.4 Government 5,732 5,448 5,796 64 1.1 0.1 Total Employment2 31,150 33,900 34,547 3,397 10.9 1.0 1 Employment for Professional and Business Services and Management of Companies sector not reported for 2001 due to reasons of confidential disclosure so change and average annual growth rate shown is for 2005-2011 period. 2Individual sectors may not add to total due to data suppression for confidentiality reasons. Sources: U.S. Bureau of Economic Analysis; Gruen Gruen + Associates.

While total employment in Jackson County remained stable between 2001 and 2011, total employment in Williamson grew by 3,400 jobs or 11 percent to nearly 35,000 jobs by 2011. Health services and the FIRE, leisure and hospitality, and professional and business services accounted for nearly all the employment growth over the 10 year period. Manufacturing employment declined by over 800 jobs. Transportation and warehousing which represents a small share of the economic base remained relatively stable with a slight increase in employment.

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Figure II-3 shows annual employment growth rates for select industries for Jackson and Williamson counties between 2001 and 2011.

FIGURE II-3: Annual Employment Growth Rate for Select Industries in Jackson County and Williamson County

Jackson County Willliamson County 4.0%

3.0%

2.0%

1.0%

0.0% Manufacturing Wholesale trade Transportation & Finance, Insurance & Professional & Total Employment -1.0% Warehousing Real Estate Business Services (all sectors)

-2.0%

-3.0%

-4.0%

-5.0%

LABOR FORCE AND COMMUTATION CHARACTERISTICS

According to the Bureau of Labor Statistics, the Jackson County labor force currently includes over 32,000 members. As of December 2012, approximately 30,100 resident labor force members are currently employed resulting in a current unemployment rate of 7.1 percent. This is down from an unemployment rate of 7.7 percent in 2011.

Table II-6 summarizes the total private sector labor force compared to the total private sector jobs to show the in-commutation versus out-commutation for Jackson County. In 2010 an estimated 8,600 members of the Jackson County labor force (i.e., employed residents) commuted out of the county for work.

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TABLE II-6

Balance Between Labor Force and Job Base of Jackson County: 2010 Trade, Goods- Transportation Producing & Utilities Services Total Total Labor Force1 2,414 3,592 13,680 19,686

Labor Force Employed Within Jackson 996 1,413 8,670 11,079 County

Out-Commuters (“Exported Labor”) 1,418 2,179 5,010 8,607 Percent out-commuters 59% 61% 52% 44%

Total Jobs 2,279 4,469 18,045 25,153 Jobs Held by Members of 996 1,413 8,670 11,079 County Labor Force (i.e. County residents) In-Commuters (“Imported Labor”) 1,283 3,056 9,735 14,074 Percent in-commuters 56% 68% 54% 56% 1 Not including unemployed members of the County’s labor force and excluding government employment. Sources: U.S. Census Bureau, Center for Economic Studies, OnTheMap; Gruen Gruen + Associates.

Over half of the Jackson County labor force in the private employment sectors of good-producing, trade, transportation & utilities, and services are employed within the County and of this majority, approximately 78 percent are employed in the services industry sectors (professional and business services, health services, education, and other services). Approximately 59 percent and 61 percent of the County labor force privately employed in the goods-producing and trade, transportation, and utilities sectors, respectively, commute to workplaces outside of Jackson County. A smaller but still majority of labor force members employed in the services sectors leave the County for work. The development of a larger local private industry jobs base would improve the opportunities for the resident labor force not engaged in public–related employment to reduce commuting for employment.

According to the U.S. Census, as Table II-7 shows, if all labor force members are included (including those employed in the public sector), the share of the labor force employed within the County increases significantly. Approximately 81 percent of the total labor force was employed within Jackson County in 2010.

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TABLE II-7

Work Location of Employed Jackson County Residents 2011 % Worked in state of residence 97.8 Worked in county of residence 80.9 Worked outside county of residence 16.9 Worked outside state of residence 2.2 Source: U.S. Census Bureau, 2011 American Community Survey

Educational Attainment of Labor Force

Table II-8 presents educational attainment levels for residents in both Jackson County and Williamson County in 2011.

TABLE II-8

Educational Attainment of Population 25-Years or Older: 2011 Jackson County Williamson County State of Illinois % % % Less than 9th Grade 4.0 3.5 5.8 High School, no Diploma 6.1 8.0 7.5 High School Graduate 25.4 30.5 27.8 Some College, no Degree 21.9 26.3 21.1 Associate’s Degree 7.0 9.6 7.3 Bachelor’s Degree 18.1 13.4 19.1 Graduate/Professional Degree 17.6 8.6 11.6 Total 100.0 100.0 100.0 Sources: U.S. Census Bureau; Gruen Gruen + Associates.

The proportion of residents by educational level shows that the proportion of high school graduates and less than high school graduates is lower at 36 percent in Jackson County than for Williamson County at 43 percent. Approximately 36 percent of the Jackson County population has a bachelor’s degree or higher as compared to only 22 percent in Williamson County. This is not surprising given the presence of Southern Illinois University in Carbondale and the large proportion of the County’s economic base in government employment.

Occupational Characteristics of Labor Force

Table II-9 summarizes the occupational make-up of resident workers from 2000 to 2011 in both Jackson County and Williamson County.

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TABLE II-9

Distribution of Jackson County and Williamson County Labor Force by Occupation: 2000-2011 Jackson County Williamson County Occupation 2000 2011 Shift 2000 2011 Shift % % % % % % Management, Professional, and 35.8 37.2 1.4 28.4 31.8 3.4 Related Service 19.0 24.5 5.5 17.8 20.9 3.1 Sales and Office 26.8 22.5 -4.3 27.8 25.9 -1.9 Farming, Fishing and Forestry 0.7 0.3 -0.4 0.3 0.3 0.0 Construction, Extraction and 7.3 6.8 -0.5 9.6 9.5 -0.1 Maintenance Production, Transportation, and Materials Moving 10.5 8.8 -1.7 16.0 11.7 -4.3 Sources: U.S. Census Bureau; Gruen Gruen + Associates.

Consistent with the employment decline in the manufacturing and construction sectors and slow employment growth in the transportation and warehousing sectors, the proportion of the resident labor force in the construction and production and transportation or laborer-type jobs has declined over the 10 year period in both counties. Both counties have experienced a growing proportion of the labor force in “white collar” and “pink collar” occupations such as managerial, professional, and sales occupations consistent with the large proportion of the jobs in the government, health services, and retail trade sectors. Williamson County has a slightly higher proportion of its resident labor force in the “blue collar” occupations at 21 percent and a slightly lower proportion of the labor force in the “white collar” occupations at 79 percent as compared to the proportions of 16 percent and 84 percent, respectively, in Jackson County.

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CHAPTER III

THE MARKET FOR POTENTIALLY DEVELOPABLE LAND USE OPTIONS

INTRODUCTION

In addition to analysis of employment trends and labor force characteristics, GG+A conducted interviews and obtained and analyzed land use/real estate market data in order to assess the prevailing land use market conditions and development trends and to identify the following:

• The primary geographic area within which the Southern Illinois Airport site will compete for industrial- and office-space users;

• The primary geographic origins of potential sources of demand for industrial and office space;

• The primary comparative advantages or strengths of the location; and

• The primary disadvantages or constraints on attracting industrial and office development.

PRIMARY GEOGRAPHIC MARKET AREA WITHIN WHICH THE SITE WILL COMPETE FOR INDUSTRIAL- AND OFFICE-SPACE USING BUSINESSES

The results of interviews with economic developers, real estate developers and real estate brokers, and knowledgeable members of the business community indicate that the primary geographic area within which the study area will compete is southern Illinois including other locations in Jackson County, Marion in Williamson County, and Mount Vernon in Jefferson County. Large industrial users considering a southern Illinois location tend to consider alternatives available more proximate to the Interstate 57 corridor and Interstate 64 (with better highway accessibility to both Chicago and St. Louis) than available from locations in Jackson County. Accordingly, a cluster of industrial uses centers around the junction of Interstate 64 and Interstate 57 in Mt. Vernon.

GEOGRAPHIC ORIGINS OF POTENTIAL SOURCES OF DEMAND

The results of interviews and review of supply suggest that some sources of demand originate from within the area. A number of users affiliated with or related to Southern Illinois University have occupied building space at the SIU Research Park or in the Business Park East. For example, Liaison Technologies, a cloud-based integration and data management company, relocated from the incubator facility at Southern Illinois Research Park and expanded last year to a 5,000-square-foot facility in the Business Park East. Aisin, an automotive components manufacturer has expanded operations and facilities at a site in Marion since it moved to the location. Continental Tire has

expanded multiple times at its location in Mount Vernon.

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COMPETITIVE ADVANTAGES

The results of the interviews indicate the following factors represent the primary locational advantages or strengths of the location of the site and broader market area of which it is a part:

• Accessibility to Highway 51 and Highway 13, a 4- and 6-lane highway leading to Interstate 57 (Canadian National Railway is over a mile east of the Airport but currently no direct rail linkage exists to the Airport);

• Low land costs (land prices are $6,000 per acre in municipal parks and have not increased in many years);

• Low labor costs;

• Affordable housing;

• Presence of Southern Illinois University and in particular to the site, the Transportation Education (providing both significant economic impacts and trained labor and some equipment/machines that would be expensive to duplicate);

• Proximity to the Southern Illinois Airport (and other airports within the region); and

• Nearby healthcare, retail, hospitality and support services.

COMPETITITVE DISADVANTAGES

The results of the interviews indicate the following factors represent the primary disadvantages or constraints on development:

• The site is not adjacent to interstate highways;

• The site does not adjoin a port or access to maritime commerce even though the Mississippi River is located on the west side of Jackson County; and

• The area around the site and Jackson County as a whole lacks a critical mass or agglomeration of businesses that help businesses attract and retain labor and operate cost effectively and productively. Agglomeration economies refer to a spatially concentrated development and capital base that from increasing returns to economies of scale, give cost and revenue advantages to a geographic area’s expanding and new firms. These advantages are “external to the firm” because they benefit all the companies engaged in a given range of activities within a particular place, without firms having to shell out extra resources. As an indication of the limited agglomeration the area has not experienced significant speculative or multi-tenant industrial or office space by private investor-developers.

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INDUSTRIAL MARKET OVERVIEW AND SUPPLY COMPETITION

The southern Illinois industrial market for distribution and warehouse space is primarily concentrated around Mt. Vernon, about 40 miles north of Carbondale and the Southern Illinois Airport. Mt. Vernon is at the crossroads of Interstate 64 and Interstate 57 which provides convenient accessibility west to St. Louis and is closer to Chicago to the north. The market for manufacturing space is primarily located in Mt. Vernon in Jefferson County, Marion in Williamson County, and Carbondale in Jackson County. Southern Illinois has a limited base of speculative industrial space. Much of the industrial base was developed for owner occupants in the 1970’s through 1990’s. Little new development has occurred in the decade of the 2000’s with the exception of an automotive components manufacturer, Aisin, which located in Marion in 2001. Aisin selected the location because of the proximity to the interstate highways, proximity to John A. Logan College and Southern Illinois University, and low land and other costs. Note, Aisin recruits engineering students rather than students from the automotive program offered by Southern University Illinois.

Many of the existing industrial parks are older with still an ample amount of land available for development. A large amount of existing industrial building space is also available including two large distribution facilities, Circuit City in Marion and Anheuser Busch in Mt. Vernon which were both vacated in recent years. Other cities in southern Illinois with industrial parks include a 90-acre park in Du Quoin and an 185,000-square-foot business incubator facility in the West Frankfort Industrial Park in West Frankfort. A portion of the former Maytag 900,000-square-foot manufacturing facility in Herrin (about 15 miles from Southern Illinois Airport) is also available.

Sources of competition for industrial users at the Southern Illinois Airport will include existing industrial parks within Carbondale and Marion.

Jackson County/Carbondale Industrial and Business Parks

Table III-1 summarizes the inventory of industrial and business parks in Carbondale.

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TABLE III-1

Industrial and Business Park Inventory in Carbondale Total Building Total Building Total Total Land Space Space Name of Year Land Area Absorbed Developed Occupied Property/Project Opened # Acres # Acres # Square Feet % Major Space Users Business Park 1999 98 10 32,000 100 Light Industrial – East Liaison Technologies, CDM Engineers and Glidden Paints, Verizon Wireless, Bicentennial 1976 194 66 250,000 100 Light Industrial/Contractor Offices, Intertape Industrial Park Polymer, Venegoni Distributing, Southern IL Healthcare Distributing, Adams Printing, Jacobs Mechanical Carbondale 1966 63 63 210,000 100 Light Industrial/Contractor Offices – Industrial Park ComPac International Southern Illinois 1990 42 10 90,000 81 USDA, DXR Development Group, National Research Park League for Nursing, SIU Nurse Assistant/Aide Testing Program, Southern Illinois Healthcare-Community Benefits, Applied Vocational Services, Olivia’s Vintage TOTAL 397 149 582,000 97 Sources: City of Carbondale; Jackson Growth Alliance.

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Bicentennial Industrial Park

Located about two miles east of Southern Illinois Park, Bicentennial Industrial Park is a 245 acre industrial park with rail access whose primary tenant is Intertape Polymer, a Canadian-owned company purchased tesa tape, a German company in the early 2000’s. The employment high was 450 in 1993 at its former manufacturing location. The current facility ws opened in 1994. In recent years, the employment level has been 67, but Intertape Polmer has initiated its production expansion plans and present employment is approximately 105. The firm obtained from the City of Carbondale last year nearly nine acres of land and is completing a three million dollar expansion of its facility in the Bicentennial Industrial Park (as the result of a transfer of assets and operations from a plant in Richmond, Kentucky).

Other users in the park include Southern Illinois Healthcare Distribution and Venegoni Distributing, a Budweiser distributor. Approximately 125 acres of land remain available in the park.

Carbondale Business Park East

Located at Reeds Station Road and Route 13 on the east side of Carbondale, about five miles from the Southern Illinois Airport, the 87-acre park is home to Liaison Technologies, a cloud-based integration and data management company that relocated from the incubator facility at Southern Illinois Research Park and expanded to a 5,000-square-foot facility in the Business Park East in 2012.12 Fiber optics for broadband access was recently installed to the park, which opened in 1999. Other users in the park include CDM Engineers, Glidden Paints, and Verizon Wireless.

12 http://siuctechdev.blogspot.com/2010/06/news-out-of-southern-illinois-research.html - As Liaison considered expansion, the options included overseas outsourcing of highly skilled technology positions or expanding existing metropolitan office locations. But Larry Mieldezis, Liaison Technologies COO, said he had another idea, a plan involving his alma mater.

“We decided instead of going offshore to other countries with these jobs, we would try a different approach, staying onshore and finding a partner in Illinois to keep these jobs in the U.S.,” Mieldezis said. He said the concept involved finding a rural location near a good university producing quality graduates in the field of information technology.

Because of the lower cost of living in such communities, companies can offer competitive wages and benefits to employees more economically than they could in metropolitan areas. He noted that keeping the jobs stateside avoids common problems associated with outsourcing jobs overseas, including language and cultural barriers, regulatory compliance and security requirements, political uncertainties and time zone differences.

“In fact, it’s proven that for every one resource we hire in the United States, we would have to hire 1.5 in India or China. We’ve found an avenue that is cost-effective and it keeps jobs here at home in the states rather than overseas,” said Mieldezis, a Marion native. “When I graduated with a bachelor’s degree in computer science in 1986 from SIUC, I would have liked to have stayed in the area but I had to move away to really utilize my degree, first to New York and then to Seattle and finally to Georgia. But I’ve maintained a relationship with SIUC and the computer science department over the years.”

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Southern Illinois Research Park

Located across from Southern Illinois University in Carbondale, about two miles south of Southern Illinois Airport, the 42 acre development began in 1990 with the building of the 55,000-square-foot Dunn Richmond Economic Development Center,. The Southern Illinois Research Park currently contains three buildings. The main 55,000-square-foot building, Dunn Richmond Economic Development Center, operates with over 100 leases for small incubator businesses. The building currently has 12,000 square feet of vacant space due to the departure of one large user which relocated to the Business Park East. The second 20,000-square-foot building opened in 2006 and is 100 percent occupied with five tenants, three of whom relocated from the Dunn Richmond Economic Development Center. Tenants in the building include a software company that is a University spin-off, the USDA for research and engineering functions, and the National League for Nursing and Nurse Aid Testing (which serves the University). A new third 15,000-square-foot building opened last November and is 75 percent occupied. Two of the building's occupants relate to the University, and two occupants are not affiliated with the University. One small space user is a professor, and another is a vintage guitar maker. The park has additional land of approximately 30 acres remaining available to support future development of approximately 250,000 square feet of space.

Murphysboro Technology & Industrial Park in Murphysboro

Located on the northeast side of town along Illinois Routes 13 and 127, the 86-acre park which opened in 1980 is largely privately-owned. Approximately 60 percent of the lots have been developed. The largest three properties in the park are occupied by a trucking firm, a construction firm, and the county highway department.

In addition to the park in Murphysboro, several other large manufacturing and distribution buildings are available, including three buildings totaling approximately 550,000 square feet of space, due to closures and consolidations of plants at other locations. Only one manufacturing plant remains operating in Murphysboro. Penn Aluminum remains operating in a 270,000-square-foot facility, but its employment has declined from about 300 jobs to 150 jobs.

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Williamson County/Marion Industrial and Business Parks

REDCO Industrial Park

Owned by the Regional Economic Development Corporation (REDCO), REDCO Industrial Park is an eight-year-old light manufacturing industrial park located two miles west of I-57 via Illinois Route 13. The 290-acre park still has about 200 acres of land available for development. The park has backbone infrastructure in place with railroad right of way although no rail spurs to the park are in place. Aisin, an automotive parts manufacturer which opened in the park in 2002, has expanded to three plants on 80 acres within the park. Aisin manufactures car parts primarily for Toyota and GM. Aisin also has an electronics and light metals plant and employs about 1,100 people. Aisin is currently planning a plant expansion. A Ride Mass Transit district facility office was built on four acres in the park within the last year.

Robert L. Butler Industrial Park

The park is a 15-year-old City of Marion-owned industrial park for distribution, light manufacturing, and office uses located four miles west of I-57 and on the south side of Illinois Route 13. The park contains backbone infrastructure and railroad right of way (but no rail spurs).

The park contains about 300 acres with 50-65 acres of land remaining available for development. No development has occurred within the park in the last eight years. Circuit City had built a now vacant 1.3 million square foot distribution facility that has been recently purchased by a Canadian developer which is trying to obtain tenants for the vacant building. Other users in the park include Blue Cross Blue Shield and Wisconsin Physician Services. Both organizations operate in office space processing health processing claims.

Williamson County Airport Industrial Park

The park adjacent to the Williamson County Regional Airport located five miles west of I-57 on the north side of Illinois Route 13 has 200 acres available for development via ground leases. The Williamson County Regional Airport provides eight daily roundtrip flights to St. Louis. No rail access is available to the park. The park has 175 acres of land on the west side of the airport property that could accommodate industrial, manufacturing, or warehouse facilities. Six one-acre sites are also available for lease on the south side of the airport property facing Illinois State Route 13. The park’s most recent developments have been retail and medical office space on these commercial and office sites facing Illinois State Route 13.

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City of Herrin

An older Herrin Chamber of Commerce-owned 500-acre industrial park exists with only a few acres of land remaining available for new development. Maytag closed its approximately 900,000-square- foot manufacturing facility in 2006. Agracel, an industrial developer, is marketing about 300,000 square feet of space of the vacant manufacturing facility as a multi-tenant redevelopment. Walgreen’s uses part of the former Maytag facility to store seasonal goods and store overstock. Full time employment is typically two to four people and for the holiday season, employment can ramp up on a temporary basis to 80 to 100 people. Other users include Natural Enrichment Industries (NEI), a manufacturer of high quality food grade Tricalcium Phosphate. NEI purchased the former 130,000-square-foot Orpak Stone manufacturing plant/warehouse in 2007 to expand its operations from its manufacturing plant in Sesser which is 22 miles from Herrin.

Jefferson County/Mount Vernon Industrial and Business Parks

Rolland W. Lewis Industrial Park

A City of Mount Vernon-owned 20-year-old industrial park with about 300 acres of land for development is largely built out with only 20 acres of land remaining available for development. Users in the park include Walgreen’s with a 1.0 million-square-foot distribution facility built in 1990. Walgreen’s invested $9 million in optimization of its facility last year, although it did not expand the footprint of its facility. Pepsi opened a distribution center on 20 acres in the park last year, replacing a small facility it had leased elsewhere in the City. Magnum Steel, a coal mining equipment manufacturer, is currently expanding within the park from its 33,000-square-foot existing facility to about 128,000 square feet of space. Anheuser Busch had a 400,000-square-foot distribution facility (used for promotional items distribution) that was vacated three years ago. The property was purchased in early 2012 by Agracel and is currently being marketed.

Mount Vernon Industrial Park

Mount Vernon Industrial Park is a smaller privately owned industrial park with a 140,000-square- foot multi-tenant building that currently has 75,000 square feet of vacant space.

Continental Tire, a tire manufacturer established in 1973 in Mt. Vernon, is in a standalone manufacturing facility near Route 142. The tire manufacturer has expanded to a total of approximately 3.0 million square feet of space over the years with several expansions in the last couple years totaling nearly one million square feet of space.

According to a Jefferson County economic development representative, all growth in the area has been due to existing businesses and not from attraction of new firms. The crossroads of I-64 and I- 57 is an advantage for distribution and manufacturing users such as Pepsi, Walgreen’s and Magnum Steel.

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LAND AVAILABILITY

As summarized below in Table III-2, approximately 700 acres (exclusive of land around Southern Illinois Airport) of land are estimated as available for future industrial and business park development within Carbondale and Marion. As reviewed above, all of the land is located in industrial and business park developments improved with the necessary infrastructure. Map III-1 identifies the location of the competing land in the market area. The relocation of the aviation and automotive programs of the Vocational Technical Institute of Southern Illinois University to the Transportation Education Center at Southern Illinois Airport may also add to the land supply if the Vocational Technical Institute campus is redeveloped for use as an industrial park in Carterville.

MAP III-1: Ready-to-Go Land Available in Carbondale and Marion

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TABLE III-2

Land Available in Carbondale and Marion 1 Available Land Map ID Name/Location # Acres Characteristics Business Park East 88 A Carbondale, IL-13 & Reed Station Rd. Bicentennial Park 139 Older industrial park with potential Carbondale, U.S. Rt. 51 & Dillinger for rail access B Rd.

Southern Illinois Research Park 30 (est.) Research park with incubator C Carbondale, U.S. Rt. 51 & Pleasant building Hill Rd. REDCO Industrial Park 200 Fully improved land, approximately D Marion, IL-13 & Skyline Drive 4 miles to I-57 Robert L. Industrial Park 50-65 Fully improved land, vacant 1.3 E Marion, Circuit City Rd. million-square-foot Circuit City facility; 4 miles west of I-57 Williamson County Airport 181 F Industrial Park Marion, Terminal Dr. & IL-13 TOTAL 703 1 Mt. Vernon and Jefferson County currently have limited to no vacant, ready-to-go land available for private development. Sources: Regional Economic Development Corporation; City of Carbondale; Gruen Gruen + Associates.

Given the significant supply of land available of approximately 700 acres for industrial development (excluding the Southern Illinois Airport property) and approximately 2.6 million square feet of available building space (primarily in a few larger distribution facilities in the market area), the competition for attracting industrial and office users to land in or near the Southern Illinois Airport is likely to continue to be intense.

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CHAPTER IV

PRINCIPAL CONCLUSION ABOUT NATURE OF POTENTIAL DEVELOPMENT OPPORTUNITIES AND SEQUENCE OF DEVELOPMENT

Accessibility

Accessibility to air transportation is the unique transportation advantage of the Airport property and environs. The Airport has good access to Highway 51 and Highway 13, a 4- and 6-lane highway leading to Interstate 57 is one mile south of the Airport. (Canadian National Railway, over a mile east of the Airport, currently has no direct rail linkage to the Airport).

Control of Land

The Southern Illinois Airport Authority owns approximately 227 acres of developable land surrounding the Airport itself positioning it to adequately provide for potential demand associated with aviation and non-aviation uses. The ownership and control of land is a competitive advantage providing the ability to quickly respond to use and development opportunities without the need to reach agreements with unrelated land owners.

Land Use and Zoning

The use of airport lands is subject to the City of Carbondale zoning ordinance. The Airport is in a “PAD Planned Airport Zone”.

Facilities

SIU owns three buildings at the Southern Illinois Airport on land it owns and leases four buildings from the Southern Illinois Airport Authority. Representatives of the SIU Transportation Education Center indicated SIU does not have excess hangar space. The Airport does not currently contain substantial available hangar space. The Airport contains three runways with lengths of 3,498 feet, 4,164 feet, and 6,506 feet. The Airport provides practical aeronautical facilities for commercial charter aircraft operators, student pilots, and general aviation private pilots. For example, the Airport serves the corporate pilot taking a client to a business in Carbondale,a primary student learning to fly, or naturalists visiting the Shawnee National Forest.

Currently, however, Runway 18R-36L, 3,498 feet by 60 feet, restricts the type of aircraft usage due to limited length and weight bearing capability. Few multi-engine aircraft are capable of using the parallel runway due to insurance or performance standards issues. Presently, all twin-engine traffic must be directed to the primary Runway 18L-36R.

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Existing Public Utilities

Appendix B contains an exhibit depicting known utilities in the proximity of the Airport. The basic conclusion from the review of infrastructure conditions is development of Airport property will not be constrained by the lack of sufficient utilities.

A 10” waterline serves the main body of the Airport and the developments along New Era Road north of Airport Road up to the Carbondale Reserve Center . Water pressure and flow is good – service is reliable. Waterlines serving interior buildings are mostly 6” plastic.

The local electric co-op, Egyptian Electric, recently installed a substation along Airport Road just beyond the existing eastern property line of the airport. The purpose of the substation is to provide reliable service to the Airport and complete a grid with backup means of power. Service lines to existing buildings are fed underground.

A fiber optic network was installed in 2011 that provides 20M Internet service from Route 13 to the main Airport and buildings as well as SIU and its buildings. The network also serves tenants on the east side of the Airport and can be expanded to additional needs. Currently, two strands of fiber are being used for current users. An additional 46 strands are available for future use.

Sanitary sewer is also collected from all users at the Airport and is released into the City of Carbondale’s sanitary system at the intersection of New Era Road and Airport Road.

Ameren natural gas service is provided to all users on the Airport and has sufficient capacity to accommodate future users.

Nature of Demand Opportunities and Sequence of Development

The results of the research and analysis, including interviews, suggest that private, speculative multi- tenant, office and industrial development opportunities are likely to be limited in the near-term and not likely to represent the initial sequence of development at the Southern Illinois Airport property and environs. Significant non-aviation traditional office, manufacturing, and distribution uses are not likely to locate at the Airport at least in the near term given the highway accessibility disadvantages and large supply of land and building space already available in southern Illinois, including nearby locations in Jackson County. Industrial or other typical nonresidential development is likely to occur on a build-to-suit or owner-occupant basis.

The results indicate the critical importance of capturing spillover demands from the Southern University Illinois (SIU) Transportation Education Center. The most likely near term opportunities relate to the formation of partnerships with airlines.

Based on the interviews and related research conducted, the following summarizes examples of the identified potential development opportunities.

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TEST CELL APPLIED RESEARCH AND DEVELOPMENT

The approximately 11,000-square-foot “test cell” facility built as part of the development of the Transportation Education Center is designed to operate airplane engines and test the effect of alternative fuel types on engine efficiency. The special purpose facility cost approximately $6.5 million to develop. The facility includes hangar space for removing and changing engines and four test cells for differing types of engines.13

Although the facility is not yet operating, an inquiry from a private sector firm, a start-up, has been received. The firm has as its objective the development of an environmentally cleaner fuel than the leaded fuel currently used to power airplane engines. Rolls Royce is also reported to have expressed potential interest in the test cell facility. The Federal Aviation Administration issues requests for qualifications and/or proposals for “centers of excellence” including those that focus on improving engine fuel efficiency and environmental sustainability through testing alternative fuel sources. The FAA issued a request for proposals for a “Centers of Excellence” for alternative jet fuels and environment, responses to which were due March 20, 2013.

FAA Centers of Excellence are established through an application process in which a university may receive a financial grant and become responsible for conducting research related to a variety of aviation issues such as research regarding airspace and airport planning and design, aviation safety and security, airport capacity enhancement techniques, and alternative fuels. The purpose of a Center of Excellence is for the center to become a national resource in a specific area of transportation. A Center of Excellence must encompass an educational component, a research component, and a technology transfer component. The education component of the center must create new programs, expand graduate level transportation education, and make new opportunities for entrance into the field of transportation. The purpose of the research aspect is to improve advances in science and technology in a specific field of transportation. The technology transfer component encourages the application of the results of the research component and requires that the university connect with the larger transportation community outside of the university. Many established Centers of Excellence include several universities working together. Some examples established Centers of Excellence include the Center of Excellence for Airport Technology, the Center of Excellence for General Aviation Research, and the Center of Excellence for the Partnership to Enhance General Aviation Safety, Accessibility, and Sustainability which was formed in 2012 and of which SIU at Carbondale is an affiliate member.

Institutional constraints, including a shortage of faculty and staff capacity constraints (as opposed to physical or technical constraints), will need to be remedied in order for “partnerships” and applied research and development “use” arrangements to be explored and pursued with private sector firms seeking to conduct research and development; other academic institutions with the potential ability to provide “visiting” researchers and instructors; and the Federal Aviation Administration. For example, because of such constraints, SIU did not respond to the requests for proposals for the

13 The National Test Facility for Fuels and Propulsion at Purdue University’s Department of Aviation Technology is testing a company's unleaded renewable generation aviation fuel using six aviation piston engines but may be extended to include new turbine fuels to replace Jet-A, the fuel used to power commercial aircraft.

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Centers of Excellence for alternative jet fuels and environment referenced above. An example of industry partnering with aviation educational programs is the partnership between Net Jets Inc. and Ohio State University’s Center for Aviation Studies starting in 2011. Net Jets four-year funding commitment of $500,000 annually provides seed funding for research projects, student scholarships and fellowships and funding for economic and public policy studies and projects and supporting business operations for the center. The potential to obtain funding through FAA Centers of Excellence will lead to opportunities to expand programs and research at the Airport and the creation of additional jobs.

DYNAMETERS APPLIED RESEARCH AND DEVELOPMENT

As part of the development of the Transportation Education Center, one relatively inexpensive dyno cell has been installed. Typical dyno cells cost between $3,000,000 to $20,000,000 to develop. Dyno cells are used to test the performance of an engine or its subsystems under various conditions. Dyno cell facilities, for example, are used to test emission control and fuel efficiency and engine performance using alternative fuels.

Because the Transportation Education Center has only one small dyno cell the times which it could be used by private firms to test and validate their research may be limited. Advantages to users of dyno cells associated with the Transportation Education Center location include ample electrical power supply, a location not proximate the residences (the facilities generate noise), and availability of student labor to operate the cells. These advantages suggest that if the institutional constraints (including lack of faculty and staff capacity to explore and pursue applied research and development arrangements including the development of additional dyno cell facilities, with private industry or other academic institutions) could be mitigated or removed, potential could exist to attract additional dyno cell facilities, operators and users.

A key, however, to attracting research and development uses and activities will be providing private industries and other research entities with facilities and equipment that would be expensive to duplicate and the costs of which can be spread-out to multiple users.

FLIGHT TRAINING AND RELATED TRAINING

Opportunities in establishing flight training for pilots and other training may exist and increase. The Transportation Education Center includes a new regional jet simulator (a CRJ200 flight simulator) and aviation training programs. A new federal regulation requires that new airline pilots have completed 1,500 hours of flight time instead of the current 250 hours (except FAA is working on a reduction in these requirements for graduates of FAR Part 141 schools like SIU operates). In addition, new pilots will be required to replace retiring pilots and respond to increased demand for air travel. One airline has already expressed interest in cooperating with SIU to train pilots to help remedy the impending shortage. Firms such as FlightSafety, a professional aviation training provider for corporate and large commercial jets, however, prefer locating in major metropolitan areas near airports with commercial service.

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Opportunities may exist to partner with airlines just as Ohio State University has partnered with PSA Airlines and Arizona State University has partnered with Mesa Airlines – to combine academic coursework and career tracks and to respond to the needs of airlines for flight training. Ohio State University and PSA Airlines partnered last fall to provide training in the Canadian Regional Jet (CRJ) 200, to allow for OSU graduates to enter PSA’s pilot training program. OSU provides the classroom and flight instruction to students to prepare them for employment with PSA Airlines, and PSA Airlines will assist with course development and instructional materials. Programs that “bridge” the gap between completing the basic educational curriculum and 275 hours of flight time required to earn a commercial pilot certificate and the advanced training and additional hours needed to obtain a full-time pilot position at a commercial airline are often provided through cooperative arrangements between the airline-owned aviation academies, private flight academies and university aviation programs and the airline companies seeking to hire graduate pilots produced by the programs.

Additional opportunities may exist for SIU to providing training to students from foreign countries. For example, a potential training program with students from Indonesia was previously considered. Faculty capacity constraints have limited investigating, pursuing, and serving additional training opportunities. These constraints will need to be remedied in order for the potential demands to be served at the Airport and Transportation Education Center.

DIRECT SPILLOVER DEMAND OPPORTUNITY RELATED TO STUDENTS, STAFF, AND FACULTY OF TRANSPORTATION EDUCATION CENTER

The interviews suggest one direct spillover demand opportunity includes the potential development of student housing and food service. The Transportation Education Center does not include facilities for food service. The undergraduate student enrollment for the departments of automotive technology, aviation management and flight and aviation technologies is estimated to total 464 students. Approximately 600 people study or work at the Transportation Education Center. The enrollment includes approximately 30 students employed by Saudi Aramco (Saudi Arabian Oil Company) training to become aircraft mechanics.

The interviews indicate that multiple developers have expressed some level of interest in developing student housing. One developer reported his firm has arranged with the cooperation of SIU to conduct a survey of Transportation Education Center students to ascertain their location, product, and pricing preferences. Given the results of the interviews suggest that new apartments geared to students have been recently built south of the SIU main campus (three large student housing complexes have been added to the Carbondale market in recent years and a fourth student housing development is planned in the south portion of Downtown Carbondale), it will be especially important to evaluate the relationship between supply and demand in the relevant market area for

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student housing as well as to evaluate the responses to the survey referred to above or to other surveys conducted. Given that 90 percent of the enrolled students are male, the most critical question any surveys should answer is whether the students will accept a location near the Transportation Education Center, as opposed to locations on campus or south of the campus where greater opportunities for social interaction with other students may arise. To the extent, surveys indicate that the predominately male students will not accept an Airport location or that other students currently living at or near campus would not consider an Airport location, a student housing use will be unlikely to be supported. In addition, assuming demand for the location is indicated, product feature preferences should be tested. For example, do automotive studentshave particular preferences for garage space for their vehicles rather than surface parking? What kind of indoor or outdoor fitness and recreational facilities may be preferred that would help brand the development, provide for social gatherings, and differentiate the project from more built out, well- established student housing locations?

MAINTENANCE, REPAIR AND OVERHAUL AND OTHER AVIATION FIRMS

MRO users may find capacity of the airfield and support of available labor base from student workers at SIU advantages to locating at the Airport. However, research suggests that enticing MRO operators to leave current facilities is challenging. In the past, a company that wanted to overhaul MD 80 aircraft expressed potential interest. However, the Airport lacked sufficient hangar space, and SIU did not identify a way to share its hangar space without compromising its educational mission. In addition, an aircraft engine overhaul firm met with representatives of the Airport to consider a location on the field, but was enticed to an Indiana location due to a better state climate for business at that time. A rebuilder of vintage military aircraft also considered the Airport but opted for a location closer to its customer base in up-state Illinois and a manufacturer of small aircraft seriously considered the Airport but was enticed to Florida because of greater state incentives.

An example of a community utilizing its existing assets is Peru, Indiana which was able to reutilize some existing aviation assets at the former Grissom Air Force Base. Dean Baldwin Painting modernized and expanded an existing 98,000-square-foot facility to 155,000-square-feet for its aircraft painting business. Miami County officials worked for nearly four years to secure funding to renovate the hangar at Grissom Aeroplex to accommodate Dean Baldwin. 14

14 http://www.deanbaldwinpainting.com/news.php.

15 www.swtimes.com, “Small Airports Contribute to Rural Economies”, by Rusty Garrett, March 17, 2013.

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In addition, as suggested by the Mena Intermountain Municipal Airport experience, component manufacturers or rebuilders of such components as aircraft seats, interior materials, engine components, landing gear, aircraft salvage, and small aircraft manufacturers firms could find the advantages of the location beneficial.

AVIATION RESEARCH

The interviews suggest that research and development for unmanned aerial systems is an industry priority. If the need for relatively unobstructed airspace and secure operations would not conflict with the operations of the Transportation Education Center, the Air Force Research Lab should be contacted to ascertain the Lab’s potential interest. One significant constraint however, may be that the military prefers locations proximate to restricted military airspace. In 2008, New Mexico State University and the Federal Aviation Administration signed an agreement to create an Unmanned Aerial Systems Flight Test Center for both government and private research and testing of the systems. The test center is the only FAA-approved UAS flight test center in the United States. The site uses the Las Cruces International Airport existing airspace and infrastructure and has access to a 12,000-square-miles coordinated airspace to test flights. Facilities include a 15,000 square foot hangar at the Las Cruces International Airport and office facilities on the NMSU campus.

In February 2013, the Federal Aviation Administration announced a solicitation process in which states can compete to host one of six sites for testing unmanned aerial vehicles intended for use in the United States. The Nevada Governor’s Office of Economic Development, the Nevada National Guard and research centers are participating in responding to the bid for the State of Nevada, one of multiple states expected to respond to the solicitation for a certified site. Pursuing unmanned aerial systems and related research will require partnerships that include public and private entities.

Some examples of partnerships already formed elsewhere are described below:

Greene County, Ohio

Greene County would like to develop a 163.5 acre plot of land south of the City of Xenia, Ohio as a site for the development of Unmanned Aerial Systems. Greene County representatives hope the low cost of land, availability of needed utilities, access to U.S. Route 35, and the proximity to business developments and significant airport facilities in the nearby cities of Wilmington, Springfield, and Xenia (as described in Chapter V will attract businesses which want to develop non-military uses for UAS technology).

Springfield, Ohio

The State of Ohio will lease commercial office space from Advanced Virtual Engineer Test Cell, Inc. in Springfield to use as an unmanned aerial vehicle testing facility. The facility will house the Ohio/Indiana Unmanned Aerial Systems Center and Test Complex and will serve as base operations for the research and development of unmanned aerial systems. Unmanned aerial systems will be launched from Springfield-Beckley Municipal Airport and unmanned aircraft will also be flown from

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Wilmington Air Park.

Okaloosa County, Florida

The University of Florida and the Economic Development Council of Okaloosa County are developing an indoor UAS testing facility located just south of the University of Florida’s Research and Engineering Education Facility on land the college owns16. The 45,000-square-foot center will have space for temporary or permanent offices and labs depending on clients’ needs. Land for future expansion if necessary is available. The goal is to attract universities, private companies, and students doing research to lease space in the facility. The project has an estimated cost of $4.5 million. Okaloosa County Commissioners has approved the commissioning of a site assessment and conceptual design of the facility.

Washington State – Joint Center for Aerospace Technology Innovation

The State of Washington and three of its universities - University of Washington, Washington State University, and Western Washington University - have collaborated to form the Joint Center for Aerospace Technology Innovation. The intent of the program is to leverage the aerospace engineering expertise of the state university system to provide research and development services to private in-state aviation and aerospace firms. Fifty eight (58) firms applied for participation in the program. Eighteen (18) research grants have been selected and awarded, with $1.5 million of funding backed by the Washington state legislature. All of the research and development grants issued through the program must be "tightly connected to problems faced by state aerospace industry."17

Given the economic base of southern Illinois, agricultural, emergency response, and medical supply applications are examples of non-military related research and testing especially relevant to the southern Illinois region.

APPLIED RESEARCH AND DEVELOPMENTAL CENTER– TECHNOLOGY TRANSFER

An aviation and/or automotive “on the field” applied research and developmental center represents another opportunity area that can be explored by the convening of the recommended implementation committee. An applied research and developmental center would promote technology transfer and/or the commercialization of the research and concepts (including applied research related to unmanned aerial systems) of SIU faculty and students or other academic and industry participants. Development of such a facility would be consistent with an "inside-out" development strategy, rather than exclusively focusing efforts and resources on the recruitment of external activities and employers. A successful applied research and developmental center will require the collaboration of existing local educators, students, entrepreneurs, and policy makers.

16 http://www.economicdevelopmenthq.com/blog/okaloosa-county-fl-indoor-uav-testing/. 17 "Aero companies tap universities to problem solve with new program", http://www.bizjournals.com/seattle/blog/techflash/2013/06/washington-aero-companies- tap.html?surround=etf&ana=e_article

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The goal of an on-the-field center should be to support and guide new aviation and/or automotive start-up and accelerator business activities.

Many other universities sponsor business plan competitions18. Under this approach, aspiring entrepreneurs would complete applications and business plans. A panel of experts (comprised by SIU faculty from the business school, engineering school, and Department of Automotive Technology, Department of Aviation Management & Flight, and Department of Aviation Technologies, Airport representatives, Jackson Growth Alliance, and other community leaders) would select a competition winner or group of winners which could then be provided space as well as access to available land at no cost (or reduced cost) for a period of time to develop their concepts. If funding can be identified and secured, contest winners might also be granted a capital expenditure allowance to purchase equipment and technology necessary to implement and test their concepts to the extent not already available at the Transportation Education Center. Selection criteria should focus on the likelihood of commercialization and concepts that have the potential to generate employment opportunities at the Airport.

One potential source of funding to establish such an applied research and developmental center program would be USDA Rural Development which provides “Rural Business Opportunity Grants.”

SURVEY OF AVIATION AND AUTOMOTIVE INDUSTRY PARTICIPANTS AFFILIATED WITH THE SIU AVIATION ADMINISTRATION, MANAGEMENT AND FLIGHT, AND AUTOMOTIVE TECHNOLOGY PROGRAMS TO OBTAIN INFORMATION AND INSIGHT ABOUT POTENTIAL DEMAND AND DEVELOPMENT OPPORTUNITIES

With assistance from the Southern Illinois University (SIU) Department of Automotive Technology and the Departments of Aviation Management and Flight and Aviation Technologies, and the Southern Illinois Airport Authority, GG+A completed a survey of members of SIU’s Aviation

18 http://www.bizjournals.com/philadelphia/print-edition/2013/03/08/get-with-the-plan.html?page=all; see also: www.fiveventures.com .

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Advisory and Automotive Advisory Boards to obtain information and insight concerning the advantages and disadvantages of the location of the Transportation Education Center and Airport from the perspective of firms that currently have representatives serving as advisory committee members to SIU Departments of Aviation Management and Flight, Aviation Technologies, and Automotive Technology.

GG+A designed two surveys – one for the two aviation departments’ advisory committee members and another survey for the Department of Automotive Technology committee members. Southern Illinois University assumed responsibility for the distribution of the survey and accompanying cover letter to committee members. The surveys were returned directly to GG+A by committee members.

In the sections that follow the review of the makeup of survey respondents, we summarize the findings and analysis of the following information obtained as a result of the survey:

• Existing facilities in Southern Illinois; • Consideration of a southern Illinois location as a place in which to expand; • Midwest Expansion plans; • Factors important in the locational decisions of firms; • Appeal of Transportation Education Center facility in location decision; • Key changes to enhance locational appeal of Southern Illinois Airport; • Likelihood of locating near Southern Illinois Airport; and • Types of Businesses likely to find Southern Illinois Airport an advantageous location.

COMPOSITION OF SURVEY RESPONDENTS Table IV-1 shows the number of aviation surveys received by the primary industry sector of each advisory committee member which responded to the survey.

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TABLE IV-1

Industry Sector Make-up of Aviation Industry Respondents Industry Sector Usable Responses Received # % Aircraft Charter 0 0.0 Corporate/Business Flight Operations 2 14.3 Flight Instruction/Training 1 7.1 Aircraft Rental/Sales 0 0.0 Aerial Sight-Seeing/Tours 0 0.0 Aerial Advertising/Banner Towing 0 0.0 Aviation Club/Academy/Association 2 14.3 Aircraft Maintenance, Repair, and Overhaul1 1 7.1 Aircraft Inspection 0 0.0 Avionics & Instrument Installation 0 0.0 Aircraft Component Manufacturing2 4 28.6 Research and Development for Unmanned Aerial Vehicles 0 0.0 Research and Development for New Aviation- Related Technologies 0 0.0 Research and Development for Gas Turbine Engines 1 7.1 Government 1 7.1 Commercial Airlines 1 7.1 Flight Simulation and Regulatory Affairs 1 7.1 Total 14 100.0 1 Respondent indicated it also provides aircraft sales, charter, and FBO services. 2Respondent indicated it also provides aircraft sales, aircraft maintenance, repair and overhaul, aircraft inspection, and aircraft component manufacturing. 3Respondent indicated it provides aircraft component manufacturing and providing wifi to business and commercial aircraft. 3Respondent indicated it also provides research and development for unmanned aerial vehicles and new aviation-related technologies, and aircraft component manufacturing. 4 Respondents indicated they also provide research and development for unmanned aerial vehicles and for new aviation related technologies. Source: Gruen Gruen + Associates

Of the 41 questionnaires delivered to Aviation Technologies and Aviation Management and Flight advisory committee members, fourteen questionnaires were returned to be included in the coding and analysis of the responses for a 34 percent response rate which is a typical and acceptable response rate for a mail survey. Nine respondents are committee members of the Aviation Management and Flight department (out of 25 committee members). Five of the Aviation Technologies advisory committee members responded to the survey. Corporate and business flight operations (14.3 percent), aircraft component manufacturing (28.6 percent), and aviation

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associations (14.3 percent) comprise 78.6 percent of industry sectors in which responses were received.

Table IV-2 shows the number of automotive surveys received by the primary industry sector of each advisory committee member.

TABLE IV-2

Industry Sector Make-up of Automotive Industry Respondents Industry Sector Usable Responses Received # % Motor Vehicle Manufacturing 2 50.0 Automotive Parts & Component Manufacturing 2 50.0 Automobile Dealer 0 0.0 Other Motor Vehicle Dealers 0 0.0 Retail Parts, Accessories, or Tire Store 0 0.0 Automotive Repair & Maintenance Facility 0 0.0 Total 4 100.0 Source: Gruen Gruen + Associates

Of the 21 questionnaires sent to the Department of Automotive Technology advisory committee members, only four questionnaires were received for a response rate of 19 percent. Motor vehicle manufacturing and automotive parts and component manufacturing were the only industry sectors with responses received. Only one of the 18 respondents (both aviation and automotive) has an existing facility in Southern Illinois. One aircraft component manufacturer respondent has a manufacturing plant in southern Illinois close to the St. Louis area and utilizes Mid America Airport in St. Louis. One aviation research and development firm has facilities located in Ohio. When asked if their firm had ever considered a facility location in southern Illinois, five of the 14 aviation committee members reported that their business had never considered locating in southern Illinois. Nine members did not know if their firm had ever considered a Southern Illinois location. Two reasons frequently cited by respondents related to lack of sufficient population density and not an established market area for the core business. Of the four automotive committee member respondents, only one indicated that its company had considered a southern Illinois location. This company, however, choose locations in St. Louis (MO) and Paducah (KY), citing a lack of a major metropolitan area as the reason it did not locate a facility in southern Illinois.

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Table IV-3 summarizes the number of respondents and their firms’ respective expansion plans within the Midwest over the next 10 years.

TABLE IV-3

Number of Respondents by Expansion Plans within the Midwest in Next 10 Years Automotive Related Company Aviation Related Company # # Expansion 0 4 No Expansion 2 5 Don’t Know 2 5 Total 4 14 Source: Gruen Gruen + Associates

The majority of responses received by committee members from the aviation departments and automotive department indicate that aviation and automotive companies had no plans to expand to the Midwest within the next 10 years. Two aviation committee member respondents indicated their firms do plan a Midwest expansion near their existing Ohio facilities. Another aviation committee member respondent indicated its firm would expand production (not a building or site expansion) of its existing assembly plant to meet potential increased demand of business. A fourth aviation committee member indicated it would expand its space due to employment growth at its Chicago location. One automotive committee member indicated it did not know if its firm planned an expansion but if one was likely it would consider a location in Effingham, Illinois near the crossroads of I-57 and I-70. This respondent represents an automotive manufacturing business which rated highway accessibility as a highly important factor to its location decision making.

One purpose for conducting surveys with aviation and automotive committee members which represent the types of businesses that may consider a location at the southern Illinois Airport was to identify those factors that were or are important to their firm’s locational decisions. One question on the survey questionnaire contained a list of factors specific to the factors important to the specific automotive or aviation industry participant. The second question on the survey questionnaire contained a list of factors more general in nature that could be important to both aviation and automotive industry participants. Each respondent was asked to rate the factors on a scale of 1 to 5 as to their overall importance to the firm’s location decision. A rating of 5 is most important and 1 least important. Table IV-4 shows the respondents’ average ratings of the locational factors. Given the small size of the sample, a break down by more detailed industry sector within the automotive and aviation responses was not completed.

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TABLE IV-4

Mean Rating of Locational Factors1 Factors Automotive Aviation Factors Specific to Automotive or Aviation Business Accessibility to Area Commercial Service Hub Airports 4.25 3.50 Accessibility to Air Cargo Service Airports 2.43 Accessibility to General Aviation Airports 1.93 Features and Services of Airports 3.21 Accessibility to Rail Service 3.50 Accessibility to Interstate Highways 5.00 Availability of Engineers and Other Professionals/Educational Institutions 4.25 3.00 Proximity to Customers 3.50 3.57 Proximity to Suppliers or Distributors 3.75 2.00 Proximity to Competitors 2.00 1.69 Factors General in Location Decision Proximity to Interstate Highways 5.00 3.31 Availability/Quality of Local Labor Supply 3.25 3.31 Cost of Labor 2.75 3.50 Land Costs/ Property Rental Rate 3.75 3.50 Property Taxes 4.50 3.14 Utility Costs & Availability 3.75 2.93 Special Tax Abatements 4.25 3.07 Availability of Land/Buildings for Immediate Use 3.25 3.50 Ability to Expand at Present Site 3.25 3.14 Ability of the Building/Location to Accommodate 3.57 Current/Future Electrical, Computer, and Telecommunication Requirements 4.25 Site Ingress/Egress 3.50 Image/Prestige of Location 3.00 2.93 Receptiveness of Community 3.50 3.07 Short Commute 2.75 2.57 Accessibility to Public Transportation 2.25 2.43 Availability of Affordably Priced Housing 3.25 2.69 Proximity of Executive Housing 2.75 2.92 Quality Primary and Secondary School System 3.50 2.62 Availability of Restaurants, Retail Goods, Support Services 3.50 2.71 1 If box is shaded, then the factor was not included on survey because it was not relevant to specific industry. Source: Gruen Gruen + Associates

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Automotive Industry Location Decision Factors Of the factors which would be specific to automotive industry respondents, the most highly rated factor is accessibility to highways. Accessibility to commercial service hub airports and availability of engineers and other professionals and accessibility to educational institutions are also rated highly important. The result is not surprising given that all of the respondents are in the manufacturing sector of the automotive industry. Proximity to suppliers, customers, and competitors were not rated as important in the location decision. Of the factors which most types of industrial businesses would consider in making a location decision, proximity to interstate highways as the highest rated factor followed by property taxes, special tax abatements, and ability of the building/location to accommodate current or future electrical, computer, and telecommunication requirements were rated highest in importance by automotive committee member respondents. Aviation Industry Location Decision Factors For aviation committee member respondents, of the specific factors related to aviation industry location decisions, proximity to customers and availability of electrical/computer/telecommunications infrastructure is rated the most important. Eight of the 14 aviation committee member respondents gave the highest/most important rating of 5 to proximity of customers. Other highly rated factors (based on the average rating for all 14 aviation respondents) to the location decision include electrical and telecommunications infrastructure, labor costs, land costs and property rental rates, and availability of land or buildings for immediate use. For two respondents in aviation manufacturing, proximity to interstate highways, proximity to air cargo service airports, labor costs, land costs/rental rates, and availability of land or buildings for immediate use were all rated the highest in importance. One respondent in corporate/business flight operations rated accessibility to general aviation airports, features and services of airports, proximity to customers, and proximity of executive housing as the highest rated location decision factors.19 One respondent in the air charter, aircraft sales, and maintenance repair and overhaul and FBO business rated accessibility to general aviation airports, features and services of airports, proximity to customers and competitors, availability and quality of local labor supply, labor costs, and ability to expand at present site as all highly important in the location decision.

19 One other respondent in corporate/business flight operations did not rate any factors high in its location decision making.

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ACCESSIBILITY TO TRANSPORTATION EDUCATION CENTER AT SOUTHERN ILLINOIS AIRPORT

One survey question asked respondents if accessibility to the Transportation Education Center (TEC) facilities or Department of Automotive Technology, Department, Department of Aviation Management & Flight, and Department of Aviation Technologies programs, faculty, and students would be a significant enough advantage to cause respondent’s companies or organizations to consider a location in or near Southern Illinois Airport. None of the automotive committee member respondents or aviation committee member respondents indicated that the TEC facilities, programs, or faculty and students would be a sufficient inducement to consider a location at Southern Illinois Airport. When asked if any key changes would cause respondent’s companies or organizations to consider a location at Southern Illinois Airport, all respondents indicated they did not know.

LIKELIHOOD OF LOCATING IN OR NEAR SOUTHERN ILLINOIS AIRPORT IN NEXT 10 YEARS

Table IV-5 summarizes the respondent’s likelihood of its business or organization locating in or near Southern Illinois Airport in the next 10 years. On a four point scale with 1 being very likely and 4 being very unlikely, survey respondents were asked to rate the likelihood of their company locating a facility near the Southern Illinois Airport within the next 10 years.

TABLE IV-5

Likelihood of Locating a Facility Near the Southern Illinois Airport Within Next 10 years Mean Rating Number of Responses # # Aviation 3.93 14 Automotive 3.75 4 Source: Gruen Gruen + Associates

The 14 aviation surveys received had a mean response rating of 3.93 indicating it was also unlikely a facility would be located near the Southern Illinois Airport. The four automotive surveys received had a mean response rating of 3.75 indicating it was also unlikely a facility would be located near the Southern Illinois Airport.

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INDUSTRIES OR TYPES OF BUSINESSES THAT WOULD FIND SOUTHERN ILLINOIS AIRPORT OR SOUTHERN ILLINOIS UNIVERSITY TEC AN ADVANTAGEOUS LOCATION

The aviation and automotive committee member respondents were asked if any particular industries or types of businesses might find a location near Southern Illinois Airport and the Southern Illinois Airport TEC an especially advantageous location. The following are the types of businesses that were cited:

• Heavy aircraft maintenance/modification • Aircraft services/interior installation • Aircraft engine overhaul • Cessna service center • Aviation or automotive recurrent training • Hybrid battery research • Hybrid battery manufacturing • Engineering • Automotive parts supplier • Motel for students and parents

IMPLICATIONS FOR ATTRACTION OF INDUSTRY OR ORGANIZATIONS TO SOUTHERN ILLINOIS AIRPORT

The results of the survey show a high degree of concurrence among the industry experts and supporters of the SIU aviation and automotive-related educational programs. The results suggest the locational assets of the Southern Illinois Airport location do not fully meet all of the locational requirements of some aviation and automotive industry sectors. For example it is not within the control of the Airport to provide superior interstate highway accessibility preferred by automotive industry participants. Proximity to customers in locations with significant concentrations of population and economic activity is especially important for certain aviation industry sectors; many types of aviation businesses depend upon proximity to customers more than proximity to sources of labor. While the Southern Illinois Airport TEC provides a quality source of skilled labor and intellectual capital of its highly regarded faculty, the Southern Illinois Airport is at a competitive disadvantage because geographically the region does not possess the population density for commercial air service or other customers that would generate activity for larger MRO/FBO firms. The location of the Airport does not provide for this “agglomerational” advantage.

The location, however, with the intellectual capital and training available from SIU, does hold potential for the industry sector targets cited above related to training and battery research.

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CHAPTER V

CASE STUDIES REVIEW OF OTHER EDUCATION- AND AVIATION-RELATED AND AUTOMOTIVE-RELATED DEVELOPMENTS

INTRODUCTION

This chapter presents the results of our research, interviews, and analysis conducted to examine the characteristics and conditions that make education- and aviation-related economic development viable. GG+A identified a sample of general aviation airports that have established at least some degree of cooperation with local educational institutions (those providing aviation-related programs, training and/or research) to promote the development of airport-controlled property. Although five of the six case studies are not located in more rural locations like SIA, the case studies provide lessons for identifying a strategic framework for enhancing the conditions and capabilities for beneficial economic development and institutional enhancements at the Airport. The case studies described in this chapter includes a review of development conditions and university relationships at the following airports:

• Melbourne International Airport (Melbourne, FL); • Daytona Beach International Airport (Daytona Beach, FL); • Col. James Jabara Airport (Wichita, KS); • Springfield-Beckley Municipal Airport (Springfield, OH); • Elizabeth City Regional Airport (Elizabeth City, NC); and • Roswell International Air Center (Roswell, NM).

Table V-1 summarizes the characteristics of the airports identified above. The case studies suggest it is relatively unique to have a university with flight training and maintenance programs at a general aviation airport in a rural location such as is the case with Southern Illinois Airport and Southern Illinois University. The industry research, including case study interviews suggest that successful aviation and academic development initiatives tend to be located in major metropolitan areas. While the combination of attributes applicable to the Southern Illinois Airport are relatively unique, the lessons drawn from the case studies described below are valid and provide perspective for forming an economic development program for enhancing conditions and capabilities for beneficial economic development and institutional enhancement at the Southern Illinois Airport.

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TABLE V-1

Characteristics of Airport Studied and Comparison of Economic Bases Airport Characteristics County Job Density 1 Key Industries' Share of County Runway 2011 Flight Private Federal & Employment2 Length Operations Sector Military Southern Illinois Airport, 6,500' 74,153 40.5 0.6 7.5% Carbondale, IL Florida Tech Research Park, 10,200' 188,311 147.2 6.0 17.3% Melbourne, FL Embry Riddle Research Park, 10,500' 219,067 121.8 1.6 10.6% Daytona Beach, FL Airpark Ohio, 9,000' 21,183 137.1 2.3 19.0% Springfield, OH National Center for Aviation Training at Col. James Jabara 6,100' 38,300 266.6 10.5 22.1% Airport, Wichita, KS Elizabeth City Aviation Research & Development 7,200' 60,120 51.8 5.5 10.5% Commerce Park, Elizabeth City, NC Roswell International Air 13,000' 36,860 0.6 0.1 11.4% Center, Roswell, NM 1 Jobs per square mile, within each county in which each airport is located. 2 Manufacturing, transportation and warehousing, and professional, scientific, and technical services. These industry sectors contain the preponderance of aviation and aerospace-related employment. Sources: Federal Aviation Administration, Terminal Area Reports; Bureau of Economic Analysis; Gruen Gruen + Associates.

As summarized above, Carbondale and Jackson County tend to include a smaller economic base than many of the airport developments reviewed in this chapter; though the Southern Illinois Airport had more 2011 flight activity (because of SIU flight training) than four of the airports included in the case study. The Jackson County economic base includes approximately 41 private sector jobs per-square-mile and less than one Federal Government or Military job per-square-mile. Industry sectors containing the preponderance of aviation-related employment - manufacturing, transportation and warehousing, and professional, scientific and technical services - represent approximately 7.5 percent of the economic base.

In contrast, the aviation parks reviewed in Florida, Ohio, and Kansas contain substantially larger local economic bases. These areas tend to contain at least 120 private sectors jobs per-square-mile and some, such as the airports in Melbourne, Florida and Wichita, Kansas, also benefit from large nearby concentrations of Federal Government and Military employment. Manufacturing, transportation and warehousing, professional, and scientific and technical services generally comprise about 20 percent of jobs in these locales.

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In terms of physical infrastructure, some of the airports reviewed also have considerably longer runways that allow them to accommodate larger aircraft. All but one small general aviation airport in Wichita, Kansas reviewed has a runway longer than 6,500 feet.

In addition, we also reviewed the development conditions of Clemson University’s International Center for Automotive Research (CU-ICAR).

KEY FINDINGS AND CONCLUSIONS

Based on a synthesis of the case studies review, the following summarizes the key findings and conclusions:

• The size and composition of the local and regional economic base affects airport development opportunities. None of the airports we reviewed appear to have substantially altered the nature of economic activities attracted to an area. The airports, their university partners, and aviation-oriented business parks have primarily catered to industries and activities indigenous to the area. Community colleges and related workforce training programs have frequently been an important component of the economic development process. General aviation airports exhibiting the most substantial development and business attraction tend to be located in regions with a history of extensive Military, Defense and NASA operations;

• In addition to proximity or adjacency to airports, the business parks tend to have superior access to other regional transportation system linkages, including superior highway accessibility;

• Aerospace programs and automotive programs and research-related activities at universities appear to generate more spillover development activity than do technical aviation training programs. Access to the research, facilities, and talent of public institutions engaged in aviation R&D appears to be a strong driver of private on-the-ground development. Less specialized activities (such as A&P Mechanics programs or pilot training) generate less economic spillover than R&D-oriented activities;

• It takes a long time to establish research relationships between industry and universities that result in on-the-ground development. It takes a great deal of time, persistence, and frequently funding support from government sources to establish aviation-related business parks. Most universities make and implement decisions at a more deliberative pace than private sector business and some government entities;

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• Low-traffic air space can be a competitive advantage to attracting some aviation testing activities, such as unmanned aerial systems.

The implications drawn from the results of the case studies review for developing the Southern Illinois Airport property and environs include the need for:

1. Southern Illinois University to have a knowledgeable high-level staff member responsible for encouraging and facilitating relationships between industry and faculty in a variety of departments and the Transportation Education Center and the Southern Illinois Airport Authority;

2. Ongoing cooperation between the University, Southern Illinois Airport Authority, municipalities of Carbondale and Murphysboro, Jackson County, Jackson Growth Alliance, and Egyptian Electric Cooperative to further plan and implement the development of the Southern Illinois Airport property and environs20; and

RESEARCH PARKS WITH AVIATION FOCUS

Florida Tech Research Park - Florida

Florida Tech Research Park is a joint collaboration between the Florida Institute of Technology and the Melbourne Airport Authority. Located adjacent to the Melbourne International Airport, the Florida Tech Research Park comprises 100 acres with an additional 500 acres of airport land that could be added to the development. The Florida Tech Research Park is located within the larger Airport Industrial Park which includes nearly 1,400 acres and has a user base of over 6,000 employees working in aviation and industrial and commercial businesses surrounding the Melbourne Airport. The existing industrial park contains Florida Tech's Emile Buehler Center for Aviation Training and Research, its Applied Research Laboratory, and the Florida Technology Research and Development Authority's Business Innovation Center. Two aircraft manufacturers are located at the Airport Industrial Park, as well as major corporations in the defense, aerospace, and high-tech industries including Harris Corp.’s world headquarters, Northrup Grumman Integrated Systems, DRS, Rockwell Collins, General Electric and L-3 Communications. Development of the smaller

20 As one of many examples of the wide-ranging network of cooperation required to pursue and implement research and development, and economic development opportunities, see the link to the article that describes collaborative efforts to become a site for unmanned aerial systems testing in Washington state: http://www.bizjournals.com/seattle/news/2013/04/26/grant-county-touted-for-airborne- drone.html?surround=etf&ana=e_article

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Florida Tech Research Park began in 2009, and Florida Tech and the Melbourne Airport Authority anticipate it will be a 20-year partnership to fully develop the Florida Tech Research Park.21

The Melbourne Airport is less than five miles from Interstate 95 (which connects Jacksonville and Miami along Florida's Atlantic coastline), and an active railway line runs along the Airport’s eastern boundary.

The Florida Tech Research Park’s first phase envisions 10 major buildings offering up to 600,000 square feet of office/research space and as many as 3,000 jobs. Future phases — an additional 500 acres of developable land is available — could boost space to more than 1 million square feet and as many as 10,000 jobs. The 20-year partnership intends to attract tenants from a variety of high-tech industries that can benefit from the Florida Institute of Technology's growing research facilities, its faculty and graduate students. The Melbourne Airport's Director of Land Development reportedly initiated the vision and plan for the Florida Tech Research Park and solicited cooperation from Florida Tech, as it was already one of the Airport's "premiere" tenants.22 The Melbourne Airport Authority retains ownership of the property and leases sites directly to tenants. The Airport manages all leases and requires high architectural standards for all new buildings. Private developers are encouraged to construct speculative buildings in order to have leasable space available at all times. A joint-use area covering approximately 25 acres at the park is envisioned for development of facilities for experimental purposes, such as solar collection or hydrogen production research. The area also may be used as a park amenity for tenants.

First 100-acre Development Phase and Existing Tenants

21 Florida Tech Research Park: the Space Coast's Next Great Gateway to Innovation and Economic Growth, Florida Institute of Technology, pp 2, 22 Id. at pp 2.

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A considerable number of incentive programs have been established to encourage development of the Florida Tech Research Park. Incentives offered include:

• Real estate tax abatements (from City and County); • Waived development impact fees; • No ground lease payments during construction (up to 18 months); • Completed environmental approvals and storm water permits; • Brownfield program grants; and • State tax waivers.

The Florida Tech Research Park and the Melbourne International Airport, which includes a substantial amount of aerospace, aviation, and hi-tech development in the Airport Industrial Park, are located in a region of Florida commonly referred to as the "Space Coast" because of its proximity to the Kennedy Space Center and NASA operations. According to the Milken Institute, this region of Florida contains the 8th largest concentration of hi-tech jobs in the United States.23 The Florida Tech Research Park, then, anticipates primarily responding to indigenous demands originating from the expansion within the local market area and spillover demand from existing nearby activities rather than attracting users of building space from outside the market area.

Despite a considerable base of existing aviation industry, research relationships, and facilities of Florida Tech, a number of incentive programs that serve to reduce upfront development costs, and multi-modal transportation access, development and build-out of the Florida Tech Research Park is not expected to occur rapidly.

Embry Riddle Research Park- Florida

Embry Riddle Research Park consists of 90 acres of land in Daytona Beach, Florida. The Embry Riddle Research Park involves the collaboration between Embry Riddle Aeronautical University, Volusia County, and Daytona Beach International Airport. The Embry Riddle Research Park is located south of Embry Riddle Aeronautical University’s main campus and adjacent to the Daytona Beach International Airport. The Daytona Beach International Airport owns about 1,000 acres of land around the Airport, and the University owns approximately 200 acres of land.

The Embry Riddle Research Park has been in the planning stages for about 10 years as the vision of whether to become an industry focused park or a research focused park was determined. Embry Riddle decided to develop a research park and in keeping with that goal, Embry Riddle Aeronautical University established an engineering program 10 years ago. Now more than half of the University’s approximately 4,600 students are enrolled in the several engineering programs. Aerospace engineering is the largest undergraduate degree program with enrollment of approximately 1,200 students.

23 Why the Space Coast?, Economic Development Commission of Florida's Space Coast,

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An $8.97 million grant has been given to the University by the State of Florida to fund the initial clearing land, road building and erection of marketing signs. The Embry Riddle Research Park is in the early stages of development with Phase I comprising 13 acres. To date, one tenant, Larsen Motorsports has located within the Embry Riddle Research Park. A second tenant, Diamond Aircraft Industries, an airplane manufacturer, recently signed a partnership agreement with Embry Riddle to locate a presence at the campus and in the research park.24 Phase II will consist of 77 acres but this phase will not commence until State of Florida funding is obtained to complete necessary road improvements. Embry Riddle Aeronautical University also has an option to buy an additional 47 acres of land from the Daytona Beach International Airport. Currently the University is focused on building research relationships with private industry that provide solutions to industry problems or challenges. The intention is that these relationships and associated activities will ultimately develop into the need for building space in the Embry Riddle Research Park. According to the University’s Vice President of Research and Innovation, the key to eventually obtaining on- the-ground development is to provide the research capabilities as well as the capital equipment and technology that can be used across different businesses that have a common need or problem to solve.

Embry Riddle also operates in 150 other locations outside of its two main campuses in Florida and Arizona. Many of these locations are on air force bases or in areas with a significant cluster of aviation or aerospace businesses such as southwest Ohio to offer higher level degree programs in areas where large numbers of active or retired military or aviation related adult workers seek higher education in aviation or aerospace fields25. The University has recently opened through its Aerospace Institutes, a location in Rockford, Illinois partnering with the Rockford public schools to offer courses at the Jefferson High School beginning in 2013.26 The partnership with local high schools is designed to enhance the STEM (science, technology, engineering and math) educational offerings. The Rockford area has a large number of businesses in the aviation industry.

National Center for Aviation Training at Col. James Jabara Airport - Kansas

Sedgwick County, Kansas built the 224,000-square-foot National Center for Aviation Training in 2010 at the Col. James Jabara Airport, a small general aviation airport in Wichita. The National Center for Aviation Training is a partnership between Sedgwick County, the Wichita Area Technical College, and the National Institute for Aviation Research of Wichita State University. The County funded building the $50 million facility based on the needs of area aviation companies such as Cessna, Spirit AeroSystems, and Bombardier LearJet to obtain more skilled and trained workers.

To date, the National Center for Aviation Training has not resulted in other on-the-ground development at the Col. James Jabara Airport but serves as a training facility for the workforce that Wichita area aerospace businesses need. To fund the National Center for Aviation Training, the property tax mill levy was increased.

24 http://daytonabeach.erau.edu/news/research-park-diamond.html, Embry-Riddle Inks Deal to Bring Internationally Renowned Aircraft Manufacturer to Daytona Beach 25 http://www.erau.edu/er/newsmedia/leader/fall1997/campus.html. 26 http://worldwide.erau.edu/newsroom/press-releases/embry-riddle-launches-new-high-school-aerospace- institute-in-rockford-illinois.html.

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National Institute for Aviation Research Facility, Wichita, KS

The National Institute for Aviation Research is a “center of excellence for general aviation research and a center of excellence for composites and advanced material" and where 70 percent of all Federal Aviation Administration (FAA) composites research is conducted27. The $50 million center took 10 years to come to fruition and is the main campus for the Wichita Area Technical College which operates the facility. In addition to aviation training, the campus also features an advanced manufacturing educational complex, classrooms for general education credits, and an administrative building with space for student services and assessment. The Wichita Area Technical College offers training for Aviation Maintenance Technicians (AMTs) in pursuit of their Airframe and Powerplant (A&P) license from the FAA. The strength of the Wichita Area Technical College aviation program relates to the close ties maintained with local manufacturers such as Cessna, Bombardier, Hawker Beechcraft, Spirit AeroSystems, and others.

The Wichita State University National Institute for Advanced Research operates in a portion of the facility and offers research and development opportunities and instruction.

The Wichita area’s aviation manufacturing cluster provides 30,400 aviation jobs which support a total of 118,894 jobs indirectly28. The Col. James Jabara Airport has 294 acres of land available for development. In 2007, Lee Air Inc. began platting for an 80 acre business park across from the Jabara Airport. The City of Bel Aire located across from the Airport has begun development of the first 155 acres of a planned 800-acre business park, Sunflower Commerce Park. The park has rail and is close to Interstate 35, 135, and 235 interchanges. The Sunflower Commerce Park’s first tenant Century Manufacturing has recently opened a 36,000-square-foot manufacturing plant on three acres of land. According to a County Commissioner, the attraction of Century Manufacturing to the

27 http://www.kansascommerce.com/index.aspx?NID=471.

28 http://watc.edu/blog/category/news/page/5/.

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nearby industrial park did not occur because of the aviation training facility at the Col. James Jabara Airport.

INDUSTRIAL PARKS WITH AVIATION FOCUS

Airpark Ohio

Located near Springfield Ohio, Airpark Ohio comprises a 1,800 acre development including an active joint military base, a general aviation airport, and an industrial park. Airpark Ohio is adjacent to the Springfield-Beckley Municipal Airport between Dayton and Columbus and about a 20-minute drive from Wright Patterson Air Force Base. Airpark Ohio contains approximately 191 acres of land zoned for “light industrial” which includes light manufacturing, service, office, and warehousing uses. The Springfield-Beckley Municipal Airport services corporate, military, and general aviation customers. The Airport has two runways, approximately 5,500 feet and 9,000 feet in length and has one FBO operator. The Airport also accommodates Army Guard, Army Reserve, and Ohio Air National Guard units.

The City of Springfield, along with the State of Ohio, Dayton Development Coalition, and other partners are jointly pursuing opportunities related to the unmanned aerial systems market. Airpark Ohio is home to Select Tech’s GeoSpatial Advanced Manufacturing Facility and has active (federal authorization) with Sinclair Community College and the Ohio Army National Guard to fly (unmanned aerial vehicles). The City of Springfield would like to build a new $2 million hangar at the Springfield-Beckley Municipal Airport with state funds that it is seeking to help attract unmanned aerial systems activities. In 2011the Springfield-Beckley Municipal Airport averaged 27 aircraft operations per day. Currently, 40 aircraft are based at the Airport with a majority being single-engine planes. Since 2006, the City of Springfield has invested more than $3 million in improvements at the Airport, including water, sewer, roads, firefighting operations and snow- removal equipment, but has not updated the hangars. The City of Springfield owns several hangars at the Airport, all of which are occupied.29

In addition, the Airpark Ohio industrial park expanded with the new $3.5 million Bob Evans Transportation Center plus the opening of Phase II of the development, which added five additional lots and associated utilities for development. The Ohio National Guard has added several new buildings to house Ohio Army Guard and Reserve Units and a new facility for the Ohio Air National Guards’ 269th Communications Squadron. In addition, the Army National Guard has ongoing renovations to accommodate recent mission changes at the base. Bob Evans was already based in Springfield with a distribution center in the Airpark that it sold to Miller Refrigerated Services. Bob Evans recently closed its food processing plant in Springfield but built the 25,000- square-foot transportation center as a trucking facility to distribute its food products.

29 http://www.springfieldnewssun.com/news/business/springfield-plans-23m-hangar-complex/nPR8C/

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Elizabeth City Aviation Research & Development Commerce Park – North Carolina

The Elizabeth City Aviation Research and Development Commerce Park, at the time of conception, represented the collaboration between the Elizabeth City Regional Airport Authority, the City of Elizabeth City, the local economic development commission, Elizabeth City State University, and the College of the Albermarle. The U. S. Coast Guard Air Station Elizabeth City is also located on the property and shares the Elizabeth City Regional Airport runway (it is one the largest Coast Guard bases in the country).

The first phase of the Elizabeth City Aviation Research and Development Commerce Park was originally planned to include 64 acres that would accommodate (1) an $18 million joint-use aviation science and training facility for use by both educational institutions; and (2) approximately 300,000 square feet of additional hangar space for private use. The joint-use educational facility was planned to be funded primarily by state and federal grants but was never built when funding sources disappeared following the 2008 financial crisis.

One of the expected tenants - the College of the Albemarle - is now in the process of building its own 40,000-square-foot Aviation and Technical Training Center at a neighboring regional airport and will offer FAA-certified training programs. Elizabeth State University has not yet been able to secure funding to implement its original physical plan at the Elizabeth City Aviation Park, though it has acquired two aircraft and leases space in the terminal at the Airport.

According to a representative of the economic development commission involved in the project, the plan for the research and development park would have never been pursued if the large U.S. Coast Guard Air Station were not present. In addition to the two colleges expressing interest in expanding their aviation programs to the Elizabeth City Regional Airport, a major impetus for the plan was the expected expansion need of an existing company. DRS Technologies had secured a contract to perform overhauling of C-130 Coast Guard aircraft but existing facilities and hangars would not accommodate aircraft of this size. The Coast Guard was consequently shipping aircraft to Florida or Canada for overhauling. DRS built one 80,000-square-foot facility; ground leased the entire 64- acre site; and planned to expand operations in additional hangars. The Airport also invested substantial dollars into building a taxiway that could accommodate C-130 aircraft. The initial expansion of DRS attracted the radio and radar subcontractor Telephonics. A few years after securing the overhaul contract, DRS subsequently lost a significant portion of the contract (for electrical and wiring). As a result, the DRS expansion has not occurred as originally anticipated. The Elizabeth City Regional Airport Authority still has 48 acres available under option adjacent to the recently-built C-130 taxiway. Financial uncertainties surround the project as the $10 million in state and federal grant money invested into development of the Elizabeth City Aviation Research and Development Commerce Park have not produced anticipated economic development targets.

Roswell International Air Center – New Mexico

The Roswell International Air Center is a former 6,000 acre military base that closed in the 1960s. The federal government donated the military base airport and adjoining land to a consortium of the

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City of Roswell, Eastern New Mexico University, a local hospital, and the National Guard following the base closure. The Roswell International Air Center is characterized by relatively low flight volumes but includes aviation infrastructure that is unique from most other general aviation airports, including a 13,000 foot runway, because of its former military use.

Located on-site at the Roswell International Air Center, the Eastern New Mexico University- Roswell campus offers aviation-specific degree programs for pilot training, air traffic control, and aviation maintenance. Some of the programs also provide contract training to businesses located at the Roswell International Air Center.

According to the real estate manager of the Roswell International Air Center, while Eastern New Mexico University utilizes airport infrastructure and has several on-site facilities with taxiway access, its presence has not generated a substantial amount of spillover development on the property. The vast majority of the 120 aviation and manufacturing businesses attracted to the Roswell International Air Center did not locate at the site because of the presence of Eastern New Mexico University and the technical training it offers. More important competitive advantages have been the low-traffic airspace surrounding Roswell and its physical runway infrastructure. Because of these features, the Roswell International Air Center also attracts a considerable amount of "transient" activity associated with aviation testing and mechanical research operations. Two large aircraft manufacturers, Boeing, and Gulfstream, for example, frequently come to the Roswell International Air Center to perform brake and hydraulic testing. The German Air Force uses Roswell International Air Center to conduct similar testing. Aircraft manufacturers that utilize the Roswell International Air Center for testing usually fly in all of their own technicians, staff, and equipment. Most aircraft manufacturers do not perform these activities frequently enough to establish a large permanent presence at the Air Center.

Our interview suggests that the Roswell International Air Center has also begun to attract activity associated with unmanned aerial systems testing and training. The real estate manager indicated that the primary reason that companies and research entities come to Roswell to conduct unmanned aircraft flight testing and training is because the FAA control tower closes at 9:00 p.m. every day. The testing operations are performed at night when little if any air traffic exists. Again, the nature of these activities are short term in nature as equipment, aircraft, engineers, and trainees are frequently brought to the Roswell International Air Center for short periods. The presence of Eastern New Mexico University-Roswell has not helped the Air Center to attract these operations.

While the Roswell International Air Center and Eastern New Mexico University-Roswell have established a productive working relationship and have "grown up" as neighbors, the Roswell International Air Center Airport Authority has not actively pursued a university-led aviation development strategy. The real estate manager indicated that eastern New Mexico University- Roswell does not conduct research or aerospace training programs and, as such, does not generate a sufficient draw to attract permanent aviation and aerospace-related industry.

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RESEARCH PARK WITH AUTOMOTIVE FOCUS

Clemson University International Center for Automotive Research

An example of a strong collaboration between industry, government, and educational institutions is that of Clemson University and BMW. Although not located adjacent to an airport, the 250 acre Clemson University International Center for Automotive Research (CU-ICAR) in Greenville, South Carolina (situated on a major corridor between Atlanta and Charlotte) is an automotive and motorsports research campus composed of five technology neighborhoods planned to total over 3 million square feet of building space. CU-ICAR offers not only undergraduate programs but also masters and doctoral programs in automotive engineering. Started in 2003, CU-ICAR currently has constructed over 760,000 square feet of space. Private industry including American Titanium Works, AT&T, BMW, Michelin, Proterra, and Timken has created research and manufacturing facilities on the campus.

CU-ICAR continually analyzes and surveys the automotive industry to identify trends and issues that may impact the need for investments in additional infrastructure. One of the newest facilities on the campus is a new commercial use laboratory and equipment that offers interior component testing services to Tier 1 automotive suppliers. Another innovation developed at CU-ICAR with other partners is a clinical driving simulator that helps individuals who have lost limbs to learn to use hand controls in place of a vehicle’s pedals.

CU-ICAR’s original private partner, BMW opened a manufacturing facility in Spartanburg, about 30 miles from Greenville, in 1994 and was incentivized by the state to locate in South Carolina. Since its inception, the capital investment in CU-ICAR has been provided by approximately $140 million from Clemson University and state and local governments and approximately $94 million by private industry (including BMW’s $50 million investment in CU-ICAR).30 The key advantage in this collaboration was a research university with existing capabilities and a key user in the region. Another key turning point in the development of CU-ICAR was back in 2000, when the city leaders of Greenville recognized that Clemson University was more than just a campus, but a research center that could combine its technology and innovation with industry partners to produce a nationally recognized automotive engineering program.

30http://web.mit.edu/lis/Przirembel.pdf. http://mooreschool.sc.edu/facultyresearch/researchcenters/divisionofresearch/businesseconomicreview/bereview552/ bmwinsouthcarolinaanupdate.aspx.

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CHAPTER VI

REAL ESTATE ECONOMIC ANALYSIS OF PROTOTYPICAL AIRCRAFT HANGAR DEVELOPMENT

INTRODUCTION

This chapter presents a real estate economic analysis of the use of Southern Illinois Airport Authority property for the development of a prototypical aircraft hangar. The purpose of the analysis is to evaluate the financial feasibility of a prospective first phase development alternative. The analysis considers whether the potential operating income generated by the occupancy of the facility is likely to amortize the costs of hangar construction and development. Funding needs and potential sources are identified and described in light of the results real estate economic analysis. The results demonstrate that public support will be needed to bridge a feasibility gap in order to facilitate feasible private development. The model presented here can be used to evaluate future development proposals and differing spatial development alternatives.

POTENTIAL USES/TARGET MARKETS

As summarized in Chapter IV, potential uses or target markets for the development project would include flight training and related training, MRO operations, emergency response, and research activities.

PHYSICAL CHARACTERISTICS OF PROTOTYPICAL HANGAR DEVELOPMENT

Typically five types of space contained in aircraft hangar facilities include: (1) the hangar area; (2) shop/maintenance space; (3) a warehouse/storage area; (4) office/administrative space; and (5) a building utility area.31 The large size of the postulated alternative would permit responding to a wide range of user requirements, including storing large aircraft that SIU cannot currently accommodate in its existing facilities. In addition to the hangar itself, development will require taxiway improvements, an access ramp, and a parking area to serve the facility. Approximately 10,000 square feet of parking space for 40 cars and 50,000 square feet of ramp development would be needed to accommodate the intended aircraft. Table VI-1 summarizes the physical characteristics of the prototypical hangar development analyzed in this chapter.

31 Whole Building Design Guide, Aviation Hangar, http://www.wbdg.org/design/aviation_hangar.php.

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TABLE VI-1

Characteristics of Prototypical Aircraft Hangar Development Land Area 2.0 acres Building Space: Hangar 30,000 square feet Office / Training 10,000 square feet Total 40,000 square feet Building Height 47 feet Surface Parking Spaces 40 Sources: Hanson Professional Services Inc.; Gruen Gruen + Associates.

Approximately 25 percent or 10,000 square feet of the building is assumed to be devoted to training and administrative/office-type space. The building would be 47 feet in height allowing it to accommodate for example a Boeing 767.

HANGAR DEVELOPMENT COST ESTIMATE

Table VI-2 below summarizes the estimated cost of developing the 40,000-square-foot prototypical hangar facility.

TABLE VI-2

Hangar Development Cost Estimate $ Per Square Foot $ Total % of Total Site & Infrastructure Costs 20 800,000 14.3 Hard Costs 92 3,680,000 65.7 Soft Costs @ 20% of Total 28 1,120,000 20.0 Total Costs 140 5,600,000 100.0 Sources: Hanson Professional Services Inc.; Gruen Gruen + Associates.

Total development costs, including site and infrastructure improvements and soft costs, are estimated at $140 per square foot or $5.6 million. Sitework and taxiway improvements are estimated at about $800,000 or $20 per square foot of building space. Hard construction costs for the hangar are estimated at about $3.7 million or approximately $90 per square foot. Hard costs comprise approximately two-thirds of total cost. We assume soft costs (engineering, design, and permit fees, etc.) equal to 20 percent of total cost or about $28 per square foot.

REVENUE NEEDED TO FULLY AMORTIZE DEVELOPMENT COSTS

Even if hangar development costs could be financed entirely by lower cost public debt, such as a bond issuance by the Southern Illinois Airport Authority or Jackson County, the hangar space would need to generate a significant amount of operating revenue to meet debt service obligations. Table VI-3 below summarizes the annual debt service estimated to apply to the financing of $5.6 million of

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development costs.

TABLE VI-3

Annual Debt Service if Entire Development Cost ($5,600,000) Could be Financed 4.0% Annual Interest Rate 5.0% Annual Interest Rate $412,058 annual $449,358 annual 20-Year Amortization $10.30 psf $11.23 psf $323,849 annual $364,288 annual 30-Year Amortization $8.10 psf $9.11 psf Source: Gruen Gruen + Associates

Amortization over 30 years at an annual interest rate of four to five percent would require annual debt service payments of approximately $324,000 to $364,000. This equates to approximately $8 to $9 per-square-foot of hangar space annually. Amortization over a shorter 20 year period would require annual debt service payments of approximately $412,000 to $449,000. This equates to approximately $10.30 to $11.20 per-square-foot annually. Additional revenue would be necessary to operate and maintain the facility while meeting annual debt obligations.

ESTIMATE OF FUNDING SHORTFALL

As summarized above, annual debt service is estimated at approximately $8 to $11 per square foot if 100 percent of development costs were financed. The occupancy and use of the facility will also generate additional operating costs associated with:

• Utilities (which are likely to vary depending on utilization and build-out of the space); • Insurance; • Maintenance and repairs; • Replacement reserves; and, potentially, • Property tax.32

It is difficult to estimate operating costs associated with utilities and property tax without knowing the specific characteristics of the hangar tenant(s). Based on information obtained from the Southern Illinois Airport Authority, we assume annual operating costs of $2 per square foot.

Potential Magnitude of Rental Income

The rental rate obtainable for the hangar space will affect the ability to secure financing and the need for additional funding. A review of hangar listings in Illinois and interviews indicate that smaller T- hangars, generally ranging from 1,000 to 3,000 square feet in size, rent for approximately $1.00 to $3.00 per square foot annually. Annual rents for available hangar space at the Williamson County Regional Airport in Marion, Illinois (just approximately 20 miles east of the Southern Illinois

32 If the hangar is leased to a commercial user, the Southern Illinois Airport Authority will be required to pay a leasehold property tax on the otherwise tax-exempt property.

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Airport) are approximately $1.75 per square foot. According to a representative of the Williamson County Regional Airport, the rental rate does not include tie-down fees or insurance but does cover utilities and maintenance. Net rents for hangar space at the Taylorville Municipal Airport in Taylorville, Illinois are reported at $1.20 per square foot. Rental rates for small hangars at general aviation airports are somewhat higher in urban areas. In Chicagoland, for example, T-hangar rents appear to range from approximately $2.50 to $3.00 per square foot.

Larger aircraft hangars for corporate and maintenance use are associated with higher rents. Table VI-4 below summarizes a sample of asking monthly rents for larger hangars based on a review of online listing data.

TABLE VI-4

Sample of Larger Hangar Space Rents Hangar Size(s) Monthly Rent Annual Rent # Square Feet $ $ Per Square Foot Aurora Municipal Airport 18,750 14,000 8.96 (Sugar Grove, IL) 10,000 6,000 7.20 DuPage Airport 19,250 12,100 7.56 (West Chicago, IL) 19,250 13,200 8.21 Winchester Regional Airport 13,125 5,016 4.59 (Winchester, VA) 12,500 6,250 6.00 Springdale Airport 16,660 5,748 4.14 (Springdale, AR) Kinston Regional Jetport 19,600 13,067 8.00 (Kinston, NC) Troutdale Airport 68,640 34,320 6.00 (Troutdale, OR) Hampton Roads Executive 14,640 5,000 4.10 (Chesapeake, VA) Phoenix-Mesa Gateway Airport 63,598 34,300 6.48 (Mesa, AZ) Smith Reynolds Airport 50,809 25,000 5.90 (Winston-Salem, NC) Rostraver Airport 12,000 7,000 7.00 (Westmoreland, PA) Sources: Hangartrader.com; Loopnet.com; DuPage Airport Hangar Fee Schedule; Gruen Gruen + Associates.

Two corporate hangars for lease at the Aurora Municipal Airport in Sugar Grove, Illinois are asking annual rents of approximately $7.20 to $9.00 per square foot. Hangar rents are similar at the nearby DuPage Airport at approximately $7.60 to $8.20 per square foot. As summarized above, rents for larger hangars at other general aviation and regional airports elsewhere tend to range from approximately $4 to $8 per square foot annually. Some hangars are leased on a triple-net basis (i.e. tenants pays for all operating expenses) while others are offered at full-service or modified gross rates (e.g. tenant may be responsible for utilities but not for other expenses).

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If leased at a net annual rental rate of $2.00 to $5.00 per square foot, the prototypical 40,000-square- foot hangar would generate annual net income of $80,000 to $200,000.

Debt Sizing Analysis and Capital Funding Shortfall

Table VI-5 presents a debt sizing analysis based upon potential net annual rents ranging from $2 to $5 per square foot. An appraisal commissioned previously by the Airport Authority indicated obtainable net rent for hangar space was likely to approximate $2.50 per square foot. Office space rents were estimated at $5.00 per square foot.

TABLE VI-5

Debt Sizing Analysis Based on Range of Potential Rental Rates Net Annual Rent Per Square Foot $2.00 $3.00 $4.00 $5.00 Net Annual Operating Income $80,000 $120,000 $160,000 $200,000 Annual Debt Service Supported $64,000 $96,000 $128,000 $160,000 @ 1.25 Coverage Ratio1 Total Debt Funding Supported @ 30-Year Amortization and 4% Annual $1,107,000 $1,660,000 $2,213,000 $2,767,000 Interest Rate Percent of Total $5.6M Development Cost 20% 30% 40% 49% Funded by Debt 1 Both public bond issuances and private loans will require a debt service coverage ratio that exceeds 1.0. This demonstration assumes $1.25 of revenue is needed for every $1 of debt service incurred. Source: Gruen Gruen + Associates

Our analysis of the economic base, real estate market, historical airport development conditions, and a previously-completed appraisal suggest that net hangar rents in the lower $2 to $3 per square foot range are most likely to be realistic. It is unlikely that hangar space at Southern Illinois Airport would obtain rents comparable to those obtained at larger general aviation airports in urban areas with a greater scale of on-site activity and larger and more diverse economic bases. As such, the majority of development costs should be anticipated to require alternative funding. The results suggest that even if the potential sales value of the occupied potential development project was factored into the analysis, the returns would not be sufficient to attract and support private feasible

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investment and development. Therefore, government, industry, and/or non-profit sources of funding will be required to facilitate the viable development of the postulated first phase development project.

FUNDING SOURCES

FAA Airport Improvement Program (AIP) Grants

For many general aviation airports, the FAA's AIP grant program represents an important source of funding to expand and improve airport infrastructure. The State of Illinois participates in the FAA's State Block Grant Program, meaning that the State of Illinois assumes responsibility for the distribution and allocation of entitlement33 and discretionary funds to "non-primary" commercial service, reliever, and general aviation airports in Illinois. The AIP grants can cover approximately 90 percent of eligible costs. Competition for funding is expected to continue to increase given persistent funding cuts. The State is reported to have become very careful about justification and eligibility of projects. Table VI-6 shows the State Block Grant funding in Illinois over the past several years.

TABLE VI-6

AIP State Block Grant Funding in Illinois State Block Grant $ Entitlement $ Discretionary $ Total 2009 NA NA 42,779,623 2010 17,965,645 15,461,907 33,427,552 2011 17,555,078 6,953,300 24,508,378 2012 17,616,639 6,869,490 24,486,129 Sources: Federal Aviation Administration; Gruen Gruen + Associates.

For hangar projects, FAA grants can be used to "pay for utilities, some underground work, paving of ramps and taxiways, and even fencing, gates, and lighting systems."34 Construction of revenue- generating hangar facilities are not typically eligible to receive funding. The only FAA dollars likely to be available to the Southern Illinois Airport are entitlement funds ($150,000/year) which necessarily must utilized for other identified airport improvement projects in the coming years. Given the lack of discretionary AIP funding available to general aviation airports in Illinois, FAA grants should not be counted on to provide funding for development projects.

State of Illinois Series B Aeronautics Bonds and Road Funds

The State of Illinois has authorized $620 million of Transportation Series B bond sales for mass transit, rail, and aeronautics projects.35 Transit and rail projects comprise 97 percent of anticipated

33 All general aviation airports in Illinois receive entitlement funding of at least $150,000 per year, and in some cases, up to 20 percent of improvement funding needs identified in the National Plan of Integrated Aviation Systems (NPIAS). 34 Aircraft Hangar Development Guide, AOPA Airport Support Network, Page 17. 35 http://www.ilmpo.org/uploads/MPO_Bond_Presentation.pdf

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bond proceeds with only $20 million allocated to aeronautics projects. Both the Series B bond proceeds and Road Funds, however, are only used to provide the 2.5 percent match to federal FAA grant funding.

Airport Revenue Bonds

As discussed previously, to the extent that the hangar space can be leased at a rental rate that generates a positive net operating surplus, this income stream can be used to back a revenue bond. A revenue bond secured by the operating income of the facility, however, is unlikely to fund the majority of development costs.

In addition to facility-specific revenue, the Southern Illinois Airport Authority could potentially raise bond proceeds from two alternative sources:

1. An operating surplus associated with airport-wide activities; or 2. New tax revenue gained by increasing the Airport Authority's property tax levy.

No property tax rate limit exists for bond and interest revenue levied by Airport Authorities in Illinois (a referendum however would be required if aggregate Airport Authority debt exceeded three-quarters of one percent of special district assessed value).36 Discussion with the Manager of the Southern Illinois Airport Authority indicates, however, that increasing the Southern Illinois Airport Authority tax levy for purposes of financing hangar construction, is not likely to be politically feasible.

Private or Institutional Donations

The constraints associated with the funding sources and programs described above suggest the importance of attempting to obtain industry, institutional or other private donations.

36 Illinois Department of Revenue (Sept 2010), Illinois Property Tax Rate and Levy Manual, page 29.

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APPENDIX A

Synthesis of Aviation Industry News Articles on Location Announcements Announced Location Type of Development Selected Development Why Selected Incentives Offered Source Airbus considering Washington Engineering center Talent, center of The Seattle adding 2 more State aerospace activity, Times engineering wants to work with (Business/Tec centers in the next engineering universities hnology) decade and trade schools J.A. Billipp 36.8 acre Air cargo and Direct access to Access to the airfield is http://www.m Company development other aviation Ellington Airport being made possible ultivu.com/mn announces adjacent to related facilities runways, taxiways and through important r/62119-j-a- Ellington Air Ellington ramp areas. Houston Airport Systems’ billipp- Commerce Center Airport in Potential for a wide support for the project company- Houston, TX range of domestic and and cooperation with J. A. announces- international air cargo Billipp Company, the ellington-air- and aviation related property and building commerce- businesses developer center Aviation firm ATR Miami The company is a Florida has a good http://www.bi North America is Springs, manufacturer of business climate zjournals.com relocating its Florida turboprop aircrafts /southflorida/ American news/2013/06 headquarters from /21/aviation- Dulles, Va. to company- Miami Springs moving-to- miami.html?ut m_source=Sta te+Aviation+J ournal&utm_c ampaign=25c0 05c64a- July_26_2010_ Skybrief7_26_ 2010&utm_me dium=email& utm_term=0_ e1fc9e3a37- 25c005c64a- 374416629 GE Aviation has Asheville, Manufacturing Near existing facilities The company is waiting to http://www.ae announced plans NC plant receive approval for an ro- to break ground incentive package from news.net/inde on a new parts the state. x.cfm?do=mai manufacturing n.textpost&id plant in Asheville, =33b8caed- NC d3f2-4386- 945f- 94cc9f090dcd

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Synthesis of Aviation Industry News Articles on Location Announcements Cont. Announced Location Type of Development Selected Development Why Selected Incentives Offered Source SyberJet Aircraft Cedar City, Headquarters and Chose because of State and local http://www.je announced it is Utah aviation assembly incentive package governments offered a tsetmag.com/ moving its plant offered and the pro- multi-year tax incentive newsroom/syb headquarters and a business environment package with a combined erjet-aircraft- new SyberJet SJ30 of the state. Also can value of over $43 million announces- Assembly Plant to use the Cedar City cedar-city- Cedar City, UT Municipal Airport to utah-as-the- test their SJ30’s. location-for- its- headquarters- and-new-sj30- assembly- plant/#nav GE Aviation Ellisville, Aviation factory "GE Aviation’s http://www.a announced the Miss. growing partnership viationtoday.c opening of its new with the state of om/the- composites factory Mississippi is creating checklist/7913 in Ellisville, Miss., long-term economic 0.html#.Ucnl6 its second growth," said David zssmgY composites site in Joyce, president and the state. CEO of GE Aviation. European Trappes, http://www.a Researchers Test France viationtoday.c Diesel Alternative om/rw/produ to Turboshaft cts/engines/E uropean- Researchers- Test-Diesel- Alternative-to- Turboshaft_79 572.html#.Uc 3BtTukolF NASA Langley Research Center and Joins Manufacturing Commonwealth Center for Advanced Manufacturing

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APPENDIX B

Exhibit of Utilities in Proximity of Southern Illinois Airport

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Gruen Gruen + Associates (GG+A) is a firm of economists, sociologists, statisticians and market, financial and fiscal analysts. Developers, public agencies, attorneys and others involved in real estate asset management utilize GG+A research and consulting to make and implement investment, marketing, product, pricing and legal support decisions. The firm's staff has extensive experience and special training in the use of demographic analysis, survey research, econometrics, psychometrics and financial analysis to describe and forecast markets for a wide variety of real estate projects and economic activities.

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