Commerce Park Drives Growth at Sebring Regional

Author: 
Mike Schwanz
Published in: 
May-June
2016

Maximizing income from multiple sources is important for all airports, but it's especially crucial for small general aviation facilities that don't collect commercial landing fees, or have high-volume potential from parking and concessions.  

Mike Willingham, executive director of Sebring Regional (SEF) in Florida, takes revenue diversification very seriously, and attracting tenants to the airport's industrial park has been key to his success. With 44 businesses currently located on SEF's property, landside development brings in more than $2 million per year-fully 90% of the airport's annual revenue. 

FACTS&FIGURES
Project: Industrial Park Development
Location: Sebring (FL) Regional Airport 
Commerce Park Income: $2.25 million/yr
New Tenant: CitraPac
CitraPac Rent Revenue: $20,000/yr
Financial Incentives Provided: $1.3 million
Incentive Funding: City of Sebring ($250,000); Sebring Regional Airport Community Redevelopment Agency ($250,000); Highlands County ($400,000)
In-Kind Incentives: Highlands County ($400,000 of on-site civil improvements); Atkins Global (engineering services); Sebring Regional (fill material for construction of plant & parking lot)
Size of New Plant: 42,000 sq. ft.
Initial Employees: 65 (will grow to 240)
Competitive Advantages: Central Florida location (at epicenter of citrus industry); CSX rail spur; part of Foreign Tax Zone; in-place infrastructure; on-airport locations facilitate customer visits; focus on commercial tenants by airport management
Key Benefits: Increased income for airport; regional job expansion

"I always felt that a general aviation airport needed more sources of income. The runways were more of an amenity," says Willingham. "Aviation didn't pay all the bills."

Attracting CitraPac to SEF's commerce park was a recent accomplishment that will generate $20,000 per year in rent. The large frozen-fruit manufacturer was no easy sell, however. It took a determined, cooperative multi-year effort by the airport, city and county officials to land the family-run company as a new tenant. 

"We knew for several years that CitraPac was seeking a site to expand and build a new plant, and I first started to talk to Gregg Harshman, the president of CitraPac, back in 2010," Willingham recalls. "Many towns in central Florida were competing with us to lure CitraPac to their city, and were offering many amenities. Gregg told us we needed to up our game to be on an even playing field with them."

To be competitive, SEF provided about $1.3 million in financial incentives-a package that took Willingham months of meetings and negotiations with city and county officials to secure. The city of Sebring invested $250,000; Sebring Regional Airport Community Redevelopment Agency contributed $250,000; and Highlands County provided $400,000 plus $400,000 of on-site civil improvements.  

In-kind contributions included engineering services from Atkins Global, and the airport supplied base and fill material for plant construction and a new parking lot.

"We had to convince our local officials that more jobs would be created, which is the key to economic activity in any region," explains Willingham.  

CitraPac is expected to employ 65 full-time workers during its first year at SEF, and plans to expand its workforce up to 240 people in the following five years. Construction of the soon-to-open plant will provide another 100 jobs.

Baiting the Hook
One huge advantage SEF offers all of its industrial tenants is easy connection to a CSX Railroad mainline just two miles away. With a spur line running right through the airport property, trains can stop at each plant in the industrial park to unload raw materials. After the raw materials are unloaded and processed, companies usually transport their finished products via truck.

Another enticement for commercial tenants is that SEF is part of a Foreign Tax Zone (FTZ) that encompasses several south-central Florida counties. "This is a huge advantage for our customers," Willingham notes. "They can import raw materials and products duty-free that will be finished or assembled at our site. When the products leave the FTZ and are transported elsewhere in the United States or to other countries, duties may be deferred, reduced or eliminated."

Willingham actively promotes the airport's FTZ status to potential customers overseas. "We go to the Paris Air Show every other year, and I often go to Eastern Europe as well," he comments. "Being in a FTZ can really help the bottom line of many companies doing business here in the United States."

With an ample amount of undeveloped land, SEF has options for current tenants whose businesses are prospering, and new companies from around the globe that want to expand or relocate. 

The combination of financial incentives and SEF's competitive advantages convinced Harshman to locate the new CitraPac plant at the Sebring airport. "We had been planning to build a larger plant for several years," he recounts. "Our current facility in Dundee, FL, only covers 6,500 square feet. Our new plant will have 42,000 square feet of space when it opens this June."

The company plans to produce frozen fruit cups for school districts in its new plant. "Fortunately, the demand for these healthy alternatives to school lunch menus continues to increase, so that is why we needed to build a new facility," explains Harshman.

Each day, the new plant at SEF will receive several trucks filled with freshly picked oranges from local orchards. "Once they are harvested, they are delivered to us that day; and within another 24 hours, they are processed and stored in a freezer," he says.

Trucks will then deliver the fruit cups to large distribution centers in Georgia and Texas, and the products will eventually be shipped to individual school districts. "Four or five trucks a day will leave the new plant, starting this summer. Within just a few years, we will be filling up to 20 trucks a day," he projects.

Beyond the financial incentives, SEF's location was a big plus, notes Harshman: "We are in the heart of Florida's citrus industry, and we represent a new market for local growers."

Another factor that affected CitraPac's decision to locate at SEF was in-place infrastructure. "Since the airport's commerce park has been up and running for several years, we didn't really have to worry about that," says Harshman. "The road access is excellent. The water, sewer, fire hydrants, utilities and waste collection are all set up."

Being located on airport grounds is also a noteworthy benefit, he adds. "Our partners can fly right in to the airport, so there is virtually no extra commuting time for them to get to our facility. They can be in and out in a few hours."

Overall, Harshman considers CitraPac's new plant at SEF a strong investment in the company's future. "Although the final tab to build this plant will eventually be about $10 million, we anticipate $10 million in revenue a year. It should pay for itself relatively quickly," he says. 

Harshman already sees potential for the airport to help expand his business. "Eventually, we hope to air freight our products to various Caribbean islands. Many potential markets are less than a two-hour flight away," he notes.

There are also expansion opportunities closer to home. "Right now, the new plant sits on a five-acre parcel of land, so we can double our capacity easily," Harshman explains. "In Phase 1, we will have four processing lines. In Phase 2, we will have up to eight processing lines."

The airport gave CitraPac options for two additional five-acre parcels of land to facilitate further expansion.

Financial incentives and land options notwithstanding, Harshman cites the personal service and flexibility of Willingham and the airport staff for convincing him to set up shop in SEF. "Mike has been terrific in every step of the process, and I am sure this will be a good move for us as we move forward," remarks the fourth-generation family business exec. 

Guaranteeing a smooth transition for new clients such as CitraPac is a priority for Willingham. "My staff and I try to assist each new or expanding tenant with any needs they have, every step of the way," he emphasizes. 

Welcome to the Neighborhood
Beyond CitraPac, SEF has signed deals with other companies in the last three years. Tecnam USA, Paradise Aircraft of Brazil, FLG Teardowns and Gulf Coast Supply and Manufacturing are all new tenants. In addition, Lockwood Aviation expanded into a new space last April. 

Although Willingham has plenty of latitude to run the airport as he sees fit, he works closely with the Highlands County Commission and Sebring City Council to inform them about important airport matters and garner their support before launching new initiatives. "This consistent networking and follow-up provides much-needed support for the airport authority to enable growth for the community," he says.

Having a good working relationship with local government recently paid off big time. As of February, the airport's Community Redevelopment Agency has funding until 2045, thanks to a $133.8 million redevelopment plan approved by the Highlands County Commissioners Board. 

The Community Redevelopment Agency plan commits to support four main airport projects: industrial park development; airport infrastructure/economic development; Sebring International Raceway infrastructure and U.S. Sport Aviation Expo economic development. (See sidebar for specifics on the last two projects.) 

"This funding will ensure positive growth of the region's economy for the next 30 years," Willingham concludes. 

Sebring Raceway Boosts Bottom Line 
In addition to its thriving industrial park, Sebring Regional Airport (SEF) has another less traditional income source: Sebring International Raceway. Located on airport property, the auto racing tenant sponsors Twelve Hours of Sebring, an annual road race that draws about 150,000 people to the area every March.  
Beyond the monthly rent that SEF collects from the Raceway, the airport also receives a percentage of all ticket sales, subleases and track rental associated with the annual race. "They are a significant source of revenue," notes SEF Executive Director Mike Willingham.
On another front, SEF uses airport grounds to host the U.S. Sport Aviation Expo, which attracts about 20,000 aviation enthusiasts from across the country. "We do not yet break even on that event, but consider it a good investment because of the economic development possibilities," Willingham explains. "It allows us to meet several potential clients in a short amount of time."  

Subcategory: 
Landside Development

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