# Economic Impact Assessment of the LLM

International Airport Public Private Partnership

Executive Summary

June 27 , 2012

Submitted to:

Aerostar Airport Holdings LLCEconomic Impact Assessment of the LLM International Airport Public Private Partnership

Estudios Técnicos, Inc. Page | 2 E XECUTIVE S UMMARY

Estudios Técnicos, Inc

. was commissioned by Aerostar Airport Holdings LLC (“ Aerostar”) to

conduct an economic impact assessment for the LLM International Airport PPP

. The report

presents how this transaction will impact local business activity, employment, income, and

fiscal revenues.

The economic benefits of the transaction are associate with following:

1. Aerostar ’s commitment to investment over $ 1.8 billion over the course of 30

years needed to facilitate the airport ’s growth;

2. Aerostar ’s operational plan which will result a significant increase in passenger

movement ; and

3. The change in ownership structure, which will result in new tax revenues certain

jurisdiction s

.

Accepted economic procedures were adopted to estimate the economic impact of the

transaction. The estimates were based on Puerto Rico’s Input

- Output Model and National

Accounts from the Puerto Rico Planning Boar d

.

The analysis shows that the proposed public private partnership will result in substantial

economic impacts during the initial 10 years of the agreement

. Local businesses will perceive

$ 2.3 billion per year in new commercial activity

, which will support 14, 461 new jobs per year and $ 4 37 .4 million in annual salaries. Economic impacts increase over time. By the end of 2020,
more than 22,999 jobs and $766.7 million in salaries would be supported by a p rojected
increase in $4.0 billion in commercial activity. The government will benefit from $93 6 million in

new tax revenues over the ten year period.Economic Impact Assessment of the LLM International Airport Public Private Partnership

Estudios Técnicos, Inc. Page | 3 Economic Impact Summary

Impact of Aerostar’s 10 year investment plan

Aerostar’s construction activities and investment in machinery and equipment of $ 583

during the initial 10 years of the agreement will support $ 1.4 billion in new business activity,

913 new jobs per year with associated salaries of $ 23 .3 million per year

.

The gove rnment will benefit form $ 67.1 million in additional taxes during the period , of

which $35 million are in construction excise taxes, $21. 8 million in personal income taxe s and

over $10 .3 million in sales taxes.Economic Impact Assessment of the LLM International Airport Public Private Partnership

Estudios Técnicos, Inc. Page | 4

Economic Impact of Aerostar’s 10

- year Investment Plan

Impact of Aerostar’s O perational P lan

The expected increase in passenger movement resulting from Aerostar ’s operational

plan will support an estimated increase of $8.8 billion dollars in additional visitor expenditures,

which amount to $1 9 billion in new business activity during a ten year period. This will promote

11,29 2 jobs per year with associated salaries of $ 337 .2 million per year

.

In addition, the government will benefit from $ 868 .9 million in additional revenues

associated with n ew visitor expenditures and Aerostar’s tax burden during the initial 10 years of

the lease. Of this total, $99 .5 million will be paid directly by Aerostar in municipal license tax,

income taxes and PRPA annual payment

. Over $7. 6 million in municipal license tax will directly

benefit the Municipality of Carolina.Economic Impact Assessment of the LLM International Airport Public Private Partnership

Estudios Técnicos, Inc. Page | 5

Economic Impact of Aerostar’s Operational Plan

Economic Impact of New Fiscal Revenues

N ew tax revenu es from the LLM public

- private partnership would support $ 2.4 billion in new

business acti vity during the initial 10 year term of the agreement , along with 2,25 7 annual jobs

and more than $ 76.9 million in annual salaries.

Economic Impact of New Tax Revenues