Why airport privatization plan didn’t seek bids

Source: David McKay Wilson, Lohud, November 14, 2016

The international wave of airport privatization deals, which has seen private firms take control of many of the world’s largest airports, has yet to gain traction in the continental United States. Westchester County Airport now stands as the lone passenger facility seeking federal approval to turn over its airport revenue to a private company. A Tax Watch review of these deals around the world found a major difference: Westchester did not seek bids to test the open market before selecting Oaktree Capital Management to run the airport known as HPN. … Westchester County Executive Rob Astorino opted not to test the open market. He began talks with Oaktree in late 2015, with negotiations intensifying over the past three months. Federal regulations have no bidding requirement. Astorino said he felt comfortable with Oaktree because there aren’t many companies that have experience with the Federal Aviation Administration and airport management. … According to county budget documents, the county has received income of about $45 million a year, which includes revenue from a variety of sources. It includes rents from general aviation operators, corporate jet hangers, rental-car companies as well as landing fees from commercial airlines, the $4.50-per passenger fee added onto every ticket on departure flights, and a share of parking garage revenues. That money currently goes into a restricted airport fund to be used exclusively for airport operations. Emmett McCann, a managing director at Oaktree, said the U.S. privatization program, which began under President Bill Clinton, differs from others around the world because the airlines have a say in whether the deal goes through, with 65 percent of the carriers at an airport required to back the deal. Astorino has already lined up major carriers at Westchester to back the deal, including Jet Blue, American and United Airlines. … The Oaktree deal would expand upon Westchester’s partial privatization at the airport, which has had private management dating back to its establishment in the mid-1940s. Westchester now pays AvPORTS about $1 million a year to run the airport operation — on top of paying about $45 million in expenses, including the salaries of AvPORTS employees — from revenues it receives from myriad sources. Under the Oaktree deal, the private equity firm would manage the airport and receive the income stream over the next 40 years — bringing in an estimated $2 billion in today’s dollars. In exchange, Westchester would be able to use the proceeds for the 40-year lease for general county purposes. That’s a boon to an anti-tax crusader like Astorino, who is considering privatizing more county functions to reap non-tax income. …

Related:

Fact check: Airport privatization plan
Source: LoHud, November 14, 2016

County Executive Rob Astorino is pushing hard to privatize Westchester County Airport. The move would see Los Angeles-based Oaktree Capital Management take over, in exchange for an up-front payment of $130 million, a portion of which Astorino has included in his 2017 budget. In order to get that money, the Board of Legislators must approve the deal by Dec. 27. That means there’s a lot to unpack in a short period of time. Here, we try and flesh out some statements the county executive made to the Journal News during an editorial board meeting Nov. 3. …

Westchester County in Deal to Privatize White Plains Airport
Source: Andrew Coen, Bond Buyer, November 3, 2016 (Subscription Required)

New York’s Westchester County announced a public-private partnership for its municipal airport in White Plains, N.Y. designed to direct airport revenue to the county budget. County Executive Rob Astorino announced Thursday a 40-year deal to lease Westchester County Airport to Los Angeles-based Oaktree Capital Management for $140 million. The deal calls for Westchester County to receive a $111 million upfront payment from Oaktree, structured to have proceeds applied to the county’s operating budget over the course of the 40-year lease. The structure works like an annuity, a county press release said. Astorino said net revenue would amount to $15 million in the first year and $5 million annually over the following five years. … The P3 deal would come under the Federal Aviation Administration’s Privatization Pilot Program that allows for up to 10 airports to be privatized. Oaktree helped implement the first P3 for a major U.S. territory airport in San Juan, Puerto Rico. According to an FAA website, San Juan is the only privatized airport in the 19-year-old program. The transaction will require the approval of the FAA and the Westchester County Legislature must also approve the lease agreement. …