FAA airport privatization program grounded by financing concerns

Source: Jim Watts, Bond Buyer, August 24, 2017 (subscription required)
 
A 20-year-old federal pilot program of airport privatization has found few takers because of restrictions on how the Federal Aviation Administration allows private operators to fund related infrastructure projects, the Congressional Research Service said. A CRS report, released earlier this month, points to challenges that may lie ahead for the Trump administration, which says it is preparing a 10-year, $1 trillion plan that will focus on leveraging private investments in infrastructure through public-private partnerships.  The CRS focused on the FAA’s Airport Privatization Pilot Program (APPP), created by Congress in 1996 to increase airports’ access to private capital for infrastructure projects. Only two airports have been privatized since the law was enacted, and one of them, Stewart International Airport in Newburgh, N.Y., reverted back to public ownership after seven years in private hands. …

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Airport Privatization: Limited Interest despite FAA’s Pilot Program
Source: U.S. Government Accountability Office (GAO), GAO-15-42, Published: November 19, 2014

From the summary:
Since the FAA started to accept applications to the Airport Privatization Pilot Program (APPP) in 1997, 10 airports have applied to the pilot program (see figure). Of these 10, 2 were privatized, 7 did not complete the program, and one application is currently under FAA review. Public-sector airport owners’ objectives for full privatization varied, but the overriding reason cited was financial benefit. The 7 applicants that withdrew did so for varied reasons, such as changes in market conditions that reduced expected privatization benefits.

Several factors reduce both public and private sector interest in airport privatization in the U.S.—such as higher financing costs for privatized airports and the possible lack of state and local property tax exemptions. Also, while the APPP reduces some of the challenges to privatization that we identified in 1996, privatization still requires considerable time and cost to navigate. Furthermore, public sector airport owners have found ways to gain some of the potential benefits of privatization without ceding control under full privatization, such as entering airport management contracts and joint development agreements for managing and building an airport terminal.

The potential effects of airport privatization on airport efficiency, the federal aviation trust fund, federal tax revenues, and airport employees and concessionaires are difficult to determine. Privatization’s impact on these areas depends on many different factors such as how each airport privatization is structured, making it difficult to estimate the overall impact.

Different airport ownership and financing structures and motivations have driven more extensive overseas privatization efforts, as at least 450 airports around the world have been privatized to some degree. Stakeholders mentioned a variety of lessons learned from the U.S. and international experience, including ensuring public-sector due diligence, involving all stakeholders and creating a transparent privatization process. Stakeholders also provided a range of suggestions for modifying the APPP, from increasing the clarity of the program’s rules to reducing the federal role in airport privatizations.

Private Prison GEO Group to Pay $60,000 To Settle EEOC Sexual Harassment And Retaliation Lawsuit

Source: EEOC Press Release, August 25, 2017
 
The GEO Group, Inc., operator of the Central Arizona Correctional Facility (CACF) in Florence, Ariz., will pay $60,000 and furnish other relief to settle a sexual harassment and retaliation lawsuit filed by the U.S. Equal Employment Opportunity Commission (EEOC), the agency announced today.  According to the EEOC’s lawsuit, GEO allowed its employees and managers to sexually harass Roberta Jones since June 2007. For example, the agency alleged that certain male superior officers and coworkers would frequently stand around bragging about their sexual exploits. At least two superior officers were alleged to have put their hands on Jones in an unwanted manner. GEO failed to adequately respond to Jones’s complaints of sexual harassment, the EEOC said. The lawsuit also alleged that Geo assigned Ms. Jones to less desirable posts, disciplined, and terminated her after she complained about the harassment and participated in protected activity under Title VII of the Civil Rights Act. …

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Florence Private Prison GEO Group Sued a Second Time by EEOC for Sexual Harassment and Retaliation
Source: U.S. Equal Employment Opportunity Commission (EEOC), September 25, 2015

The GEO Group, Inc., operators of the Central Arizona Correctional Facility in Florence, Ariz., violated federal law by sexually harassing a female correctional officer and then retaliating against her for having participated in a prior lawsuit brought by the U.S. Equal Employment Opportunity Commission (EEOC) against GEO alleging systemic sexual harassment, EEOC charged in a lawsuit it filed today. According to EEOC’s lawsuit, GEO allowed its employees and managers to sexually harass Roberta Jones since June 2007. …

Silicon Valley billionaire loses bid to prevent access to public beach

Source: Sam Levin, The Guardian, August 10, 2017

A California court has ordered a Silicon Valley billionaire to restore access to a beloved beach that he closed off for his private use, a major victory for public lands advocates who have been fighting the venture capitalist for years. An appeals court ruled on Thursday that Vinod Khosla, who runs the venture capital firm Khosla Ventures and co-founded the tech company Sun Microsystems, must unlock the gates to Martins Beach in northern California by his property.
The decision is a major blow to Khosla and other wealthy landowners who have increasingly tried to buy up the internationally celebrated beaches along the California coast and turn public lands into private property. …

Low Staffing Levels at Arizona Prisons Could Lead to Big Fines

Source: Jimmy Jenkins, KJZZ, August 9, 2017

A federal judge will appoint an outside expert to address low health care staffing levels in Arizona prisons and could soon issue economic sanctions against the state. For years the state has failed to comply with performance measures from a settlement between the state and the inmates. The main reason for the failures is staffing, and Judge David Duncan said economic currents are to blame. At a status hearing Wednesday, Duncan said the state’s private contractor, Corizon, has made the decision to simply pay fines instead of paying for full staffing at state prisons. … Duncan became increasingly incensed when hearing of the state’s failure to comply with measures that guarantee inmates access to their prescribed medicine. He repeated his threat that the state is facing steep fines and suggested economic sanctions to counter Corizon’s profit motive. …

Why America’s biggest government contractors balked at criticizing Trump

Source: Aaron Gregg and Jena McGregor, Washington Post, August 17, 2017

The swift end of President Trump’s corporate advisory groups on Wednesday was remarkable for the way some executives publicly criticized the president.  But the four government contractors on the president’s advisory councils — Lockheed Martin, Boeing, Harris Corp. and United Technologies — waited until after the councils had disbanded to publicly weigh in, if they did at all. Even then, several stopped short of singling out the president for blaming “both sides” for the violence at a white supremacist rally this past weekend in Charlottesville. … In many ways, contractors such as Boeing and Lockheed Martin are more dependent on government decision-making than other companies that took part in the councils. Trump’s promises to boost defense spending and strip away regulations have helped make the companies some of the biggest beneficiaries of the stock market’s rally in the first eight months of his presidency. … But it has been a precarious relationship. …

California Today: Battle Over a Bill Reaches the State Senate

Source: Mike McPhate, New York Times, August 24, 2017

An intense debate is being waged in Sacramento over a proposal that would alter how crucial services are provided to Californians. Sponsored by the Service Employees International Union, the measure would require that counties adhere to a raft of new conditions before contracting out for services in health care, housing, public safety and other areas. …

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Editorial: California Democrats’ labor of love for unions
Source: San Francisco Chronicle, August 23, 2017

A union-backed bill to pad local government payrolls has been steadily diminished by those with the clout to fend off organized labor and its numerous friends in the California Legislature. The state’s cities got a reprieve from the bill en masse. So did San Francisco, the state’s only city and county, and Santa Clara County. All that’s left for the state Senate is to finish the job and kill this misbegotten bill altogether. … The bill’s onerous conditions leave little doubt that its intent is to discourage and eliminate private contracts in favor of expanding government payrolls and union membership. It threatens to needlessly inflate public spending and disrupt a range of services, many of them routinely provided by nonprofits serving the homeless, the mentally ill and other vulnerable people. A legislative analysis found that the bill would bring about “potentially major local cost increases or service reductions” and could affect “a broad array of services.” …

Bill benefits unions at expense of needy
Source: Senator Jeff Stone, August 18, 2017

Assembly Bill 1250, introduced by Assembly member Reggie Jones-Sawyer, a Democrat from Los Angeles, is a blatant power grab by the leadership of two of the largest public employee unions in California, Service Employees International Union (SEIU) and American Federation of State, County and Municipal Employees (AFSCME).  AB 1250 would virtually ban counties from contracting with nonprofits, licensed experts and community businesses for the vital services they provide Californians. It would do so by establishing a process so onerous and burdensome to comply with that it would make the contracting out process effectively impossible. …

Opinion: Judge orders O’Hare contractor to rehire workers who led strike

Source: Mark Brown, Chicago Sun-Times, August 23, 2017

Barnett and Subijano were abruptly fired from their jobs as private security guards at O’Hare Airport on April 13, 2016. Two weeks earlier they had joined other low-wage airport workers in a well-publicized, one-day unfair labor practice strike at O’Hare organized by the Service Employees International Union. The women’s employer, Universal Security Inc., contends it fired them because they made statements to the news media revealing “sensitive security information” about airport operations. That was always nonsense. They were fired because they had the nerve to publicly speak up about why they wanted to join a union, which included criticism of their limited training. …

Ex Wayne Co. CFO’s ties to developers warrant probe, commissioners say

Source: Ross Jones, WXYZ, August 11, 2017

The sale of a Wayne County building to developers with ties to the county’s former CFO has prompted calls for an investigation by Wayne County’s prosecutor.  County Executive Warren Evans insists the CFO, Tony Saunders, played no role in the sale that and no rules were broken. … Also this week, Denis Martin, the president of AFSCME Local 1862, sent a letter to Wayne County Prosecutor Kym Worthy, asking that her office of Fraud and Corruption Investigation Unit dig into the deal.  While the deal was being vetted by the county commission, analysts noted several red flags even before they were aware of Saunders’ connection to the buyers. …

Report: Gov. Henry McMaster considering Santee Cooper sale to help pay for nuclear project

Source: David Wren, The Post and Courier, August 8, 2017

Gov. Henry McMaster is reportedly considering selling state-owned electric utility Santee Cooper as a way to pay for at least one of two nuclear reactors at the V.C. Summer Nuclear Station near Jenkinsville. The Wall Street Journal reported Monday that McMaster is “pursuing several options” to raise the money needed to finish the project, which Santee Cooper and South Carolina Electric & Gas abandoned last week in the face of rising costs and the bankruptcy of lead contractor Westinghouse Electric. …

Congress must continue to block Trump plan to sell BPA

Source: Union-Bulletin Editorial Board, August 8, 2017

Late last month the U.S. House Budget Committee approved a budget resolution that rejects privatizing the transmission assets of the Bonneville Power Administration proposed by the Trump administration. A great move. The sooner this lousy proposal is dead the better it will be for Pacific Northwest residents who pay power bills — pretty much all of us. … President Donald Trump is calling for turning over the transmission network of power lines and substations owned by the Bonneville Power Administration, a federal agency that distributes most of hydropower from the Columbia and Snake rivers’ dams, to private companies. As Trump sees it, this would lower costs to taxpayers and improve efficiency. But in reality it would result in far higher rates for consumers. And putting the high-voltage grid in the hands of private investors — perhaps foreign investors — would create national security concerns. …

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Down the Mighty Columbia River, Where a Power Struggle Looms
Source: Kirk Johnson, New York Times, July 28, 2017

To ride down the Columbia River as the John Day Dam’s wall of concrete slowly fills the view from a tugboat is to see what the country’s largest network of energy-producing dams created through five decades of 20th-century ambition, investment and hubris. … Now, the Trump administration has proposed rethinking the entire system, with a plan to sell the transmission network of wires and substations owned by the Bonneville Power Administration, a federal agency that distributes most of the Columbia basin’s output, to private buyers. The idea is part of a package of proposals that would transform much of the infrastructure in the United States to a mixture of public and private partnerships, lowering costs to taxpayers and improving efficiency, administration officials said. Assets of two other big public power operators, based in Colorado and Oklahoma, would be sold, too, if Congress approves the measure.

Debates about government and its role in land and environmental policy are always highly charged. But perhaps nowhere could the proposed changes have a more significant impact than along the great river of the West — fourth largest by volume in North America, more than 10 times that of the Hudson. Privatization would transform a government service that requires equal standards across a vast territory — from large cities to tiny hamlets — into a private operation seeking maximum returns to investors. …