Westchester County legislators skeptical about proposed airport lease

By Aleesia Forni

2 Comments

A $140 million plan that would transfer management of the Westchester County Airport to a Los Angeles-based investment firm is being proposed by county officials, but the deal is being met with some skepticism from the County Board of Legislators.

Westchester County Executive Robert P. Astorino detailed a 40-year revenue-sharing lease between the county and Oaktree Capital Management LP earlier this month. The county expects the deal to improve passenger experience, energize the local economy and strengthen environmental protections without increasing the airport’s footprint.

The transaction would require the approval of the Federal Aviation Administration, though county officials said preliminary talks with the FAA have been favorable.

Approval from the board of legislators, however, may prove more difficult to obtain. A two-thirds majority of the 17-member board is necessary for the agreement’s approval. So far, the deal has been met with hesitation by many legislators.

The full lease agreement proposal was sent to the board on Nov. 4 following the public announcement of the deal one day prior. The board’s Majority Leader Catherine Borgia said the deal’s announcement came “as a surprise to many, if not all of us on the board of legislators.”

Astorino was set to deliver the 2017 budget to legislators on Nov. 10, one that included $15 million in revenue from the airport deal. Both Borgia and County Legislator Ken Jenkins, a candidate for county executive, called the plan a “gimmick” to balance an unbalanced budget. Jenkins also called the proposed management lease “a giveaway.”

“We can only surmise that an arrangement created behind closed doors, with no public input, was done with the intent of forcing legislators to approve this in exchange for funding various programs and services that the county executive has always desired to cut, including public safety efforts and services for children and families,” Borgia said.

Jenkins and board Chairman Michael B. Kaplowitz questioned why negotiations with Oaktree were conducted behind closed doors. Kaplowitz said a request for proposals would have allowed the county to scour the market and determine which lessee would bring the most benefit to the airport.

“We don’t know that until you ask the world to bid,” he said. “With the lack of an RFP, it creates some doubt, frankly.”

County administration officials said the deal is backed by a majority of the airport’s key airline tenants, including JetBlue Airways, American Airlines and United Airlines.

“(Those airlines) know we’ve done it elsewhere and they’ve asked us to come here and achieve a similar outcome,” said Emmett McCann, managing director at Oaktree.

As part of the agreement, those airlines have agreed in principle to a long-term use agreement that provides price certainty, greater operational efficiencies and guaranteed capital improvements.

“The financial benefits of this public-private partnership will allow us to continue to keep taxes flat and government services both responsive and affordable,” Astorino said.

As part of the deal, Oaktree would pay Westchester County $111 million upfront, structured so that those funds could be applied to the county’s budget over the course of the 40-year lease. The county would receive $15 million in the first year of the lease, followed by $5 million in each of the next four years and more than $2 million each succeeding year.

Under the agreement, the county would no longer be responsible for improvements or ongoing maintenance at the airport. Oaktree would invest $30 million in airport improvements in its first five years, including a redesigned lounge, reconfigured ticketing area, improved parking, enhanced arrival area and additional food and dining offerings. The agreement also provides for a new wastewater treatment facility for de-icing fluid. Those improvements are expected to create 300 construction jobs.

The three county employees who work at the airport would have the option to remain with county government. All of the airport’s employees will have the option to pursue opportunities with Oaktree.

Astorino stressed that the agreement would keep in place the airport’s 240-per-half-hour passenger limit, a restriction in 2015 he proposed to relax. The plan would also maintain the footprint of the terminal and the airport’s hours of operation. The number of gates at the airport would remain at four, and there would be no additions or extensions of runways.

“The business model here is to make the airport more profitable through better service, more amenities and greater efficiencies, not expansion,” Astorino said.

The partnership would attempt to reinvigorate an airport that has seen its passenger totals dwindle in recent years, falling to 1.5 million total passengers in 2015 from a high of nearly 2 million in 2010.

The plan is a product of a Federal Aviation Administration program that allows small to midsize airports to be run as public-private partnerships. Under the terms of the FAA program, money paid to the county by Oaktree can be used for all county programs. Until now, any revenue generated by the airport could only be used at the airport.

Oaktree will take over operation of the airport from AvPorts, the Dulles, Virginia-based company that has managed the airport since 1977.

“We decided to get aggressive on this as a new source of revenue and as a result, Oaktree brought their experience with them and they have done this in the past,” Astorino said.

Oaktree has completed similar projects in Baltimore, Puerto Rico and London.

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About the author

Aleesia Forni
Aleesia Forni covers transportation, tourism, nonprofits and residential real estate for the Westchester County Business Journal. She previously worked as a financial reporter for the online newsletter Prospect News. She started with the Westchester County Business Journal in April 2016.

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2 Comments

  1. Richard Roher

    The CBoL has a point and shouldn’t be having to weigh this quickly because it’s already factored into a budget with a pending deadline. How do we know the county’s getting appropriate value on the lease? What extra benefits might be wrung out if the bid were public? All good questions.

  2. Jack Robinson

    Will an RFP be issued to include the existing manager AvPorts & other alternatives to Oaktree?

    When will there be a public session for citizen questions?

    This looks like it’s just a budget gimmick with “trust me” benefits that will be unaccountable.

    A shady way to drop a proposal on the BOL & citizens

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