For Sale: Prime real estate, close to the airport. Motivated seller.
That's the message coming from Lehigh Valley International Airport this week. Bowing under the weight of a $16 million court debt, the Lehigh-Northampton Airport Authority has decided to begin fielding offers for some of its land.
A real estate committee the authority created Tuesday will review any offers that can help the airport raise enough money to pay its massive court debt.
It doesn't mean the airport is about to conduct a fire sale, said board Chairman David Haines. But for developers who have had their eyes on any of the airport's 2,600 acres straddling Lehigh and Northampton counties, the authority for the first time is listening.
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So, if you're in the market for a 10,000-foot runway capable of landing a jumbo jet, the officials are almost certainly not interested. But if you want several hundred acres of expensive farmland to the north, they're all ears.
And if you have your eye on Queen City Airport in south Allentown, well, that's probably going to be open for heated debate.
"Some board members, including myself, have been receiving informal inquiries from brokers with interest in some of our property," Haines said. "What we've done is establish a way to review those offers."
The move comes two weeks after a Lehigh County Court master recommended LVIA pay the remaining $16 million it owes on a $26 million court judgment in the next four years. The judgment came during a 15-year court battle in which a judge ruled that in the mid-1990s the airport took 632 acres of development land from investors called WBF Associates.
The airport agreed last year to pay $10.4 million to one of the investors, but that left $16 million that Court Master Malcolm Gross says should be paid by the end of 2015. The problem with that, say authority board members, is under Gross' suggested schedule, the payment jumps to $5 million in Year 3, and more than $6 million in Year 4. That's money the airport simply doesn't have, and probably won't have unless it raises cash soon.
The authority had taken bids from companies that would have reviewed the airport's assets and determined which could be sold, but the study was nixed because the $300,000 to $400,000 the companies were demanding was too high.
That puts the job in the lap of the newly formed real estate committee. Ironically, the land Haines said he most wants to sell is the very WBF land the airport was forced to pay $26 million for taking. Airport appraisers say the property could probably fetch only about $8 million, but that would be enough to pay much of the bills for Years 3 and 4 of the repayment plan.
"The court master strongly suggested we look to sell the surplus WBF land," said Haines, who is on the six-member committee. "And the inquiries I've gotten focus specifically on that property."
Still, the real estate committee's charge is to review all offers. An authority board member, Allentown Mayor Ed Pawlowski, said he intends to use that opening to renew his plea that the airport sell all or a portion of the 210-acre Queen City Airport. Located along Interstate 78, it's the authority's most valuable property, and Pawlowski believes it could not only stabilize LVIA's shaky finances, but open Allentown to new development.
Haines contends Queen City is a key factor in keeping private planes off the main airport and has too many federal restrictions blocking its sale. Pawlowski disagrees, saying if authority board members don't at least consider it, they're shirking their fiduciary responsibilities.
"I definitely think this opens the door to talking about Queen City again," Pawlowski said. "You better believe I'm going to bring it up. We have a secondary asset that is not core to the running of the main airport. We should all be talking about whether we should be selling it."
The debate on what to sell will come later, but Haines is certain there will be interested parties. The reason for his optimism is that for the first time, real estate brokers can get paid to bring investors to the airport.
As part of creating the real estate committee, the authority agreed to pay brokers a commission for bringing investors to its doorstep. In the past, the airport wasn't seeking to sell its land and had a strict policy not to pay real estate agents any commission for bringing investors who ultimately buy airport property. Therefore, the airport simply wasn't on the radar of any real estate broker's search for development land for a client.
"Last I checked, real estate sales is not a nonprofit career," said authority board member Tony Iannelli, a former real estate broker who now chairs the Greater Lehigh Valley Chamber of Commerce. "Quality brokers were not going to bring us interested buyers unless they were going to get paid."
Haines said the new committee has not scheduled any meetings, but will when serious offers begin rolling in.
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