Purchase, New York, resident Jonathan Wong, who keeps his private aircraft at the Westchester County Airport.
Westchester County Executive Rob Astorino balanced his 2017 budget on $15 million from his plan to privatize the county airport through a long-term lease.
His $150 million deal with Oaktree Capital Management, negotiated in secret in 2016, fell apart in December after the county Board of Legislators insisted that the process be opened to the free market through a Request for Proposals.
The RFP was issued on April 3. Tax Watch reviewed the RFP and found five takeaways for Westchester residents as the county considers becoming the only airport in the continental U.S. to join the federal Airport Privatization Program.
1. There are protections for fees charged at airlines, but not for those who park there
The RFP protects the airlines, corporate fleets and the owners of private airplanes. Fees charged the airlines can’t rise more than the rate of inflation, unless 65 percent of the airlines agree to such an increase, which is a requirement of the federal program. Westchester has extended that protection to the private airplane operators whose fees can’t rise faster than those charged to the airlines.
But there’s no cap in the RFP on parking fees at the terminal’s parking garage, which is scheduled to come under county ownership — and rate control — in 2024. That's when Westchester County, if it doesn’t privatize the airport, could decide to lower rates to better serve its customers.
That likely won’t happen if the privatization deal goes through and the garage is transferred to the private operator. The parking concession would be a profit center for the privatized airport, and there’s no cap on how high those parking rates could rise.
But County Board of Legislators Chairman Mike Kaplowitz, D-Somers, citing competition from the Park2Fly parking/shuttle operating from Purchase College and a proposed garage nearby, predicted that the competition would lead to a "fair market rate" for parking at the airport.
"If given our preference, we hope that parking fees would be as low as possible," Kaplowitz said.
Westchester County Legislator MaryJane Shimsky, stands outside the gate of Signature Flight Services at the Westchester County Airport. Signature Flight Services agreed to an extended lease at the airport.
2. Police could be covered
Under Oaktree’s deal, the private operator would have paid almost half the $10 million cost of police coverage at the airport by the Westchester County Police Department. Over the ensuing 39 years, the payments increase by the rate of inflation. But critics warned it was a bad deal for county taxpayers because the cost of police was likely to increase at a faster rate.
The RFP "assumes" that the private operator will reimburse the county “for all services the county provides the airport.” That means the operator would have to shoulder all the county police costs, though neither County Executive Rob Astorino nor the county’s airport consultant, Doreen Frasco, would confirm the RFP’s intention.
County Legislator MaryJane Shimsky, D-Hastings-on-Hudson, who chairs the legislature’s Infrastructure Committee, said the escalating costs of the county police under the Oaktree deal had troubled many legislators last fall.
At $5 million a year, covering the county police costs adds at least $200 million over what Oaktree was willing to pay. This clause could cut the amount of cash offered Westchester.
But Kaplowitz said the cost of the county police would be among the issues that will need to be negotiated during the selection process.
3. Time is tight
Proposals are due July 14, with the county planning to name its preferred vendor on Aug. 21. The Astorino administration wants county board approval just a month later, on Sept. 25. Then the county will send the proposal to the Federal Aviation Administration for approval, which Westchester expects by year’s end.
Several issues could wreak havoc with Westchester’s tight time-frame. The proposal needs support from 12 of 17 legislators, all of whom will be up for election on Nov. 7. Astorino is seeking his third term while Democratic contenders Ken Jenkins, a Yonkers county legislator, and state Sen. George Latimer, D-Rye, have voiced opposition to the deal.
Shimsky said there’s talk about delaying a vote until after the Nov. 7 election.
“The time line is aspirational,” she said. “If we can’t get all our questions answered, that timeline is going to have to fall by the wayside.”
Then there’s the distant possibility of a referendum. Under county law, Westchester voters could force a referendum on the 40-year lease by submitting a petition with 22,199 signatures — 10 percent of those who voted in the 2014 gubernatorial campaign.
4. The deal could starve the airport in the out years
The winner of the privatization deal would be responsible for all of the airport’s capital needs, the RFP states. Sources of funding would include federal funds through the Airport Improvement Plan, the federal Passenger Facility Charge program which brings in $3.5 million a year, and the private company’s own funds.
Airport assets, such as the terminal, runways, hangars and parking facilities have a long useful life. Under the RFP, the operator would be responsible for handing over the airport property to the county at the end of the 40-year lease with a minimum of five years of useful life left in them.
Andrew Crosby, assistant professor of public administration at Pace University, said the out-years of the deal could spell trouble for Westchester, when there would not be enough time for the private operator to receive a profitable return on his investment.
“This could end up putting Westchester on the hook for huge capital costs down the road,” he said. “They are going to invest where there is a return on their investment. You have to wonder what the operator would do in year 35 if a major hangar needs to be rebuilt.”
Purchase resident Jonathan Wong, who keeps his private plane at the airport, feared disinvestment by the private operator in the lease's later years.
"They are there to maximize their profits," he said. "The operator's incentives would not be aligned with what the county needed."
Kaplowitz, who extolled the RFP in his State of the County response last week, said that hand back requirement was an improvement over Oaktree's plan, which lacked such a provision. But he opened up the possibility that Westchester would take on some responsibility for capital investment in the lease's later years.
5. Negotiations to ensue
Another takeaway from the RFP: It's a starting point for negotiations between the selected operator, the county board, and Astorino.
Kaplowitz expects that the county and the operator would share the cost of capital investments at the airport in the later years of the lease.
"As the process continues, we will negotiate terms on capital investment that are fair to both the operator and county taxpayers," he said.
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