Raleigh’s “conservative revolution” is undertaking an effort to take the management of Charlotte’s Douglas International Airport from a city authority and transfer it to a REGIONAL authority. *Oh, Goody. Let’s allow even more politicians and bureaucrats to get a finger in the pie. That’s sure to increase managerial competence and efficiency. *
The Queen City is a fiscal mess. The city manager describes the place as being “in decline.” For about the last dozen years, Charlotte has held the title as the highest-taxed locality in North Carolina. The city council just doubled the food tax to finance improvements to Jerry Richardson’s football stadium. Mayor Redd Foxx was on MSNBC the other day musing about raising taxes even further to compensate for Little Barry’s sequester.
Here’s more about the thinking behind the current effort in the legislature to modify the airport’s management authority:
The bill to transfer control from Charlotte to a regional authority was on the fast track, but now that bill has run into serious turbulence.
The state Senate was set to approve the bill today until the issue of airport bonds stopped everything.
Charlotte Douglas is more than $800 million in debt, and the city – running things there since 1935 – financed that debt over the course of many years with airport revenue bonds.
Those bonds were issued with conditions, and there is no provision in them for transferring airport assets, which is what’s being proposed right now in Raleigh.
State lawmakers looking to erase Charlotte from the airport equation thought the bonds could simply be transferred from the city to whomever takes over.
But because there is no such agreement in place with bond-holders, the city could technically go into default if the airport bill passes.
To make matters worse, WBTV obtained a letter to the city’s CFO today that says the city doesn’t even know who the bondholders are.
The City may be able to find out, the letter says, at substantial cost and effort, but there is no incentive for bondholders to agree to the state’s plan.
A regular reader of this site — a veteran observer of and participant in politics at the state and CharMeck levels — pointed out another option leaders ought to consider — privatization. Specifically, a deal similar to what the FAA recently approved for the San Juan Airport in Puerto Rico:
The U.S. government has approved a plan to privatize Puerto Rico’s main airport.
The Puerto Rico Port Authority has announced a deal to lease San Juan’s Luis Muñoz Marín International Airport to Aerostar Airport Holdings LLC for 40 years.
If it goes ahead with the plan, the airport would be the first major U.S. airport run by the private sector.
The privatization is part of a pilot project by the Federal Aviation Administration to allow public private partnerships for a select few airports. This would be the first major passenger airport to go forward.
Aerostar would make a $615 million up-front payment to the port authority. The port authority currently owes nearly a billion dollars in long-term debt and would thus benefit from the $2.57 billion deal.
Aerostar plans to finance the up-front payment through $350 million in investment grade bonds and $265 million in equity.
Aerostar is to make revenue-sharing payments to the port authority in the following years.
If San Juan can pull in $2.57 billion, Charlotte Douglas has got to be worth THREE TIMES as much. Charlotte could use the private sector-generated income to pay down that $800 million dollar debt, and possibly finance some of those other projects they’re looking at (without having to bleed the city’s ever-shrinking tax base even further).