County Issues RFP to Privatize Management, Operations at Westchester County Airport

John Jordan | April 19, 2017

WHITE PLAINS—After a proposal to sign a long-term lease with a private investment firm to manage and operate Westchester County Airport met with resistance from county legislators, the Public-Private Partnership initiative is moving forward after all.

Westchester County issued a Request for Proposals (RFP) for a Public-Private Partnership for the “Lease, Management Operation, Maintenance and Improvement of Westchester County Airport” on April 3rd. Bids are due by July 14th.

The county stated in the RFP issued by the Westchester County Department of Public Works and Transportation that it hopes to select a winning proposer, sign a lease agreement and secure necessary FAA approval by the end of this year. The county in the RFP has proposed a long-term lease agreement that by law could run as long as 40 years.

In November 2016 Westchester County Executive Robert Astorino proposed a plan to implement a public-private partnership whereby Oaktree Capital Management, L.P. would manage operations at Westchester County Airport under a 40-year-lease deal. The long-term lease deal was structured to save taxpayers more than $140 million, improve the overall passenger experience, and strengthen environmental protections, according to the County Executive. However, after criticism from the County Board of Legislators over not putting the project out to competitive bid, the county hired Frasca & Associates, LLC, a transportation consulting and financial advisory firm, to conduct an RFP to select a new private operator for Westchester County Airport.

The airport, which is located on 702 acres, serves an average of 1.75 million passengers per year. The airport is currently managed by AFCO/AVPORTS Management LLC under a contract with Westchester County.

In the RFP, the county stated it has seven goals in finalizing a P3 with a private entity: generate revenue for the county to use for non-airport purposes, preserve the quality of life of the surrounding community’s by increasing the “airport’s role as an “economic engine and business gateway for the county,”…increasing the airport’s financial performance by using the private entity’s experience and expertise, implementing capital improvements, strengthen environmental protections and protect the county from airport financial liability.

The county also wishes to enhance airline passenger experience and airline operations and efficiency at the airport by having the winner bidder invest in technology, infrastructure and amenities that will improve the passenger experience and airport operations. Among the investments the county listed in the RFP included: the redesign the passenger lounge with enhanced seating; reconfiguring the ticketing and boarding areas; improving automobile parking with valet and garage check-in options; enhancing the arrivals area with new baggage claim equipment; and the upgrade of concessions and restaurants with more food and dining offerings, including a mix of brand names and locally accented concessions.

Westchester County Executive Astorino said he is hopeful that the RFP will generate multiple bids that could perhaps fuel even higher revenues than the original P3 proposal with Oaktree Capital Management was expected to secure for the county.

County legislators have also stated that for a P3 to be finalized, the long-term agreement would have to bring in significant revenue for Westchester. After hearing a report from airport consultant Frasco & Associates, L.L.C. at a meeting last month of the Board’s Committee of the Whole, Legislator Ben Boykin (D), said, “As a member of the Airport Advisory Task Force that helped to select this firm, I have stated from the start that any outcome must wholly benefit Westchester County taxpayers for years to come—not just fill a short term budget gap. Unlike the last time around, we must seek bidders in a fair and open bidding process. If that means that the best thing for the taxpayer is no deal, then that is an outcome we should be pleased with. Any transaction must be sensitive to all stakeholders—our taxpayers, airport customers, surrounding residents, while protecting our environment.” Boykin is the chairman of the three-member Airport Advisory Task Force.

County Legislator MaryJane Shimsky (D), chair of the Committee on Infrastructure and a member of the Airport Advisory Task Force, said, “As we embark on this next part of the process, we must insure that any deal we consider is in the best long-term financial interests of Westchester County’s taxpayers; and that it protects the traveling public, the neighboring communities, and the environment. In my mind, only deals that properly address those four concerns—the county’s long-term financial interests, the traveling public, the neighboring communities, and the environment—are worthy of consideration.”

Legislator Francis Corcoran (R), the third member of Airport Advisory Task Force, stated, “With tens of millions of dollars in revenue virtually trapped at the county airport because of FAA regulations I believe the county’s proposal to partner with a private company to unlock those airport revenues for general budget use is a smart and resourceful plan. There aren’t a lot of companies with the experience, expertise and capital to take on a partnership of this scope and length. I look forward to hearing the proposals that result from this RFP.”

County Executive Astorino’s original proposal with Oaktree Capital Management was well received by the major airline tenants at Westchester County Airport. such as JetBlue, American and United, as well as the local business community.

The P3 proposal was made possible by Westchester’s eligibility in a Federal Aviation Administration program that allows small to mid-sized airports to be run as public-private partnerships.

Highlights of the Oaktree proposal included the county receiving an upfront payment of $130 million from Oaktree, which after revenue share and expenses would have provided the county with net proceeds of $111 million over the course of the lease.

First year net revenue to the county was proposed to be $15 million; followed by net revenue of $5 million in each of the next four years; followed by average net revenue of more than $2 million for the remaining years on the lease.

Oaktree committed to spend at least $30 million in Oaktree-funded capital improvements in the first five years, in addition to other federal funding available to the airport. Oaktree also was to make significant additional investments over the course of the lease. The $30 million in Oaktree capital spending was expected to produce an estimated 300 construction jobs.

John Jordan
Editor, Real Estate In-Depth