UPDATE: Astorino Budget Hinges on Airport P3 Deal

John Jordan | November 2016

Westchester County Executive Robert P. Astorino with Emmett McCann, managing director at Oaktree and Marsha Gordon, president and CEO of the Business Council of Westchester.

WHITE PLAINS—While business groups have praised Westchester County Executive Robert Astorino’s recent public-private partnership (P3) proposal at Westchester County Airport, the county executive’s proposed $1.8-billion budget is predicated on the Westchester County Board of Legislators approving the plan before the end of this year.

In fact, the Board of Legislators has until Dec. 27 to pass the county budget, which as proposed by County Executive Astorino comes with no county tax increase or workforce reductions. However, county legislators have noted that Astorino’s budget has a $15-million shortfall that will be filled by the $140-million, 40-year lease deal with Los Angeles-based Oaktree Capital Management, L.P. and therefore must be approved by Dec. 27th as well.

The P3 deal before the County Board of Legislators calls for an upfront payment of $130 million from Oaktree to the county, which after revenue share and expenses, will provide the county with net proceeds of $111 million over the course of the lease. The first year new net revenue to the county will be $15 million; followed by new net revenue of $5 million in each of the next four years; followed by average new net revenue of more than $2 million a year for the remainder of the lease. These payments can be applied to the county’s operating budget as early as 2017.

Since the County Executive released his proposed budget and the airport lease deal in early November, the County Board of Legislators has scheduled budget meetings as well as sessions focused on vetting the airport lease deal, which requires a supermajority vote of 12 legislators for approval. If the lease deal is not approved, the County Board would have to make up the $15-million budget shortfall.

On Nov. 11th, the day after County Executive Astorino released the 2017 county budget, Board of Legislators Budget and Appropriations Committee Chair Sheila Marcotte stated, “I remain committed to delivering a budget that provides the services our residents need while protecting taxpayers.  As unfunded mandates from Albany and the costs of goods and services continue to rise, we have to find alternative revenue streams to fund county government. Optimizing revenue at an existing and critical county asset like the airport is a smart and resourceful way to do that.”

However, Board of Legislators Chairman Michael Kaplowitz warned that the lack of time given to review the 40-year airport lease, along with the unbalanced budget, might prevent the BOL from reaching the 12-vote supermajority required for the airport lease.

“The airport lease may be a good deal and I hope it is but a contract of this length and scope requires serious investigation and review. There are a number of critical considerations regarding this lease beyond the financial implications; we must be sure that there will be no negative environmental impact for our neighbors around the airport or for the reservoir, which abuts the airport property. We also must consider how we will handle the increased passenger flow both at the terminal and on public streets around the airport.” Kaplowitz said.

He added, “The BOL will act in the best interest of taxpayers and if this deal is as sound as the county executive has claimed then we should be able to get all the answers to the many questions Legislators have raised in order for a vote to take place before we pass the budget on or before December 27th.”

However, Kaplowitz told the Journal News in a published report on Nov. 21st that he would like the P3 airport lease to be subject to a Request for Proposals. The lease deal did not go out to bid and the current airport manager AvPorts has reportedly told the County Board that it would be interested in placing a bid on the long-term airport management proposal.

“What I’m trying to do is reset the process out in the open, be as transparent as possible,” Kaplowitz told the Journal News. “Getting full value for the people of Westchester County requires that there be an RFP process.”

John Jordan
Editor, Real Estate In-Depth