"An airport for a park just doesn't make sense"

Tuesday, December 5, 2006

Column
An airport for a park just doesn't make sense
By BILL VIRGIN
The Seattle (WA) Post-Intelligencer


Skeptical of the motivation, dubious of the supposed benefits, unhappy about
the likely detrimental effects -- that sums up Seattle P-I reader reaction
to the county's proposal to take over the Eastside rail corridor and convert
it to a biking and jogging trail.

"The results will be disastrous to future transportation plans around this
area," wrote one. "We can't figure out why all the rush to destroy a viable
transportation corridor," said another correspondent. "We cannot abandon
major transportation corridors, particularly in the Puget Sound area where
the topography and pre-existing development limit road and rail locations,"
added a third.

Yet another reader added a different perspective: The other half of this
proposed deal -- having the county hand over King County International
Airport (Boeing Field) to the Port of Seattle -- is no bargain, either.

"Who would want to trade a billion-dollar asset for a liability?" the reader
wondered. "And a park is a liability as soon as it's acquired. It needs
improvement, maintenance (and) security, and is a constant drain. An
income-producing asset should not (be) considered as trading stock for a new
liability."

In technical terms the county-owned trail still would be a physical asset.
But as the reader points out, it would not be a revenue-producing asset
(unless the county executive has in mind a scheme to place toll booths along
the trail's route, or have joggers and cyclists strap EZ Pass transponders
to themselves).

And the airport is a revenue-generating asset -- one that generates enough
revenue, in fact, that it pays for itself, with no contribution coming from
the county's general budget.

Boeing Field's anticipated budget for 2007 is $12.9 million, director Robert
Burke said. Close to three-quarters of that comes from ground leases of
property around the airport (there are a few parcels, such as Boeing's
military operations and the Museum of Flight, that are privately held). The
balance comes from landing, fuel and aircraft tie-down fees and other
miscellaneous sources.

The airport does pay the county for certain services but otherwise there's
no mingling of the budgets, Burke says. Excess of revenue over expenses goes
to capital and reserve funds. The airport does get grants from federal
sources such as the Aviation Trust Fund, which was tapped for the recent
runway-rebuilding project.

"We are not in the red," Burke says firmly.

So how would you value something like Boeing Field? By cash flows from
revenue? At $12.9 million Boeing Field doesn't sound like a very big
operation. That amount could be gigged a bit through new leases or
redeveloping some parcels. Burke says there are some parcels that could be
developed on the west side of the airport. Properties on the east side are
tied up in leases that won't be available for renegotiation for the next two
to five years.

Perhaps the better measure might be property sales along the 590- to
610-acre airport. Given what property values in King County have been doing
in recent years, perhaps there's huge value to be unlocked by selling land.

Or maybe the most accurate valuation is as its replacement cost as a working
airport. Boeing Field has a 10,000-foot main runway. Sea-Tac Airport's
existing runways are 11,900 and 9,425 feet long, and the third runway now
under construction will be 8,500 feet long. What would it cost to replace a
close-in airport with a runway that long, used by significant cargo
operators as well as the region's major private employer? What's the value
of having that airport as a possible second regional airport should Sea-Tac
reach capacity?

That last calculation, though, might have to be multiplied by a discount
factor that would significantly lower Boeing Field's value: It might not be
able to grow much beyond its current traffic level and current mix of cargo,
Boeing, general aviation and (very limited) passenger operations.

Last year's furor over Southwest's proposal to move passenger operations to
Boeing Field is a good indicator of the kind of opposition that would
develop should major expansion of traffic and usage at that airport be
proposed again.

It might be argued that King County doesn't belong in the airport business,
even if owning one doesn't cost it any money. It also might be argued that
it makes more sense for the Port of Seattle to own Boeing Field, because
it's already in that business and might be able to squeeze some (oh, that
dreadful word) synergies out of operating two. (One ulterior motive for the
port is that by owning Boeing Field, it eliminates one option for a
passenger airline to negotiate lower landing fees by threatening to move.)

It might even be argued that, even if it's a bad deal financially for the
county, it's better that Boeing Field be moved out of its control. Given its
odd strategy for rail transportation, who knows when King County will decide
that Boeing Field would be perfect for the world's largest off-leash dog
park?


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