"Air cargo group is latest to draw up a plan for MidAmerica's field of schemes"

Sunday, March 4, 2012

Air cargo group is latest to draw up a plan for MidAmerica's field of
schemes
BY DAVID NICKLAUS
The St. Louis (MO) Post-Dispatch


MidAmerica Airport, which was completed in 1998, sits vacant on June 2,
2004. The total cost of the project in Mascoutah, including replacing a
military housing subdivision and two schools, was $305 million. 

Fourteeen years after NBC News featured MidAmerica Airport in a "Fleecing of
America" report, officials in St. Clair County are still trying to make
their aviation investment pay off.
 
And for the first time, the Mascoutah airport appears to have interest from
a private group that's willing to make a big investment without further
public funding.
 
Skeptics aren't ready to remove MidAmerica's white-elephant label, however,
until the group reveals more about itself and raises some real money.
 
"How gullible are they in St. Clair County?" asks Michael Boyd, an aviation
consultant in Evergreen, Colo. "This whole thing is a boondoggle; it's a
national embarrassment."
 
He was reacting to news that the county board had endorsed the issuance of
up to $550 million in bonds by a group calling itself Strategic Air Cargo.
The deal involves so-called conduit bonds, meaning that the county lends its
name and tax exemption but has no obligation to repay the money.
 
Gary Andreas, a development consultant in Chesterfield, is the spokesman for
Strategic Air Cargo. He said the group consists of five to 10 people, some
of whom have significant aviation experience, but he wouldn't disclose any
names.
 
Andreas said the group has been working on its plan for three and a half
years. The plan is to buy four Boeing 747s, build an office-warehouse
complex at MidAmerica, and launch a cargo airline that would serve distant
points in Asia, South America and elsewhere.
 
Despite the secrecy surrounding the group, which is not yet incorporated,
Andreas said the county board had plenty of information on which to act.
 
"Nobody on the St. Clair County side has gone into this blindly," he said.
"There are things they had a right to know, and there are things they didn't
really have a right to ask, and it's been played that way."
 
Mark Kern, the county board chairman, said he was encouraged by the fact
that Strategic Air is working with BB&T Capital Markets, a division of a
major North Carolina bank.
 
Kern also said he's seen other interest in MidAmerica of late, including a
recent visit from a major Chinese buyer of American food products.
 
"Things are starting to come together" for the underused airport, he said.
 
Taxpayers might want to withhold judgment on that.
 
Over the years, the county has subsidized a few short-lived passenger
operations, built a refrigerated cargo warehouse, then turned that underused
building into a Boeing plant. It's now subsidizing a new produce warehouse
to replace the old one.
 
Strategic Air isn't asking the county for any money, Andreas emphasized. If
the group issues tax-exempt bonds, it would enjoy an indirect subsidy from
federal taxpayers, but Strategic Air alone would be on the hook to repay the
bonds. He said the group may not borrow the whole $550 million if backers
decide to substitute equity for debt.
 
That's refreshing. But Boyd doesn't think the latest venture will be any
more successful than past attempts to build traffic at MidAmerica.
 
"You have plenty of capacity at other airports closer to where cargo would
want to go," he said. "What is near there that produces anything that needs
to go to China by air? ... It's a pipe dream."
 
Kern notes that MidAmerica has its advantages, including plenty of
developable land and what he says are the lowest landing fees in the nation.
 
It also has a lot of history to overcome. Until Andreas' group raises some
money and starts flying, MidAmerica will keep its reputation as a field of
schemes. 

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