Sunday, March 19, 2017
How Westchester airport lost $7 million in passenger fees in two years
Westchester lost the right to collect an estimated $7 million from airport passengers from 2014 to 2016 because its building plans didn't move forward quickly enough
By David McKay Wilson
The Lower Hudson (NY) Journal News
The Westchester County Airport on Nov. 2, 2016.
The Westchester County administration’s inability to move forward on improvement projects at Westchester County Airport cost the public transportation hub an estimated $7 million over 25 months from 2014 to 2016, according to documents and interviews.
Starting in June 2014, the Federal Aviation Administration invoked a rarely used tool to suspend Westchester’s right to assess the $4.50-per-flyer Passenger Facility Charge because the county had failed to deliver airport improvement projects it had promised to build.
At the time, the administration of Westchester County Executive Rob Astorino had spent just $5 million of $35 million the county had collected from passengers, according to federal documents.
The tale of how the administration of Westchester County Executive Rob Astorino lost $7 million emerged from a review of hundreds of pages of documents obtained from the Federal Aviation Administration, which administers the PFC program.
Among the findings in the documents were:
“Leaving $7 million on the table is a cause for concern,” said Legislator MaryJane Shimsky, D-Greenburgh, who chairs the legislature’s Committee on Infrastructure.
Legislator David Gelfarb, R-Rye Brook, said county needs to make sure that Westchester remains eligible for the passenger-charge program. Documents show that Westchester collected an average of $273,000 before the suspension.
"I would hope that we get any available money, like the PFCs, that we are entitled to," said Gelfarb.
The passenger charge is how regional airports, like Westchester County Airport, can glean financial support from travelers who live outside the taxing jurisdiction of the entity that runs the facility. Westchester County Airport, known as HPN, borders the state of Connecticut, and many travelers drive here from Fairfield County, Connecticut.
It’s also popular among travelers from Putnam and Rockland counties who opt not to fly from New York City airports.
Loss was good for taxpayers
Astorino spokesman Ned McCormack said the county’s inability to collect the charge for 25 months was actually a win for taxpayers.
McCormack denied that Westchester had actually lost revenue when the administration’s construction plans fell through at the airport. If Westchester didn’t have improvement plans in the pipeline to qualify for the passenger fee, then it favored those who fly from HPN, McCormack said.
County spokesman Ned McCormack said the airport's future capital plan depends on what happens with the request for proposals for privatizing the airport.
“The PFC program is designed to ensure that money will be available when projects come on line, but also to keep money in the pockets of taxpayers until projects are vetted and approved,” he wrote in an email. “The PFC acts like a checking account for designated bills. It is not a savings account or rainy-day fund for unspecified contingencies.”
HPN plans in flux
Discussion of the PFC charge in Westchester has arisen a year after the US Congress rejected a proposed $2-a-passenger increase in the charge to$6.50 per flight, which is currently under study by the US Transportation Research Board. Westchester County Airport has long been managed by a private company. But the capital program has remained under the purview of the Westchester County government.
It comes as Westchester’s plan for the airport under Astorino remains influx.
In 2016, Astorino sought legislative approval to relax passenger limits at the airport, but withdrew the initiative after legislators and residents balked. Then he proposed leasing the airport over 40 years in a no-bid deal to a private equity firm, becoming the only airport in the continental US to participate in the federal privatization program.
Westchester County Executive Rob Astorino has yet to comment on whether he backs a state bill that would require New York state to pay property taxes on 7,000 acres it owns in Westchester.
But that plan was also withdrawn, and remains on hold as a consulting firm prepares a request-for-proposals to test the open market for other companies possibly interested in running the airport.
It remains uncertain whether the private company would take control off the airport’s capital program. Also yet to be decided is how to move forward on a $32-million plan to upgrade the passenger terminal.
“The project is on hold awaiting the outcome of the RFP for the public-private partnership of the airport, which will determine the design and funding source or sources,” said county spokesman McCormack.
Under FAA rules, the company that takes control of an airport under its privatization regulations would collect the passenger charges to address improvement needs at the airport, said FAA spokesman Jim Peters.
At today’s rate, the private operator would receive an estimated $130 million for airport projects over the term of its 40-year contract. That could grow considerably if the US Congress agrees to increase the fee.
The Westchester County Airport on Nov. 2, 2016.
FAA spokesman Jim Peters said that the suspension of an airport’s ability to collect the passenger charge was rare. He said the federal agency worked with Westchester to come up with a plan that met federal guidelines.
“Although rare, the FAA has worked with airports though the informal resolution process to reach a mutually beneficial solution and avoid termination,” he wrote in an email. “This was the case with Westchester County Airport.”
How PFC program works
Under the PFC program, commercial airports win authorization to collect the passenger charges after submitting plans for airport improvements to the FAA. Once approved the airport operators must commence the work within two years.
The FAA began raising issues about Westchester’s compliance with the program in May 2013 when it told the county it was in violation because it hadn’t moved forward quickly enough on its plans to build covered walkways, the baggage screening building, and the de-icing project. The screening facility is a 20,000-square foot two-story building adjacent to the terminal that will increase the passenger terminal’s size by almost 50 percent.
In 2013, Westchester deleted those construction projects, and downsized their plans so that the county was only on the hook to design the walkways and baggage screening building within the two-year time-frame.
Almost a year later, Westchester ran into problems with the de-icing facility plan, which would have improved its system for collecting the chemicals sprayed on airplane wings during snow or ice-storms. One problem was misleading drawings that underestimated the extent of the project, according to the documents.
“Recently submitted information reveal the terminal ramp de-icing area to be 67,408 square yards and not the 39,591 square yards per the sketch on the previous application,” the FAA wrote in a memo detailing Westchester’s problems with the PFC program.
The fluid is now collecting into storage tanks, and either metered out to the Blind Brook sewage treatment plant in Rye, or trucked to Mount Pleasant, and pumped to the Yonkers sewage treatment plant.
In 2013, Westchester was to install underground two 200,000-gallon tanks. But design engineers in February 2014 discovered solid rock there. The county decided that blasting at the airport was not an option. By March 2014, Westchester had amended its PFC plan only design the de-icing project. That resulted in Westchester having not enough work in the pipeline that would be paid for by the PFC charges.
A plane gets de-iced at Westchester County Airport.
The FCC suspended the Westchester PFC program in August, 2014 until it could come up with a plan to use the PFC funds it had collected, and would collect once the program was reinstituted.
It took Westchester two years to get back in.
A stern memo from the FAA to Westchester in November, 2014 let the county know it had some explaining to do when it attempted to jump-start the PFC process that fall.
“I strongly urge you not to forward this application …. as your PFC program is currently suspended, and new PFC applications are not eligible at this time,” wrote Ryan Allan, FAA community planner. “A more pertinent course of action would be to address the issues with the program that led to the stop in collections.”
The plan for the de-icing system was revised to feature two 150,000 gallon above-ground tanks
The new facility, however, appears to conflict with a plan proposed by Oaktree Capital Management, the private equity firm that has proposed giving Westchester $140 million to obtain a 40-year lease to run the airport, and have access to its $2 billion in revenues over that time period.
Oaktree told Westchester it would build a treatment plant at the airport site to process sanitary sewage and the de-icing fluid. That would negate the need for a facility to upload the de-icing fluid into truck tankers.
McCormack said the county needs to assess Oaktree’s proposal in light of the upcoming RFP.
The walkway project was eventually completed, McCormack said.
The baggage screening facility, which is linked to the terminal through a conveyor belt, was originally scheduled for completion in the fall of 2015, documents show. But Westchester ran into problems designing it, according to correspondence from Westchester to the FAA. The baggage facility was completed in August, 2016.