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"Mayor looks at privatizing Nashville airport to generate transitfunds"


Tuesday, June 27, 2017


Mayor Barry looks at privatizing Nashville airport to generate transit funds

By Joey Garrison and  Nate Rau

The Tennessean



Mayor Megan Barry's administration is exploring privatizing the operations of the city-owned Nashville International Airport to an outside management company to generate funding for mass transit in Middle Tennessee.


The mayor's office confirmed hearing a presentation in May from representatives of Oaktree Capital Management, a California-based investment firm that has also made bids to run government-owned airports in other cities.


Barry's Chief Operating Officer Riebeling downplayed the meeting as "preliminary," but he did say the privatization of the Nashville International Airport is something the city is looking at to help fund a $6 billion proposed transit system in the region.


Under the arrangement, a private company would pay Metro to enter into a long-term lease for the airport's operations.


Although no deal is on the table, Riebeling estimated a transaction could generate in the "low billions" for transit in Nashville.


Nashville monitoring privatization process in St. Louis


The Nashville Business Journal first reported on the May presentation.


Nashville's interest comes as the city of St. Louis won approval in April from the U.S. Transportation Department to explore the privatization of its airport.


"The mayor's office heard a presentation from experts on the concept of a private-public partnership to operate airports in a way that would generate revenue for public services," Barry spokesman Sean Braisted said in a statement.


"We are monitoring this process in St. Louis to determine whether it is feasible for a city the size of Nashville. If Metro could generate hundreds of millions of dollars in funds to pay for needs such as transit, while maintaining a high-quality airport that meets the needs of our growing city, we have a responsibility to the taxpayers of Davidson County to do our due diligence and explore the possibility."


Oaktree Capital Management is in the process of finalizing a long-term lease to operate Westchester County Airport in New York. The group has also expressed interest in doing the same for the Lambert-St. Louis International Airport Corporation in St. Louis.


"We're not talking to anybody substantively about this," Riebeling said. "It's one idea that we have presented. We're going to continue to monitor what goes on in St. Louis to see what make sense as we look at all options for transit funding. But there's no negotiations going on. There's no deals."


Transaction would involve long-term lease, not sale, of airport


Riebeling said the meeting came at the request of the firm, adding that the city must explore all options when major capital needs arise such as transit.


He also said the meeting shouldn't be seen as a statement on the performance of the Nashville International Airport, which he called "a very quality airport."


"The community has told us that transit is a major need in our community, so we're exploring different ways and different ideas that you could come up with to help finance projects," Riebeling said. "It's not something that's going to happen overnight and it's not something that might even happen at all."


San Juan, Puerto Rico is among other North American cities that use private management companies to run its airports.


Any transaction in Nashville would have to be done accordance to Federal Aviation Administration rules.


If the city does move forward, Riebeling said a deal would involve a long-term lease of the airport, not a sale. He said Metro would issue a request for proposals for operators if the city goes down that path.


On transit funding, Barry in April announced hopes to hold a public referendum in May 2018 on funding light rail and other transit projects through dedicated tax revenue streams. Barry has not formally presented a transit funding proposal.


Planned upgrades include more security lines, a new hotel and spacious "Grand Ole Lobby."


                 Planned upgrades include more security lines, a new hotel and spacious "Grand Ole Lobby."


Airport Authority board chair predicts a deal won't happen


Airport Authority board chairman Bobby Joslin said the board has not been involved in the talks and predicted privatization would not ultimately happen.


“I am still in the dark, which means the whole board is in the dark,” Joslin said. “From what I understand, this is nothing but a conversation piece. They are looking at all available means in regards to funding mass transit. Whether this would sit well with the community, I don’t know.


“There are so many hurdles to cross, it might be easier said than done."


Joslin said the timing is complicated because the airport is embarking on a $1.2 billion expansion plan and is in the preparation phase to issue bonds for the first slate of projects. He said the Airport Authority which oversees Nashville International Airport has $350 million cash on hand.


“I do find it odd that this is happening in terms of the timing,” Joslin said. “At end of the day, I don’t think this will ever happen.


“There are struggling commercial airports all across this country, we just happen to not be one. If I was St. Louis, Cincinnati, Memphis or Pittsburgh, my door would be open to these discussions. (But), this airport is a gem to this region — the accolades, the staff we have in place. It’s a well-oiled machine."


Management at the airport, overseen by CEO Rob Wigington, declined to comment.


Butch Spyridon, president of the Nashville Convention and Visitors Corp., said his organization is "not familiar with this particular opportunity" but said he's confident the CVC will be part of any conversations.


"It is obviously very early to jump to any conclusions, but mass transit and the BNA Vision Plan are both critical to our future success," Spyridon said.


The Nashville airport is on pace to its fifth-straight year of record-setting passenger traffic. In 2016, more than 12.9 million passengers traveled in and out of the airport.


In 2015, the airport was the subject of a scathing consultant's report detailing a top-heavy organization whose senior management has for years been “paternalistic, dictatorial and centralized.”


At the time, Wigington acknowledged the need to change and has worked to transform the airport's culture.


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