CAA: GA News, "50-year New Orleans area airport lease finally on table"

["Stephen Irwin" <stepheni@xxxxxxxxx>]

Friday, March 22, 2002

50-year airport lease finally on table 
Lakefront proposal seen as N.O. catalyst 
By Frank Donze 
The New Orleans (LA) Times-Picayune


The Orleans Levee Board is poised to take a significant step today in
its two-year quest to bring private management to Lakefront Airport, a
once-profitable facility that has become a major liability for the state
agency.

A board committee that has studied the privatization issue since 2000 is
expected this afternoon to approve a 50-year lease with a joint venture
between American Airports Corp. of Santa Monica, Calif., which runs
nearly two dozen airports nationwide, and a local firm headed by
investment banker Larry Sisung Jr.

Approval of the lease would authorize the board's staff to move the
process into its final phase: application for participation in an
exclusive Federal Aviation Administration program that would let the
Levee Board pump any savings associated with privatization into its
flood-control budget. Board officials say the designation is critical to
the cash-strapped agency's effort to straighten out its finances.

The full board has scheduled a 6 p.m. hearing for local residents to
comment on the privatization plan, which must undergo a federal review
that could last six months to a year. As part of its analysis, the FAA
might hold an additional public hearing, board officials said.

Without the FAA's blessing, political entities that sign leases with
companies to run their airports face restrictions on how profits can be
used. The Levee Board has operated Lakefront Airport since it opened in
1934 near the Industrial Canal on Lake Pontchartrain's south shore.

Used mainly by business jets and private aircraft, Lakefront Airport is
one of the busiest airports of its type in the nation. But the collapse
of Louisiana's oil industry in the mid-1980s led to a reduction in air
traffic and, in recent years, annual budget shortfalls of $2 million or
more.

Because federal grants represent a large percentage of the operating
expenses for most airports, the FAA requires that all revenue generated
by the facilities be used for airport-related purposes.

The 1997 act of Congress that established the privatization program
limited participation to five airports. Thus far, only one, tiny Stewart
International Airport in upstate New York, has made it through the
process.

Three airports have withdrawn their proposals or had their applications
rejected by the FAA. There are no applications pending, though the
possibility of adding New Orleans' Louis Armstrong International Airport
to the list emerged as a theme during the recent mayoral campaign.

Catalyst for development

The lease that the airport committee will consider today is a product of
more than six months of negotiations between American Airports officials
and the board's staff. AAC won an 18-month competition for the job in
August after its only remaining competitor withdrew.

Although the process has taken longer than expected, board member and
airport committee chairman James Livingston said he is satisfied with
the result.

"If we want economic development in this city, the Lakefront can be part
of the catalyst," Livingston said. "If we do it right and create an area
for general aviation to prosper, this could be a real opportunity for
New Orleans.

"You'd always like to get more money, but considering where we're at and
where we can potentially go if it's run well, I think the board and the
community as a whole will reap considerable benefits in the long run."

Under the offer on the table, American Airports guarantees the board
lease payments of $300,000 in the first three years. Beginning in the
fourth year and continuing throughout the life of the lease, the company
guarantees either $300,000, or 11 percent of the first $3 million in the
airport's gross revenue plus 30 percent of the gross revenue in excess
of $3 million -- whichever is greater.

All the numbers involved would be adjusted annually to account for
inflation.

Although the company would have no obligation to hire any of the
airport's three dozen employees, AAC officials have agreed to interview
the workers and give them "due consideration for available positions."

Bringing in service

The underlying strategy for improving the airport's fiscal health, the
Levee Board's consultants say, is to improve the efficiency of
day-to-day management and explore ways to develop more than 100 acres of
vacant land on the site. Among the money-making proposals that have been
suggested is luring businesses that specialize in aircraft maintenance
and the sale of plane parts. Pilots who use the airport now must travel
to Texas or Florida to have their planes serviced.

Levee Board members have said they have no desire to bring commercial
service to the airport, choosing instead to explore small charter
flights that would cater to the city's tourism and casino industries --
a change they say would bring no appreciable noise increase in nearby
neighborhoods. American Airports officials have said they will explore a
host of other possible amenities for the airport, including a hotel,
restaurants, convention meeting space and car-rental services.

The company is proposing a $91 million capital improvement plan during
the first 15 years. About $56 million of the total would come from
federal grants, with the rest put up AAC or outside investors.

Eighty percent of the management venture will be owned by American
Airports Lakefront LLC, a subsidiary of American Airports, which is
owned by American Golf Co. Several years ago, American Golf, which
operates more than 300 municipal golf courses nationwide, bought
COMARCO, which manages nine airports, bringing the number of airports in
its portfolio to 21.

The local component of the management team is United Professionals Co.
LLC, which owns 20 percent. Its principals are Sisung, former
superintendent of the Jefferson Parish school system, and his sons,
Larry J. Sisung III and Robert Lane Sisung.

Certain restrictions apply

Any development exceeding two acres would require Levee Board approval.
The management team would pay property taxes on any improvements.

The lease prohibits a range of uses, including gambling establishments,
marinas, cemeteries, prisons, funeral parlors, fraternity or sorority
houses, landfills, stables, tattoo parlors, trailer parks, welfare
agencies and incinerators. Mineral exploration also is banned.

AAC also has no authority to impose tolls on any roads on the airport
site.

Though the board has no plans to sell the airport, American Airports
would have the right of first refusal on a purchase for the life of the
lease.

Under the agreement, AAC agrees not to demolish or damage the terminal's
"Fountain of the Four Winds," the art-deco sculpture by the late Enrique
Alferez. Although the lease allows for the fountain to be moved, the
board would have final say on its new location.

For the first three years of the lease, the Levee Board would pay no
rent on the offices it occupies in the terminal. Before then, the board
hopes to relocate to a nearby building it owns on Franklin Avenue.


   Post your opinion on this story in the CAA General Aviation Forum
http://www.californiaaviation.org/cgi-bin/dcforum/dcboard.cgi?conf=DCConfID2

*****************************************