Saturday, March 22, 2008
Revenue projections may determine who runs Oceanside airport
By CRAIG TENBROECK
The San Diego (CA) North County Times
OCEANSIDE —- At first glance, the two companies vying to operate and renovate the Oceanside Municipal Airport have proposed similar deals with the city. Both want to lease the 50-acre airfield for several decades. And both have agreed to build the facility according to the airport’s master plan, adjusted for market demand. But there is one striking difference. One of the candidates —- Los Angeles-based Airport Property Ventures —- claims it can funnel several million dollars more into the city’s coffers over the long term.
During the first 25 years of a 50-year agreement, Airport Property Ventures estimates that it could net roughly $11 million for Oceanside, company officials have said.
The other applicant, Santa Monica-based American Airport Corp., has estimated that it would generate $7.4 million for the city over a 40-year term, officials said.
Largely because of those revenue projections, city staffers said, they have recommended that the City Council authorize negotiations with Airport Property Ventures.
But what’s best for the city’s bottom line may not be the best for everyone, some airport watchers say.
“One (company is projecting) so much more than the other you have to be a bit skeptical,” said Ben Myers, president of the Oceanside Airport Association, a politically active group of pilots and airport supporters.
“There’s only so much space to develop out there at the airport, and only so many hangars you could install if you stacked them end to end,” Myers said in a phone interview last week.
“It sure seems to us that to be able to get those kinds of results (Airport Property Ventures) is going to have to charge more money for their hangars,” he added.
The pilots association has endorsed American Airports because it has more experience running small airports, Myers said.
But “we’re happy with either group,” he added.
The pilots, as well as a citizens group, interviewed both companies along with city staff. But they were not privy to the same confidential financial information, said Gary Gurley, the city’s general services manager.
Lydia Kennard, a principal with Airport Property Ventures, said last week that the key difference between the proposals is the level of investment each company is willing to make in the facility. Whereas her company would develop both the north and south sides of the airport, American Airports has proposed developing the south side while leasing the north side to developers.
“We don’t have the middle men,” Kennard said when asked to explain the differences in two companies’ revenue projections.
Kennard’s partner, Jack Driscoll, assured members of the city’s Transportation Commission on Tuesday, that Airport Property Ventures doesn’t intend to chase pilots away with high rents.
“Certainly (the airport) is going to change to some degree,” he said. “But I think that they’ll realize if we’re selected that their fears will be unfounded in terms of being priced out.”
The future of the 50-acre airport, located north of Highway 76 near the San Luis Rey River, has long been the subject of debate. While many private pilots rave about the facility and have pushed to keep it open, critics have fought its expansion and labelled it a money drain.
In 2006, after years of back-and-forth, the council agreed to look for a company to take over the airport and upgrade the facilities.
Airport Property Ventures, American Airports Corp. and Culver City-based CMTS submitted proposals.
American Airports proposed a 40-year lease, and Airport Property Ventures proposed a 50-year term.
“They’re both good, reputable companies,” Gurley said.
(CMTS was ruled out because it wanted the city to contribute to infrastructure improvements).
The selection will ultimately be made by the City Council. But the decision may not come for several weeks.
The council was scheduled to vote on staff’s recommendation last week but it chose instead to send the discussion it back to the Transportation Commission for another round.
Edward Sause, president of American Airports, said it was misleading to compare the two companies’ revenue projections. That’s because Airport Property Ventures has proposed payments to the city based partially on net revenue, whereas his company has proposed paying a percentage of gross revenue.
“We believe that the proposal that we’ve made is a stronger financial proposal and actually guarantees rents to the city,” Sause said.