CHICAGO – St. Louis finalized a consulting contract with 16 firms with a mix of city ties, public-private partnership, airport sector and other expertise to provide financial and legal advice as the city considers privatizing St. Louis Lambert International Airport.
“The only reason to consider this is to get a better airport,” Mayor Lyda Krewson said in a statement after the Wednesday vote. “We owe it to ourselves to consider what could be a very positive turning point for the future of our airport. We worked to make sure the team we put together has the expertise to protect the public’s interest as we explore this opportunity.”
The Board of Estimate and Apportionment which holds sway over such contracts signed off on the team with Krewson and Board of Aldermen President Lewis Reed voting in favor of the contract and Comptroller Darlene Green voting against it. The city took its time with the advisory contract which had been expected to be finalized late last year.
The team includes:
--New York-based Moelis & Company LLC; financial advisor
--Washington, D.C-based McKenna & Associates LLC; manage and oversee process
--St. Louis-based Grow Missouri, Inc.; support and financing
--Missouri-based Ellinger and Associates LLC; general counsel and compliance services
--Washington, D.C.-based The Wicks Group; regulatory and airline counsel services
--Chicago-based Mayer Brown LLP; transaction documentation counsel services
--Washington, D.C.-based Squire Patton Boggs LLP; public finance and compliance services
--Detroit-based Siebert Cisneros Shank & Co LLC; financial analysis, advice and consulting services.
--Philadelphia-based PFM Financial Advisors LLC; financial analysis, advice and consulting services
--St. Louis-based Stifel, Nicolaus & Co. Inc.; financial analysis, advice and consulting services
--Atlanta-based Greenberg Traurig LLP; legal advisory services
Five other firms will provide various community, airline, communications, legislative, and community outreach and real estate services. They are New Orleans-based Charbonnet & Associates; St. Louis-based Jones Strategic Advisors LLC; St. Louis-based Metropolitan Strategies and Solutions LLC; St. Louis-based Regional Strategies; and Illinois-based Clayborne, Sabo & Wagner LLP Collinsville.
The advisory contract represents the next step in the city’s evaluation of an airport lease – permitted under the Federal Aviation Administration’s Airport Privatization Pilot Program – and the team will help craft a request for qualifications and then a request for proposals process.
Krewson’s predecessor, Francis Slay, began exploring an airport privatization in March 2017 when he submitted a preliminary application to the U.S. Department of Transportation as a means to generate private investment in the airfield and money for the city government.
The FAA accepted the application a month later, the city established a selection committee in September, and a request for proposals for firms interested in advising the city was launched last September.
Green opposes the privatization effort.
“The Comptroller’s Office does not support this effort to trade Lambert’s successful fiscal management and positive growth for the risks of privatization,” Green said in a statement. “Currently, the airport is in a strong financial position showing 31 straight months of passenger growth, two credit rating upgrades and added international flights. Privatization would disrupt this growth.”
“To abandon the long and successful history of Lambert as a municipal airport through this politically expedient process is wrong,” Green said, adding she believes voters should have the chance to decide on whether to proceed. St Louis voters approved a $2 million bond issue in 1928 to buy property to build the airport.
The contract bans advisory team members from participating as a consultant or in any role with any group that might submit a proposal to operate and manage the airport. Grow Missouri Inc. will cover the costs of advisors and would be reimbursed if a deal is eventually reached with a private operator.
Any final agreement with a private operator would require approval from the Board of Estimate and Apportionment, the Board of Aldermen, the FAA, and a majority of the airlines that operate at Lambert. The process is estimated to take between one and three years.
The city adopted a series of principles that include a prohibition on the sale of the airport, requiring adherence to existing lease and contracts and collective bargaining agreements, improving airport operations and service and using any net funds “in a way that will have a positive impact on the city and its citizens.”
If privatized, the airport’s $600 million of debt would be retired. The airport’s revenue bonds carry ratings in the single-A category. Southwest Airlines accounts for about 51% of the 6.7 million of passengers who traveled through the airport in 2016.
The FAA program allows for private operation of airports that have received federal funding. Under the program, the city could lease the airport and its operations but would retain ownership rights.
The program was launched in 1996 allowing airports to enter into long-term operating leases or pursue the sale of a facility to a private firm. The 2012 Reauthorization Act increased the number of airports than can participate from five to 10 but there have been few takers.
St. Louis is the only U.S. hub airport currently seeking a slot program after Chicago Midway International Airport withdrew its application in 2013. Only two airports have been privatized since the law was enacted, and one of them, Stewart International Airport in Newburgh, N.Y., reverted to public ownership after seven years.
The FAA approved the privatization of Puerto Rico's Luís Muñoz Marín International in 2013 and it remains in the program. Aside from St. Louis, there are only two county airports in in Florida and New York currently seeking slots, according to the program’s website.