CHICAGO – Advisors interested in helping St. Louis explore a privatization under the federal pilot program of St. Louis Lambert International Airport have until Oct. 20 to submit proposals.
A selection committee that includes representatives from the mayor’s office, Board of Aldermen, the city counselor’s office, and the comptroller’s office will review the proposals with the goal of selecting a team by the end of the month.
The city is seeking “a qualified and experienced advisory team” to assist it in developing the airport lease RFP, evaluating responses, negotiating favorable terms for the city, obtaining Federal Aviation Administration approval, and closing the transaction, the RFP says.
The city also makes its intention clear that two firms, PFM Financial Advisors LLC and Siebert, Cisneros Shank & Co., which have worked on recent airport financings, should be members of the team. “It is the city’s preference that these financial advisory firms who have been previously selected through the city’s selection process, and who have significant knowledge of the city’s and airport’s finances, be part of each proposer’s team,” says the RFP.
The city wants to reach an updated schedule to present to the FAA within 30 days after the selection of the advisory team.
“The city intends to conduct a competitive solicitation and procurement for the creation of a public-private partnership for the lease of the airport…and, if the bids received are acceptable, submit the necessary documents to the Board of Aldermen and the Board of Estimate and Apportionment for their review and approval,” says the advisory RFP published by the city counselor’s office.
The city is considering a private lease as a means to “to improve and expand airport services for its business and recreational travelers as well as businesses that utilize airport facilities,” according to the RFP. “The proposed application of the net proceeds from any lease of the airport will also have an impact on the decision to move forward.”
Former Mayor Francis Slay earlier this year submitted an application to participate in the FAA’s Airport Privatization Pilot Program, saying the city was looking at how to leverage the program either through an upfront payment or payments over time to pay for non-airport related costs. Mayor Lyda Krewson has continued the process.
The Department of Transportation accepted the preliminary application and in April said the city may proceed with the necessary steps to select a private operator, negotiate an agreement and submit a final application to the FAA.
Under the program, the city could lease the airport and its operations but would retain ownership rights. If the city moves forward, the FAA and a majority of airlines serving Lambert would need to approve as well as the local city boards.
Southwest Airlines accounts for about half of passengers traveling through the airport and it supported Chicago’s efforts to privatize Midway International Airport. The city later dropped the effort due to a limited number of qualified bidders.
Lambert has nearly $700 million of revenue debt that carries ratings of BBB-plus from Fitch Ratings, A-minus from S&P Global Ratings, and A3 from Moody's Investors Service.
The FAA's privatization program was launched in 1996 and the 2012 Reauthorization Act increased the number of airports from five to 10, but there have been few takers. Only two airports have been privatized since the law was enacted, and one of them reverted to public ownership after seven years. San Juan, Puerto Rico's Luís Muñoz Marín International remains in the program.