Westchester County in Deal to Privatize White Plains Airport
New York's Westchester County announced a public-private partnership for its municipal airport in White Plains, N.Y. designed to direct airport revenue to the county budget.
County Executive Rob Astorino announced Thursday a 40-year deal to lease Westchester County Airport to Los Angeles-based Oaktree Capital Management for $140 million.
The deal calls for Westchester County to receive a $111 million upfront payment from Oaktree, structured to have proceeds applied to the county's operating budget over the course of the 40-year lease. The structure works like an annuity, a county press release said.
Astorino said net revenue would amount to $15 million in the first year and $5 million annually over the following five years.
"The driving force behind this proposal is simple – unlock millions of dollars of value that have been created at the airport and put this idle money to work," said Astorino in a statement. "We are creating a reliable, long-term source of funding."
The P3 deal would come under the Federal Aviation Administration's Privatization Pilot Program that allows for up to 10 airports to be privatized. Oaktree helped implement the first P3 for a major U.S. territory airport in San Juan, Puerto Rico. According to an FAA website, San Juan is the only privatized airport in the 19-year-old program.
The transaction will require the approval of the FAA and the Westchester County Legislature must also approve the lease agreement.
Westchester County, just north of New York City, has a population of 976,396, according to the 2015 American Community Survey. The county is rated Aa1 by Moody's Investors Service and triple-A by S&P Global Ratings and Fitch Ratings.
As a publicly owned airport, federal rules required any revenue generated to only be used at the facility and not for county purposes.
County officials noted that the partnership with Oaktree relives it of financial responsibility for capital improvements and ongoing maintenance of the 74-year-old airport.
Oaktree has committed to implement at least $30 million of capital improvements in the next five years and other infrastructure investments over the course of the lease.
JetBlue Airways, American Airlines and United Airlines all agreed in principal to a long-term use agreement to serve the airport as part of the Oaktree transaction.
"Westchester is building on a national trend towards delivering the airport improvements and innovation this country needs," said Emmett McCann, managing director at Oaktree and lead for the firm's airport efforts. "We expect this project to serve as a model for similar airports across the country."
Oaktree jointly created a 50-year P3 with the Maryland Port Administration for the Seagirt Marine Terminal in Baltimore, which is the primary port serving Washington, D.C.
CIBC Capital Markets was financial advisor to Westchester County on the deal. PFM Group also worked with the country as a municipal advisor.