Sunday, July 13, 2008

Airport Plan To Require Fee Hikes

Improvements at the Long Beach Airport could be financed with increased parking rates and a higher passenger facility fee on each ticket.

That assumes, however, passenger levels remain the same in the coming years. Eighth District Councilwoman Rae Gabelich has said in the past that she isn’t comfortable making that assumption.

However, that discussion will wait until next Tuesday. The report was scheduled to be presented at the July 8 City Council meeting, but three council members, including Gabelich, were absent.

Mayor Bob Foster held the item over for a week, and warned the council members to be prepared for a lengthy discussion. The representatives from the four even-numbered districts will be sworn in for a second term next week.

“I know some of you have some parties planned next Tuesday evening,” Foster said. “I just want to remind you that this is an important issue.”

Gabelich, who has fought what she characterizes as airport expansion for much of the last decade, requested the financing report in May as a condition of approval to increase the airport’s credit line enough to start final design of a new parking structure and preliminary design of terminal improvements. While the council has approved the plans in concept, it has retained the right to review all contracts and final plans.

Assistant airport manager Christine Edwards signed the staff report detailing the potential financing scenarios to complete construction at the airport. The report actually shows the airport’s debt capacity, Edwards said, because final costs for either the garage or the terminal project can’t be figured accurately until design is complete.

In order to provide a realistic number, formulas were developed to finance up to $65 million for each project. The assumption that there would be no change in current passenger traffic levels was paired with a 6% annual increase in operating costs.

To finance $65 million for the parking structure, hourly parking rates would double from $1 to $2 an hour, daily rates in the existing structure would go from $17 to $19 a day and the daily rate in the new structure would be $15 a day. The new structure would essentially replace the spaces now at the remote lot being leased from Boeing, where rates currently are $8 a day.
Financing of $65 million in bonds for terminal construction would be more complicated. Currently, the airport collects a cost per enplaned passenger (CPE) of $5. That is a combination of the passenger facility fee added to each passenger’s ticket and charges to the airlines.

To finance $50 million, that CPE would have to go to $9.50 to $11 per passenger. A $65 million bond would push the CPE to $12 to $15. No breakdown between passenger and airline cost was offered in the initial report.

Efforts to upgrade the art deco terminal, which is designated a historic landmark, began in 2001, when JetBlue announced it would make Long Beach its West Coast hub. Commercial jet flights have since reached their maximum number under the city’s noise ordinance, and the airport saw more than three million passengers last year.

The council has approved terminal improvements increasing its size to up to 90,000 square feet as long as no additional gates are added. A second parking garage, creating about 3,300 parking spaces, also has been given preliminary approval.

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