Friday, February 13, 2009

Talks on leasing Long Beach Airport are shelved

By Dan Weikel
February 12, 2009

Further discussions about leasing all or part of the Long Beach Airport to private investors have been shelved, at least temporarily, because of a lack of interest on the City Council, municipal officials said Wednesday.

"Our plate is full right now, and a lot of things are happening," said Long Beach City Manager Patrick West. Privatization of the airport "went to the back burner."

Council members had planned to discuss the matter in closed session Jan. 6, but they voted instead to hold a public hearing after three council members and four citizens complained that secrecy should not surround such an important policy discussion. The hearing was postponed to a later date, but never scheduled.

Late last year, the city received unsolicited inquiries about the sale or lease of Long Beach Airport assets from major banks and Wall Street firms, including Citigroup, J.P. Morgan, Goldman Sachs, Merrill Lynch and Morgan Stanley.Long Beach Airport serves about 3 million commercial airline passengers a year and is home to a variety of private aircraft and aviation-related businesses.

Supporters of airport privatization say it is a good way for local governments to raise substantial amounts of money. Because of the economic downturn, Long Beach is facing a projected $15.7-million revenue shortfall this year.

The only commercial airport in the nation now considering privatization is Chicago Midway, which served about 17 million commercial passengers last year. The Federal Aviation Administration is evaluating a proposed 99-year lease to a consortium of investors that would provide about $2.5 billion to the city of Chicago.

A decision to approve the plan has been postponed until April because financial arrangements are still being negotiated.

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