Friday, April 28, 2017

On St. Louis’ Airport Privatization

Earlier this week St. Louis City announced that the FAA had accepted its “preliminary Application” to look at privatizing Lambert Airport.

In a statement, Mayor Lyda Krewson’s office said that “she is open to studying the program to identify how a lease agreement could benefit the city and the airport.”

“This is a great opportunity to explore a public private partnership for the airport,” she said. “I appreciate their consideration of our application and look forward to working with the FAA throughout the process, but as always, the key is in the details.

Here are some thoughts on “the details.”

A recent St. Louis Business Journal article cites Travis Brown’s back of envelope numbers: “Lambert’s enterprise value, or its market capitalization plus debt, exceeds $1 billion. Lambert’s debt totaled $726 million as of June 30, 2016…”  That would put the ballpark price-tag on the airport in the $200-300 million range.

There are really only two sides to the ledger.  A private owner seeking to increase the airport’s bottom-line and make money off the deal would have to cut costs and/or increase revenues.  It’s hard to see obvious ways to cut costs in the operations of the airport, though in a $140 million operating budget there are likely places to trim or create efficiencies that new eyes can find.

In terms of increasing revenue, it’d be hard to raise the airport’s landing fees without push b ack from the airlines.  And to some extent air traffic is a variable more dependent on demographics and economics than anything within the operators control.

One area with potential would be to increase the amount that travelers spend in the airport. Can the vendors and shops be upgrades to induce more spending?  Could the TSA funnels be reconfigured to increase travelers’ satisfaction and lead to higher spending?

The Pitfalls

The biggest pitfall is that the City makes a bad deal – in terms of money.  They could sell the airport for too little money or for all upfront cash with no ongoing participation (as the operator makes the asset more lucrative).  The prime example of this is Chicago which privatized its parking meter collection.  See the Sun-Times article here.

Pull Quote: [T]he 2008 meter privatization drew more widespread public outrage, in part because of steep rate hikes phased in over its first five years. Rates downtown, for example, increased from $3 an hour in 2008 to $6.50 an hour in 2013… Chicago Parking Meters — formed by banking giant Morgan Stanley and other financial partners — paid the city $1.15 billion to manage the meter system and pocket the money fed into it for the next 75 years… In the seven years since, the meter company has reported a total of $778.6 million in revenues. It’s on pace to make back what it paid the city by 2020, with more than 60 years of meter money still to come…

And

The other pitfall isn’t about the deal.  The city could get a good deal financially, but if it doesn’t use the cash prudently, it will be perceived as a bad deal.  Five, ten years down the road there’d be a sense that the windfall was squandered, and it was a bad idea.

 

Romine – Greitens Sit

The story circulating on the Senate side of the building is that Governor Eric Greitens met with Sen. Gary Romine in the Bingham conference room to discuss their legislative priorities.  The governor offered to help get Romine’s discrimination law change (SB43) moving on the House side if Romine would stop blocking the charter school bill on the Senate side.

According to the story circulating Romine rebuffed the offer with a stiff “we’re not going play your games,” and walked out….

 

Meanwhile

The Senate put aside its usual drama and passed out some bills yesterday… Sen. Andrew Koenig’s educational saving account, Sen. Gina Walsh’s zoo tax bill, Sen. Jill Schupp’s suicide prevention training, and a bond issuance for UMKC, carried by Sen. Mike Kehoe.

 

Greitens Highlights His Ethics Reforms

Governor Eric Greitens reviews his 100-day mark on Fox and Friends.  See it here.  Not exactly a tough interview…  “Governor, why don’t you get a cape?”

 

Bits

WOLF PAC is registering lobbyists (see below).  They’re trying to overturn Citizens United and support publicly financed elections.

 

Barry Goldwater Jr – also listed today in the registrations – is the son of late conservative icon (“extremism in the defense of liberty is no vice”).  He now runs a solar company, Sunrun.  Maybe I’ll carry my copy of The Conscience of a Conservative with me during these next two weeks – just in case…

 

MissourEE or MissourAH?  One MOscouter sent this “definitive analysis.”  See it here.

 

Sen. Ryan Silvey imitates the governor’s latest Facebook video, but spends his time taking dark money.  See it here.

 

Spotted this week…. The governor riding in a lobbyist’s car….

 

eMailbag on Avery for Senate

Avery is mad because Koenig won't stand with trial attorneys and teachers unions?! In the words of Ron Richard, "Bring it on, big boy."

 

eMailbag on Schaaf – Greitens Scuffle

[T]he reader who framed it as a public fight between Rob Schaaf and Eric Greitens misses the point.  No offense to Senator Schaaf, but no one cares specifically about him or if he blinked.  He's not going for the White House in the next decade or any decade…. For most people, the story is the Missouri Senate is calling Greitens out for dark money… This is all bad for Greitens because that is the only name people will remember in 6 months.

 

Lobbyists Registrations

Michael Monetta and Lemay Bryant added WOLF-PAC.

Barry Goldwater Jr. added Sunrun Inc.

Jamie Farmer added University of Missouri Board Of Curators.

 

$5K+ Contributions

HealthPAC - $220,000 from MHA Management Services Corporation.

 

Birthdays

Happy birthdays to Tina Shannon and former Rep. Brian Yates.

Saturday: Brad Bates, and former Rep. Belinda Harris.

Sunday: Andy Blunt, Dave Evans, and Julie Murphy Finn.