The notion of airport privatization has generated any number of conspiracy theories ranging from an outright sale of the airport to a money grab by consultants — but none focusing on the cash influx needed to address St. Louis’s daunting economic challenges that have continually escalated over the years. This deal could represent a cash influx that can provide exciting opportunities for growth, revitalization and the ability to improve the overall health and welfare of St. Louis’ underserved populations.
The interplay of our economic challenges and opportunities demand that the important tasks associated with airport privatization are a priority for our elected officials. The question of why, and if, airport privatization should occur can be summed up this way: If you owned a home and someone was paying you $12,000 a year to rent it, and a broker approached you and said I think I could get you a better deal than $12,000 a year, you would probably listen to what the broker had to say.
The broker proceeds to ask you a few questions, such as how much money do you owe on the property? How old is the house, and what condition is it in? Do you have any idea about how much money you want to make renting the house?
After you have answered the few basic questions, the broker says: If you enter into a broker agreement with me, I’ll prepare a brochure with all the pertinent information about your house and pay for all the printing and advertising. I’ll receive all the offers to rent your home and present them to you (along with an analysis and recommendations) for your consideration. You have no obligation to accept any, and I’ll take all the risk, so if you decide to walk away that’s fine. I’ll do all of this for a fee that we agree on up front, and I don’t get paid unless you accept a deal because I believe that you will get at least one offer to rent your house that will pay off your mortgage and pay for all the repairs, upgrades and ongoing maintenance over the term of the lease. It’ll also pay you a minimum of the $12,000 a year you’re currently getting, give you $100,000 cash up-front, and you will always retain ownership of your house.
Deal or no deal?
Let’s be perfectly clear; you’ll have some naysayers who are going to say, it’s too good to be true. Why would anybody rent that house and give you a deal like that? You’re not smart enough to negotiate a deal like that, etc. On the other hand, you’re going to have some friends who say: Check out the broker’s credentials; make sure you hire a good attorney to review everything.
And what are you going to do with the $100,000? You should invest most of it. You should pay off your other bills or pay for your kids college education. You could buy additional property to rent out. God has truly blessed you, friends would say, so don’t go crazy and spend all that money at one time, etc.
St. Louis Lambert International Airport is owned by the city of St. Louis. The city owes around $600 million on it (and it will cost the city $900 million to pay it off). The necessary upgrades to make it a first-class airport will cost hundreds of millions of dollars. It has significant environmental issues that will cost more millions to remediate and dispose of. It has more unused land than it uses, including a runway taxpayers spent $1 billion to build. Travelers hate flying in and out of Lambert due to the lack of direct flights to major markets, and the airlines are making millions off of it.
A deal to lease the airport could bring in millions in revenue from lease payments and taxes, pay off the $600 million we owe, convert it into a first-class airport, and give the city $1 billion in cash up front.
If I had my way, we would spend the first $100 million in north St. Louis. What would you do? Deal or no deal?