Just How Essential Is Privatization To Getting Rid Of Lambert's Debt? It Depends Who You Ask.
Clearing more than a half-billion dollars of debt is a key selling point in the push to lease St. Louis Lambert International Airport to a private operator.
As the debate heads to the November ballot, proponents of a potential lease argue the debt is holding back the airport from making improvements and developing vacant airport land.
But airport Commissioner Rik Nemanick worries those pushing privatization are using the debt as “a red herring” to scare voters into thinking the debt is out of control. He said the airport is actually close to paying off most of the debt.
“We would be within spitting distance of those bonds being retired anyway. And so I really don't see that we're getting any net benefit,” Nemanick said. “All I see is to gain a year or two maybe on that, we would be giving up control of our airport for 49 years.”
Janet Bednarek, an aviation history professor at the University of Dayton in Ohio, said Lambert’s debt — nearly $530 million as of mid-July — falls in line with that of other midsize airports.
She also said it’s common practice to use debt to fund major infrastructure projects — like the runway St. Louis built in the early 2000s. Consolidation and economic fallout in the airline industry over the past few decades has also led to more borrowing, Bednarek said.
“So, this is a very, very typical thing that airports do. And I would say it's probably unusual for an airport not to have any debt,” she said.
Under the Federal Aviation Administration’s program that allows cities to lease their airports, existing debt must be paid off at the time of a transaction.
Some privatization proponents argue the program is St. Louis’ best shot at coming up with the money to pay off the debt and get a better airport.
Lambert’s debt has been top of mind for Travis Brown for years.
He previously served as the lead consultant to the city’s nearly two-year exploration of airport privatization, which Mayor Lyda Krewson officially ended in January. During that time, Brown also produced a controversial documentary calling out the debt as one of the airport’s most pressing issues.
Airport Director Rhonda Hamm-Niebruegge and others criticized the documentary at the time of its release, calling it inaccurate. They had it removed from streaming platforms. But Brown said it’s more relevant today than ever.
“There's nothing wrong with any of the work. We had to look back over 30 years to review the deep structural arrival of how we got here,” he said, adding that the “bad debt” traces back to the construction of a $1.1 billion runway that’s underutilized today.
Brown said consultants to the city-backed effort discovered that on top of the debt, the airport needs about $900 million more to spend on capital improvements over the next 10 years.
“We don’t have a decade to wait,” he said.
Brown said solving the airport’s financial issues is a major reason one of his companies, Pelopidas, is helping to fund the petition effort headed for the November election. The company had contributed nearly $715,000 by the end of July, according to state campaign finance records.
The petition effort lays out a plan to lease the airport for at least $1.7 billion.
“If we don’t provide resources of this kind, you’re probably looking at other ways to collect revenue or a bailout,” Brown said.
According to documents provided by the St. Louis Comptroller’s office, though, about half the debt will be paid off in seven years, and the debt has a good credit rating.
Last summer, Comptroller Darlene Green announced the city saved more than $29 million by refinancing some of Lambert’s airport revenue bonds and securing a lower interest rate. Most of that refinanced money helped cover new investments in airport facilities and equipment.
While Brown has said he just wants to help the city get a better airport, his motivation for backing the petition effort has come under fire in recent weeks.
If 60% of voters approve the measure, that sets in motion a plan to lease the airport before next summer. If that happens, the city would have to pay his consulting firm Grow Missouri — which is heavily funded by local billionaire Rex Sinquefield — and two other firms at least $44 million, according to a 2018 contract.
Another reason Brown and proponents want to lease Lambert is to open up about 1,200 acres of airport land for development. Much of the land remains restricted until more debt is gone.
Airport commissioner Marilyn Teitelbaum said the land was considered the big money-making opportunity for the 18 companies that expressed interest in leasing the airport last year.
Consultants predicted opportunities for commercial development of logistics centers, hotels and industrial buildings.
Teitelbaum said it’s not her place as a commissioner to root for or against privatization. But, she doesn’t see why the airport can’t start redeveloping the land itself.
“That was something we were looking into before the whole privatization started,” she said. “It sort of went on hold, and I don’t know whether that will be able to progress between now and the time we go to this initiative petition.”
In an email, Airport Director Hamm-Niebruegge confirmed the airport is still in communication with real estate firm Cushman & Wakefield to assess development opportunities. She declined to comment further for this story.
Adolphus Pruitt, president of the St. Louis City NAACP, is spearheading the effort with the St. Louis Kansas City Carpenters Regional Council to get privatization on the ballot. Along with Brown, they’ve outlined big plans to earmark proceeds of a potential lease for the city’s underdeveloped north side.
Pruitt describes that land as the “carrot” to entice a private operator. Under his petition, any company that leases the airport would be required to make capital improvements and provide a cash infusion to the city.
Plus, Pruitt doesn’t trust the city-owned airport to develop the vacant land on its own.
“As government, folks who manage and control the airport are not in the business of creating hospitality, entertainment, food, service, mall type of operations, not only within the airport but anywhere,” he said. “They're not equipped for it.”
Meanwhile, the airport is in the process of developing a strategic plan for the next five years, as well as a longer, more detailed master plan.
But with so much uncertainty over privatization, both airport commissioners Nemanick and Teitelbaum said it’s hard to plan for the future.
But airport privatization isn’t up to them — the voters will decide in November.