Westchester County Airport (HPN) will soon be run as a public-private partnership under a 40-year revenue-sharing lease with Oaktree Capital Management, Westchester County Executive Robert Astorino announced November 3.
The plan – made possible by Westchester’s eligibility in a Federal Aviation Administration program that allows small to mid-sized airports to be run as public-private partnerships – means Oaktree will be the new manager. The airport is currently being operated by AvPorts.
By structuring a new lease in accordance with the terms of the FAA program, money paid to the county by Oaktree can be used for all county programs. Until now, any revenue generated at the airport could only be used at the airport.
“Westchester is building on a national trend towards delivering the airport improvements and innovation this country needs,” said Emmett McCann, managing director at Oaktree and lead for the firm’s airport efforts. “By utilizing the strong demand for stable long-term infrastructure investment, creating a best-in-class passenger experience, and successfully aligning the interests of all stakeholders, the county is enhancing the local economy and creating jobs without placing a further burden on the airport’s neighbors and local taxpayers. We expect this project to serve as a model for similar airports across the country.”
Net payments and savings to Westchester County are expected to total more than $140 million, the county claims.
Westchester will receive a $111 million upfront payment from Oaktree, which is being structured so that the proceeds can be applied to the county’s operating budget over the course of the 40-year lease. This structure, which works like an annuity, will create a steady, long-term revenue stream that the county can draw on to offset expenses and help to keep taxes stable over the next four decades.
The first year net revenue to the county will be $15 million; followed by a net revenue payment of $5 million in each of the next four years; followed by average net revenue payment of more than $2 million a year in each of the remaining years on the lease.
“The driving force behind this proposal is simple – unlock millions of dollars of value that have been created at the airport and put this idle money to work in ways that benefit everyone who lives, works and visits Westchester,” said Astorino. “We are creating a reliable, long-term source of funding that will assist taxpayers, help pay for parks, police, day care and all of our other services, and enhance the passenger experience at our airport, and doing all of this without changing the current character of the nearby neighborhoods. This is smart government adapting to the future, while protecting the present and past.”
For its part, Oaktree has committed to spending at least $30 million on capital improvements in the first five years, and significant additional investments over the course of the lease. Agreed-upon investments include redesigning the passenger lounge with enhanced seating, reconfiguring the ticketing area to simplify boarding, improving parking, adding new baggage claim equipment and upgrading concessions and restaurants with more food and dining offerings.
Westchester County says JetBlue Airways, American Airlines and United Airlines all are supportive of the deal. Each has agreed in principal to a long-term use agreement to serve the airport.
“JetBlue looks forward to a reinvigorated and modern Westchester County Airport to provide our HPN customers the same award winning customer experience at the airport that they enjoy onboard,” said Jeffrey Goodell, vice president Government and Airport Affairs, JetBlue. “JetBlue customers will be able to move seamlessly through the airport and enjoy enhanced food and beverage offerings to significantly improve their airport experience.”
