Palo Alto Weekly

Spectrum - December 10, 2010

Editorial: Palo Alto Airport is a high-risk venture

While there is profit potential for city's airport there's also risk exposure for taxpayers — city needs a bail-out plan if the airport crashes financially

A city take-back of the Palo Alto Airport from the Santa Clara County Airports Department has a bright financial outlook, according to a new study — a factor that prompted a unanimous City Council to approve such a move Monday night.

The unanimity was due in part to a recent positive business plan by R.A. Wiedemann & Associates and partly because the city has no choice but to keep the airport open. The county has said it will not renew its lease when it expires in 2017 because of an "awkward and untenable" lease, high maintenance costs, an inability to expand under current city and other restrictions, and overall risks to the county, detailed in a 2006 business plan.

That plan cited the airport's highest tie-down and hangar-rental fees of any in the region — even fuel prices that were about 10 cents a gallon higher.

The council, appropriately cautious, will hire expert consultants to augment a stretched-thin city staff. It allocated $300,000 from the general fund to get work started for a possible 2012 takeover.

The county, meanwhile, is planning in 2012 to spend $200,000 to $300,000 to repave some areas that are deteriorating due to an odd situation: The whole airport rises and falls about five inches with the tides, according to county Airports Director Carl Honaker. He said the asphalt lasts only about half as long as in non-tidal areas, and the salty air also accelerates deterioration of facilities.

The county did a $2 million repaving in 2000, using federal grants plus nearly $500,000 in an "outstanding advance" from the airports department, which also oversees the profitable Reid-Hillview and money-losing South County airports. The same paving job would cost $4 million to $5 million today, Honaker estimates. The advance has not been paid back, while the grant gives the Federal Aviation Administration veto power over closing the airport, which it may have anyway under national "infrastructure" regulations.

Part of the city's due-diligence should include seeking ways Palo Alto could legally notify the FAA that it might need to close the airport at some future date.

A bail-out provision might be vital should a future sour economy, high maintenance costs, competition from other general-aviation airports (a future Moffett Field addition?) and an exodus of users and businesses add up to a massive drain on city general (taxpayer) funds.

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