Palo Alto should move as quickly as possible to take control of its small but bustling airport, a City Council committee agreed Tuesday night.
The airport, which is located in the Baylands, is currently overseen by Santa Clara County under a 50-year lease signed in 1967. The lease is scheduled to expire in 2017 and county officials have indicated that they would like to limit their investment in the aged facility and hand it back to the city as soon as they can.
On Tuesday, the council's Finance Committee unanimously agreed that taking back the airport from the county would be in the city's best interests. The committee reached this conclusion after discussing a business plan that was recently performed for the airport by the Kentucky-based firm R. A. Wiedemann & Associates.
The business plan concluded that Palo Alto Airport could turn a substantial profit under the city's management. The only catch is that this profit would have to be reinvested back in the airport, according to the Federal Aviation Administration regulations.
R. A. Wiedemann, who performed the study, said Palo Alto Airport has several major upsides, most notably favorable market conditions. Though activity has decreased in the last two years, much as it has at other airports across the country, Palo Alto Airport still had about 160,000 operations -- a large amount for a relatively tiny airport. The demand is heavy and California's tie-down rates (rates charged for keeping a plane at the airport) are among the highest in the nation, Wiedemann said.
Wiedemann's report recommends two possible options: the city managing its own airport or the city hiring a third party to manage it. Either option would make for a sound investment, the report found. If the city were to take over the airport by 2012 and manage it in-house, it could make a profit of $13.5 million by 2037. If a third party manages it, the profit would be $16.2 million by 2037.
"It's hard to screw this airport up," Wiedemann told the Finance Committee Tuesday. "It's a very successful cash-cow airport that has a lot of principles working for it.
"On paper, and in every other kind of way, it makes the grade of being a good investment."
The committee agreed that it would be in the city's best interest to take over the airport within the next two years or so, rather than wait until the county lease expires in 2017.
"I worry that the next couple of years will rush past us unless we put it as a priority," Vice Mayor Sid Espinosa said at the meeting.
The city would be forced to take charge of airport operations after the lease expires whether it wants to or not. Though some community members have called for the facility to be converted to a different use, that option is not feasible in the near term. FAA regulations require cities or counties that wish to close their airports to go through a rigorous application process, which could take years if not decades.
Given all the limitations, the committee agreed that it would be in the city's interests to begin managing the airport sooner rather than later.
"We should move as quickly as possible on this," Councilman Greg Scharff said.
The committee asked staff to come back in December with a time line of steps the city would have to take; a plan for creating an airport advisory committee; an organizational chart showing who will be performing the staff work; and additional information about how much money the city could invest in a new enterprise fund for the airport.
Staff is scheduled to return to the committee with a plan for taking over the airport on Dec. 6.