Airport Privatization Has St. Louis Surveying an Unexplored Frontier. Who's in the Pilot's Seat?

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20th Ward Alderwoman Cara Spencer has harsh words for the way privatization has played out to date. "It’s an insult to a process that may actually be good." - STEVE TRUESDELL
20th Ward Alderwoman Cara Spencer has harsh words for the way privatization has played out to date. "It’s an insult to a process that may actually be good."

On January 16, a notice taped to a wall with no fanfare announced a meeting of the city's selection committee "for airport advisory services in the potential lease of St. Louis Lambert International Airport."

It was a sharp reminder that the privatization process had quietly continued under Mayor Krewson. When word of the meeting got out, several aldermen crashed it. (Krewson declined to be interviewed for this story.) It had been nine months since Slay announced the application, and the meeting represented the first time city lawmakers had heard from the mayor about negotiations with Grow Missouri.

In the information vacuum, criticism filled the air. The day before the meeting, the St. Louis Post-Dispatch's Tony Messenger wrote a column ripping apart the city's lack of transparency.

"If you are reading this and didn't realize that the city might sell off its airport, don't be surprised," Messenger wrote.

Messenger had interviewed Donald Cohen, a skeptic of privatization who blasted St. Louis' plans in a report. "There is no clear fiscal or policy rationale for the privatization of the airport," Cohen wrote. "Privatizing the airport under these conditions would actually weaken the city's financial future, constrain the economic development vision and plans for the area surrounding the airport and the region, and limit the ability to pursue transportation alternatives. It would also increase passenger costs and potentially reduce quality services at the airport."

One week later, three of the five members of the city's selection committee — all three mayoral appointees — voted to pick Grow Missouri and two other firms to take the lead as the city's consultants. The other two committee members, who represent the Comptroller's office and Board of Aldermen President Lewis Reed, abstained.

That day Krewson released a statement making the same essential argument as her predecessor: The airport is improving, but it could be better; let's see what options are out there. "The advisor team," Krewson's statement read, adding bold for emphasis, "will work solely on behalf of the city of St. Louis."

Days later, eighteen of the city's twenty-eight aldermen signed a letter asking city's Board of Estimate and Apportionment to stop Grow Missouri while there was still time.

The board — comprising the mayor, the president of the Board of Aldermen and the Comptroller — retains the final say on city contracts and expenditures. While the selection committee had chosen Grow Missouri, nothing was final without E&A's approval. Both the Comptroller and Reed's office had abstained on the committee selection; together, their votes would be enough to scuttle the deal. (Both offices declined requests for interview.)

The aldermanic letter cited "grave concerns" about Sinquefield's group. It warned that the city was advancing "under a shroud of secrecy, a lack of transparency, glaring conflicts of interest, and widespread public mistrust." Additionally, the letter claimed that two of Slay's former chiefs of staff appeared to be preparing to cash in on the deal.

Mary Ellen Ponder, who served as Slay's final chief of staff, had taken a job with First Rule — a PR shop run by Travis Brown. (Brown says Ponder "doesn't work on airport matters.") Ponder's predecessor, Jeffrey Rainford, is now working for Oaktree Capital, a private investment firm that until last year owned a 50 percent stake in the Puerto Rican airport. The company is also pursuing avenues for leasing public airports in Nashville and Westchester County, New York. (Rainford did not respond to messages seeking comment. Oaktree declined to make a company spokesman available for interview.)

On February 15, a crowd of aldermen squeezed around a cramped conference room for a briefing from Michael Garvin, deputy city counselor under Krewson.

Garvin argued that the city had an opportunity for a "free look" at privatization, avoiding the costs incurred by Chicago. But to 20th Ward Alderwoman Cara Spencer, the process didn't seem so free.

"I keep hearing that the consulting fees are being paid for, that this is an opportunity for the city because we're not paying anything for it. I have to take exception to that," she said. "All of us sitting around the table are getting paid by the city." Garvin conceded her point.

By the end of the meeting, the aldermen and Garvin had seemed open to allowing an aldermanic representative to join the "working group" overseeing the consultant search. That assurance seemed to mollify some aldermen.

But not all. The next day, the board voted on a bill that would require the city's chosen consultant to update the public every 60 days.

Spencer eviscerated the deal in her remarks, pointing out that the city had allowed Grow Missouri to essentially shape the conditions for its own role. How, she asked, could the city independently consider its options if all roads flowed through Grow Missouri and its partners — who got a payday only if the deal went through?

"Meeting every 60 days to have an update on where we're moving forward from a process that has been flawed from the very beginning is putting lipstick on a pig," Spencer declared. "I'm not saying we can't make more money off the airport, but what I am saying is that this is a big gamble. This is a big choice. We should not take it lightly, and we should do it with objectivity."

Eight aldermen voted against the bill. Among the no votes was Ward 24 Alderman Scott Ogilvie. Sinquefield, he reminded the chamber, had tried to "bankrupt the city" with efforts to eliminate the earnings' tax.

"So why, for the love of God, are we trusting that same person to advise us on financial matters related to the airport?" he said. "This is pure insanity to have this person running this process and we oughtta say no."

In 1920, Albert Bond Lambert — a World War I pilot, Olympic medalist in golf and heir to a pharmaceutical fortune — leased about 170 acres of cornfield north of St. Louis. There, he built an airfield, and a few years later he hired a guy named Charles Lindbergh as the chief pilot shuttling mail back and forth from Chicago.

Lindbergh, of course, would eventually squeeze himself into a silver plane called the Spirit of St. Louis and become the first person to fly non-stop across the Atlantic, burnishing the city's aviation history with a spirit of adventure and risk-taking. That same year, in 1927, Lambert sold his airfield to the city for $68,000.

The sale may have lacked the drama of Lindbergh's flight, but, as the airfield became one of the first municipally owned airports in America, the move was arguably far more important to development of the region than one man's daring do.

To some investors, America's air-travel industry is once again ripe for disruption. While U.S. airports remain almost entirely publicly owned and run, the rest of the world has already taken the leap to privatization. Britain moved to privatize its airports in the 1980s, and these days more than half of Europe's air passengers travel through airports that are at least partially privately run. Canada uses a mixture of public-private ownership models, and all of Australia's major airports are privatized. The practice is catching on across South America and in some Asian countries as well.

Does that mean it could work for St. Louis? Greg Principato, who served eight years as president of the North American branch of Airports Council International, cautions that European airports don't have the same options enjoyed by their American counterparts. Airports like Lambert can access municipal capital markets — tapping local governments to issue bonds — and the interest is often tax-free. European airports, meanwhile, turned to private companies just to raise capital.

Struggling airports, says Principato, would have good reason to consider a private operator. But "airports in American are already pretty well-run," he notes.

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