Macquarie Infrastructure Corporation has been picked for a $1.1 billion public-private partnership to run Westchester County Airport, beating bids by Oaktree- and Ferrovial-led consortiums.
Through the deal, Macquarie would pay $595 million, including $300 million upfront, and commit $550 million in capital funds for maintenance and improvements over the 40-year lease. Once finalised between Macquarie and Westchester’s county executive’s office, the agreement will be sent to the county’s Board of Legislators, where its approval is far from a sure thing.
Privatisation of the airport was explored last year, when county executive Rob Astorino reached a deal with Oaktree Capital Management that would have resulted in the firm delivering a $130 million upfront payment for a 40-year lease. Legislators turned down the deal in favour of a competitive bidding process, through which three bids were submitted in August.
HPN Aviation Group, which included Oaktree and Connor Capital, immediately announced its intention to submit a bid. HPN’s bid included a $626 million payment to the county, higher than the winning offer. HPN, however, offered just $271 million in capital improvements, while a task force evaluating the bids also favoured Macquarie’s technical ability. A bid from FerroStar Westchester Airport Partners, a consortium comprising Ferrovial Airports International and Star America Fund, was ranked third.
The plan will tap the Federal Aviation Administration’s Airport Privatisation Pilot Program, which allows small- or mid-sized airports to be run as PPPs.
Many hurdles remain for the partnership. The deal will need approval from 12 of the 17 legislators, and several have already expressed wariness. And Astorino, who has championed the PPP from its inception, will be replaced as county executive in January. The county executive-elect, George Latimer, opposed privatising the airport during his election campaign.
Westchester Airport, located just outside New York City, served some 1.5 million passengers in the 12 months ending July 2017, according to the Bureau of Transportation Statistics.