LA Officials Not Buying Ontario’s Line That Airport Has No Value

Los Angeles officials have rejected Ontario’s contention that the monetary value of Ontario Airport is not tied to the general property values of the region.
Ontario officials maintain that the airport is a public utility and as such, its worth is not a function of the traditional real estate market, having no value, real or potential, outside of functioning as an airport.
Ontario officials previously publicly suggested that Los Angeles should deed the airport back to Ontario for no consideration, as Ontario deeded the airport to Los Angeles in 1985 for no consideration. In 1967, the city of Ontario entered into an arrangement with the city of Los Angeles, whereby the larger city’s department of airports, now known as Los Angeles World Airports, took over management of Ontario Airport.
Los Angeles World Airports used its clout as the operator of Los Angeles International Airport to induce airlines en masse to schedule flights into and out of Ontario International Airport. Under the guidance of the Los Angeles Department of Airports and Los Angeles World Airports, passenger traffic at Ontario International Airport, having stood at less than 200,000 passengers in 1966, increased steadily for 40 years, to 7.2 million passengers enplaning there in 2007.
Under the terms of the deal between Ontario and Los Angeles by which Los Angeles took over management of the airport on November 1, 1967, title of the airport itself was to be transferred to the city of Los Angeles after the achievement of several designated milestones, including passenger traffic levels, runway improvements, and terminal construction. Promised construction on a modern, second east-to-west runway, which was supposed to begin in 1971, was delayed a decade. In 1981, that second east-to-west runway was built, replacing the old northeast-to-southwest runway. Sometime thereafter, Los Angeles officials stepped up pressure on Ontario officials to have them cede ownership of the airport in total to Los Angeles.
In 1985, ten years after the airport had failed to achieve the goal of ten million passengers per year set for 1975, Ontario’s city council members, led by councilwoman Faye Myers Dastrup and against the wishes of then-mayor Robert Ellingwood, at a council meeting on February 19, 1985 when Ellingwood was too ill to attend,  voted 4-0 to transfer title to the airport to the city of Los Angeles.  Los Angeles took over ownership officially on July 1, 1985.
According to Gina Marie Lindsey, the executive director of Los Angeles World Airports. “Over $560 million in airport capital improvements have been made utilizing funds from a combination of Los Angeles and Ontario airport revenues, Federal Aviation Administration grants and bond proceeds secured by Los Angeles World Airports.”

Gina Marie Lindsey

The lion’s share of those improvements were made after Los Angeles took on ownership of the airport. In 1987, the departure runway was extended to the east.  In 1997 and 1998, Los Angeles built two modern 530,000-square foot terminals at the airport at a cost of $270 million. In 2005-2006, the airport’s departure runway was repaved, received storm drains, and  runway lighting was improved. The airport’s taxiways were widened.
In recent years, Ontario Airport has seen its use decline. In 2008, 6.2 million passengers took flights from the airport, a drop of 13.5 percent compared to 2007. In 2009, the airport had 4.95 million passengers pass through it. That trend continued in 2010, with 4.8 million travelers flying from Ontario International. Simultaneously Los Angeles World Airports undertook a flurry of improvements at LAX intended to make traveling in or out there more convenient to passengers.
In the last year, passenger volumes in Ontario continued to decline, with travel at Los Angeles International Airport (LAX) picking up. Just under 4.6 million passengers took flights out of Ontario International in 2011.
Over the last three years, Ontario officials have sought to induce Los Angeles to cede both ownership and control of the airport back to them.  In their public pronouncements they have emphasized that they consider the airport to be a public utility with no practical real estate value, that the investment Los Angeles has made in Ontario airport was not composed of taxpayer money put up by Los Angeles citizens but rather consisted of money generated by airport revenues and federal grants and that the 1967 management arrangement and 1985 no consideration title transfer should simply be rescinded or reversed.  In private, however, Ontario officials have offered to purchase the airport back by paying Los Angeles $50 million in cash, assuming $75 million in bonded indebtedness at the airport and providing up to $125 million to Los Angeles from future revenue to be generated at the airport in the way of passenger facility charges, pending the airport achieving certain passenger traffic levels.

Anthony Villaraigosa

It is the Los Angeles mayor and city council which will have the ultimate say on whether to return Ontario International Airport to Ontario. Privately, Lindsey and other Los Angeles World Airport Officials have advised Mayor Anthony Villaraigosa and the members of the Los Angeles City Council to seek to recover as much of the money put into improvements at Ontario Airport since 1967 as possible.
Last week Villaraigosa, after meeting with several western Riverside County municipal officials who encouraged him to broker a sale of the airport back to Ontario, told the City News Service that he was not inclined to support the sale of LA/Ontario International Airport under current economic circumstances that include deflated real estate values and that he would entertain a sale of the airport only when the real estate market recovers. This was a clear indication that the senior level of political leadership in Los Angeles has rejected Ontario officials’ assertions that the airport’s value should be assessed separately from the wider real estate market.

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