Los Angeles Agrees To Return Ontario Airport To Local Ownership

In a breakthrough of historical significance, the preparation for which has been shrouded in secrecy for at least eight months, Los Angeles Mayor Eric Garcetti this week announced that ownership and management of Ontario International Airport will be returned to the city whose name the aerodrome bears.
The move comes not quite a half century after a joint powers agreement in 1967 between the cities of Ontario and Los Angeles entrusted management of the airport to the megalopolis, thirty years after Ontario deeded the facility to Los Angeles and five years into an increasing acrimonious campaign by Ontario to wrest ownership back from Los Angeles. That campaign included the filing of a lawsuit against Los Angeles and the corporate entity – Los Angeles World Airports – it uses to run Los Angeles International Airport, Ontario International Airport and Van Nuys Airport. That lawsuit was scheduled to go to trial in Riverside Superior Court later this month.
“Together, we’ve reached a deal that will benefit everyone: Inland Empire residents, Angelenos, Los Angeles World Airports, Ontario Airport, and the dedicated employees who work at our airports,” Garcetti said. All elements of his statement beyond acknowledging the agreement will foreclose the lawsuit appeared to be calculated to avoid reference to the litigation between the two cities and the increasingly hostile rhetoric that has emanated from Ontario officials over the last four years, in particular Ontario City Councilman Alan Wapner. Indeed, Garcetti sounded as if Los Angeles considered Ontario and its aeronautical facility to yet be a part of Los Angeles’s extended family.
“As we continue our revitalization of LAX [Los Angeles International Airport] to make it the best big airport in the world, we are equally committed to ensuring Ontario is the best smaller airport in the world,” he said.
Los Angeles will transfer ownership of Ontario Airport not to Ontario but to an airport authority made up of representatives from San Bernardino and Riverside counties, but which is likely to be dominated by Ontario. Ontario has agreed to partially reimburse Los Angeles and Los Angeles World Airports for the investments made at Ontario Airport going back more than 45 years.
Garcetti coyly gave two figures with regard to the actual amount of money Ontario will fork over to finalize the transfer, saying that Ontario papers could call it a $150 million deal and that Los Angeles newspapers could refer to it as a $260 million transaction. Ontario will put up $150 million for the airport. In addition, Ontario will need to provide $60 million to purchase assets technically belonging to Los Angeles World Airports that are in place at Ontario Airport and which are crucial or indispensable to its operations. In addition there is bonded indebtedness of roughly $60 million that will now become Ontario’s responsibility to service.
Previously, Garcetti was not at liberty to publicly discuss the terms of transfer being negotiated in the back room or even acknowledge such discussions were ongoing. Improvements at Ontario Airport over the years were paid for with funds from a variety of sources, including bond proceeds, money generated by operations at Los Angeles International Airport and money that was generated by operations at Ontario Airport. Since Ontario Airport was owned by Los Angeles at that time, Los Angeles holds a legitimate claim to that money or whatever improvements were made with it. It appears now that Los Angeles, in an effort of extreme good will, is leaving those assets on the table for Ontario to freely take.
The investment in Ontario Airport since the formation of the joint powers authority in 1967 has been substantial.
In 1967, fewer than 200,000 passengers passed through Ontario Airport’s gates. At that point it had a flea infested gravel parking lot.
Los Angeles, with its control over gate positions at Los Angeles International Airport, used that leverage to induce more airlines to land at and depart from Ontario. In relatively short order ridership at Ontario Airport increased dramatically.
All told, Los Angeles instituted some $550 million worth of improvements to the airport, including paving its parking lot, laying down a second and entirely new east-to-west runway over its obsolete northeast-to-southwest landing strip, and modernizing its existing east-to-west runway, including the widening of taxiways and the addition of storm drains. Ontario Airport’s landing and take-off paths were converted into the longest such civilian facility in Southern California, and Los Angeles erected a state-of-the-art control tower, and constructed two ultra-modern terminals at a cost of $270 million, augmented with a world class concourse. In 2007, 7.2 million passengers came through Ontario Airport, a 3600 percent increase over what Ontario had been able to achieve on its own 40 years before.
Four years ago, Ontario city officials, led by Wapner, were suggesting that Los Angeles should simply deed the airport back to Ontario as a public benefit transfer, propounding that the airport had no value as marketable real estate. Quietly, however, the city of Ontario made a confidential offer to purchase the airport for $50 million and an assumption of $71 million in bond debt related to financing for improvements that had been made to the airport and repay Los Angeles another $125 million for passenger facilities charges collected at Los Angeles International Airport that were used to make improvements at Ontario Airport.
In 2012, Los Angeles World Airports hired the firm of Leigh Fisher to make a calculation of the airport’s fair market value. Leigh Fisher pegged the airport as being worth at least $243 million and as much as $605 million. The calculations were based on cash flow expectations over the next half century.
When Los Angeles World Airports officials publicly disclosed the $246 million offer, Ontario officials expressed dismay, stating the offer had been made in confidence. In response, Los Angeles officials privately told the Sentinel that if Ontario were to make an offer of $450 million, it would be accepted.
Garcetti’s announcement, which conveyed comity with Ontario, was incongruous with the hostility previously vectored at Los Angeles by Ontario officials. There were hints recently, however, of a thaw in the relations between the two cities. In Ontario, Wapner had been designated as the point man in the strategy to regain control over the airport. His aggressive manner in general and his take-no-prisoners strategy in this particular endeavor created an extremely difficult and awkward circumstance for other local, regional, state and even federal officials who were attempting to bring their status and influence to bear on the situation. Because they were unable to speak on Ontario’s behalf officially and because their more diplomatic approach clashed with Wapner’s means, they had to be circumspect, indeed downright secretive, in their dialogue with Los Angeles officials, who had expressed in definitive terms that they did not want to be burdened with dealing directly with Wapner in these behind-the-scenes discussions. This led to state legislators of both parties as well as county officials carrying out what were essentially secret negotiations with Los Angeles bearing directly upon the city of Ontario with no representative from Ontario involved. Indeed, after the Sentinel learned of these negotiations in December and began making inquiries, three elected officials requested that the Sentinel not do anything to inform Wapner of the ongoing dialogues in this regard. Wapner appeared to be yet out of that loop as late as June, when he was yet engaging in caustic remarks about Los Angeles and stating its designs for Ontario Airport were deliberately unfavorable to Ontario and the local economy.
None of that was in evidence at a press conference on August 6, when Garcetti spoke openly about exchanged phone calls and text messages with Wapner. For his part, Wapner, who was designated as the speaker representing Ontario, appeared to be on his best behavior, resisting his natural compulsion, which had become a matter of habit over the last few years, of engaging in scathingly vitriolic attacks upon Los Angeles and Los Angeles officials at every opportunity. Rather, Wapner appeared to be basking in the glory of Ontario scoring a major coup, recapturing title to the airport at some $200 million to $300 million less than what Los Angeles might have sold it for to a willing buyer.
It is a fundamental disagreement with regard to cause and effect between Wapner and Los Angeles officials over the downturn in passenger traffic at Ontario Airport that was at the basis of the long-running war of words between them that spilled over into the courts. Passengers into and out of Ontario Airport peaked at 7.2 million in 2007, but with the recession that hit the nation, state and region that year ridership at Ontario Airport dropped off precipitously and continued to steadily decline for the next six years, reaching a low of 3.9 million in 2013. In June 2007, Gina Marie Lindsay, who had been the airport manager at Seattle Tacoma Airport, was hired as the executive director of Los Angeles World Airports, the corporate entity owned by the city of Los Angeles which operates Los Angeles International Airport, Ontario International Airport and Van Nuys airport. Beginning in 2007, Los Angeles began an energetic modernization and expansion effort at Los Angeles International Airport. As a consequence of those improvements, and because airlines in response to the economic downturn began phasing out many flights to outlying hub airports such as Ontario while stepping up flights to airports located within major population centers, Los Angeles International saw its passenger totals increase.
By 2010, Ontario officials were becoming increasingly concerned over the contraction of operations at Ontario Airport. Because the downturn in flights to Ontario and the improvements at/increased flights to Los Angeles International corresponded with Lindsey’s tenure, Ontario officials cited her management of Ontario Airport as a primary factor in the decline of Ontario Airport. In March, Lindsey departed as Los Angeles World Airports executive director. This week Garcetti made mention of Lindsey, offering a far different perspective on her than the way Ontario officials, particularly Wapner, have demonized her as someone hell bent on lessening ridership at Ontario Airport and destroying the Inland Empire’s economy. Lindsey, Garcetti said, “almost got this deal done before she left.”
The Sentinel’s efforts to obtain a statement from Wapner by press time, in person and by phone, were unsuccessful.
Ontario Mayor Paul Leon told the Sentinel, “This is a monumental time in history not only for Ontario but the entire region. This gives us the opportunity to design our own destiny at Ontario International Airport. I am thrilled at what I perceive as Mayor Garcetti’s willingness not only to turn the airport over to us but to assure we are successful when we have 100 percent ownership.”
Leon said Garcetti’s announcement came as something of a surprise. “We pretty much knew that the time was short [given the approaching trial date],” Leon said. “I think things became accelerated last week. It is a little shocking. This is something the city has been wishing for and working toward for almost six years. Mayor Garcetti made mention when he was running for office that he believed Ontario Airport should be under local control. He made good on that. I have to respect him. There was an amazing sense of camaraderie and mutual celebration in the atmosphere. I personally stated to the mayor in my conversation with him that we should look forward and not behind us and work toward a successful future for both cities. We both can claim victory. This is a win-win for Ontario and the city of Los Angeles and the region.”
Leon said that having control over the airport will provide the city with the ability to “grow executive level jobs in the city. We can now appeal to corporate executives about moving their headquarters to Ontario. We can give them confidence, once we bring more airlines back in, such as Jet Blue and Allegiant, that their executives can jump in and out of town. They will be able to pick up and go just about anywhere domestically. We are going to try to get businesses in and then use those assets to lower costs for the airlines.”

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