A management team will explore ways of
getting around federal limits on the use of such assets. The
goal: raise enough to eliminate the bankruptcy tab
By Dan Weikel and David Reyes
Los Angeles Times
Searching for answers in a tight budget year, Orange County
Supervisor Charles V. Smith recently asked county officials
to explore selling John Wayne Airport as a way to eliminate
almost $850 million in debt left from the county's 1994 bankruptcy.
It's not clear whether potential buyers
such as Los Angeles or Newport Beach would be interested.
But even if they were, there's a more fundamental problem:
Selling a commercial airport to raise money is virtually impossible
because federal law prohibits the use of airport assets and
proceeds for anything other than an airport.
Appearing at one of the county's ongoing budget hearings,
Smith ordered county staff to create a management team, including
County Counsel Ben de Mayo and Airport Director Alan Murphy,
to find a way around the federal limitations. "I don't
want the report to list 15 reasons why we can't do this,"
Smith told De Mayo. "I want the report to say how to
The supervisor said he did not see any other
way to pay off an outstanding debt of $847.8 million and free
up funds for threatened programs.
The county's proposed budget for fiscal year
2004-05 is $4.5 billion. Officials expect a $40-million revenue
shortfall. The annual debt payment on funds borrowed to recover
from the county's 1994 financial debacle is at least $70 million
"My motivation is to resolve the problems
left over from the bankruptcy and the $70-million-plus that
is going down the drain to pay it off every year," Smith
Smith said he has been thinking about selling
John Wayne Airport ever since the county first floated the
idea as a way out of bankruptcy.
A task force was formed, but the Board of Supervisors
discontinued the study. Murphy and Newport Beach City Atty.
Robert Burnham, who has worked on airport issues, said there
were considerable legal hurdles at the time.
Today's situation is similar.
"It's illegal under federal law to spend
airport money other than for operations and things that affect
the airport," Murphy said. "You can't use airport
revenue for the county's general fund."
John Wayne Airport, which handles more than
8.5 million travelers a year, covers 500 acres and includes
runways, terminals, businesses and concessionaires. The field
is a former Army Air Forces base, given to the county by the
federal government after World War II. Under terms of the
grant, it must remain an airport "in perpetuity."
Airlines and the Federal Aviation Administration
also have a stake in the airport because they pay fees and
provide grants for improvements, Murphy said. "The public
and federal government have an investment in the airport,
and they may not want to have the county sell it off."