State is considering proposal to let consortium lease, operate the airport


December 15, 1992|By Suzanne Wooton | Suzanne Wooton,Staff Writer Staff writer David Conn contributed to this article.

Amid Maryland's budget crisis, Lockheed Air Terminal, a unit of the giant aircraft maker, and Westinghouse Electronic Systems Group in Linthicum have been lobbying state officials to allow them to jointly lease Baltimore-Washington International Airport.

The deal -- which could become the first of its kind in the United States -- could mean regular payments to the state from a long-term lease and profit sharing. In addition, the consortium is willing to sweeten the deal with an upfront, accelerated lease payment of between $40 million and $50 million, a legislative leader said.

The proposal has considerable political allure as the state struggles with a $450 million deficit and a growing list of transportation demands besides BWI.

Although the state has yet to receive a formal proposal, representatives of Lockheed and Westinghouse have discussed their plan with Gov. William Donald Schaefer, key legislators and state transportation officials. This summer, Mr. Schaefer visited the Lester B. Pearson Airport in Toronto, which Lockheed operates, and is expected to return in January.

Neither Westinghouse nor Lockheed will discuss specifics of their proposal publicly.

"It would mean an immediate infusion of cash, no decline in service and guaranteed lease payments each year for a long period of time," said Senate President Thomas V. Mike Miller, who says representatives for the two firms have talked about an upfront lease payment between $40 million and $50 million.

"From what we've learned so far, it would appear to be a win-win situation for Maryland citizens," the Prince George's Democrat said.

But skeptics in the Maryland Department of Transportation and others say that what's good for Lockheed and Westinghouse may not be so good for the state.

"There are really two key elements," said O. James Lighthizer, secretary of the Department of Transportation, which oversees BWI. "They should be able to run it substantially better than it is now and it should mean more money for the state. If you can't get those two, then why take the risk?"

Yesterday, during a wide-ranging news conference in Annapolis, Governor Schaefer appeared to echo Mr. Lighthizer's hesitancy. the question is, should we go further?" the governor said. "I don't feel quite so comfortable doing that. I just don't."

At the heart of the debate is who should control BWI, long considered a key economic development tool that generates thousands of jobs. If BWI were leased, it could become the first such arrangement for a publicly owned airport. Earlier this year, President Bush signed an executive order lifting some of the financial obstacles to privatizing such operations that receive federal money.

BWI is one of only three state-owned airports in the country. Typically, they are owned by local governments or public authorities.

"It would combine the abilities of two large companies who've been in the business of running airports and providing systems for airports," said James H. Burnley IV, a Washington attorney and former U.S. transportation secretary who represents Lockheed.

Lockheed has been involved in managing, building or providing extensive services at nearly two dozen airports worldwide, while Westinghouse is a leading provider of airport technology, such as radar systems. With the defense industry in decline, both firms have been expanding into other areas.

The joint venture is not offering to buy the airport, partly because such a deal would be politically less attractive to the state. Mr. Burnley said the lease proposal would allow the state to maintain control over BWI.

Whether the proposal, or others like it, moves forward is likely to hinge on recommendations from the Maryland Task Force on Privatization expected later this month.

"BWI is the meat of the [privatization] issue, but it's extremely complicated," said William K. Hellmann, a former state transportation secretary and chairman of the commission set up by the legislature to evaluate what government functions might be taken over by private business.

Currently, about $2 billion in state work is performed by private contractors, including roughly half of the airport's maintenance and operation. Of the airport's 10,000 workers, fewer than 400 are state employees.

Since the state bought the former Friendship Airport from Baltimore in 1972 for $36 million, it has invested millions in capital improvements at BWI, most recently a $30 million parking garage. The state is planning a $10 million runway expansion next year and to start construction of a $130 million international terminal in 1994, using money from a federally approved passenger surcharge that took effect in October.

All told, over the past two decades, the state has spent about $170 million more than the airport has generated from operations. And that does not count what the state has paid in interest on BWI's capital projects.

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