Wed March 27, 2013
Lots Of Fiction Going Around In Charlotte Airport Debate
The City of Charlotte is scrambling to keep its grasp on Charlotte Douglas International Airport as a group of state lawmakers and influential local figures move to create a regional authority that would oversee the airport. The city's latest tactic involves sending regular emails to the media to set the record straight on various claims made by airport authority backers. But sometimes even the fact check needs a fact check.
Spin, misinformation, conspiracy theories – it's all par for the course during a heated political battle. And both sides in this Charlotte Airport fight are guilty.
The city repeatedly insists that the airport's $800 million in outstanding revenue bonds are backed by the city's own AAA credit rating. The higher the rating, the better the interest rate you get when borrowing money to pay off bonds.
Speaking on WFAE's Charlotte Talks on February 26, City Councilman Andy Dulin reiterated: "The airport revenue bonds are actually sold by the City of Charlotte so the City of Charlotte is on the ultimate hook for those."
Days earlier the mayor and city council had sent a letter to lawmakers claiming the airport "enjoys high credit ratings and low interest rates due to the backing of the City's AAA bond rating."
But that is flat wrong according to the people who rate the airport's bonds.
"In terms of the city's own rating, it's really almost not relevant," says Emma Griffith of Fitch Ratings.
Now, the city does issue the bonds because the airport is a department of the city. But the airport bonds are paid for exclusively by airport revenues and if the airport defaults, the city has no legal obligation to step in. At all. (Read excerpts of the city's 2011 Airport Revenue Bond documents here.)
The city is now trying to frame itself as a sort of wealthy father to the airport: not legally responsible for the airport's debts but willing and able to help in a crisis. If the airport spins off under a regional authority, that backstop will be gone, says city finance director Greg Gaskins.
"I don't think the state is proposing to fill in that gap with state money," says Gaskins. "So (the airport) would be completely on their own. So if you are an investor you could – not saying you would (though) one investor did – you could view the situation under the city as better than the situation independent."
Maybe so, but Standard and Poor's Analyst Todd Spence expects the airport's credit rating to remain just as high as it currently is, whether the airport authority measure passes or not.
"We don't view that one type of structure – whether it's city department or authority - is superior to another," says Spence. "Our assumption is financial procedures and operations at the airport would remain unchanged from historical practices."
So the city's dire warnings that the airport's credit rating and ability to borrow money will suffer if it spins off on its own are little more than bluster.
But people on the other side of this issue are guilty of being wrong, too.
For example, local politico Stan Campbell alleges the city council is so incompetent it has let differences over the streetcar prevent approval of $1 billion in airport improvements funds.
"You can't run an international airport and have it held hostage by a trolley - that's just crazy," says Campbell. "But that's what's happened."
Well, it hasn't. The citywide capital improvement plan is stalled over the streetcar. But the airport's own capital improvement plan was approved last summer and projects are underway.
Another allegation by supporters of the airport authority bill is that the city took over security responsibilities at the airport last year as a way to plug a $5 million hole in CMPD's budget left by a federal stimulus grant that expired. They point to the current $5 million price tag for security at the airport and cry foul.
In fact, the city plugged that hole with its own tax dollars. What's basically happened out at the airport is that about 30 security officers who used to be airport employees are now CMPD employees. Instead of paying their salaries directly, the airport is now paying CMPD to pay their salaries.
It's true airport security costs have gone up about a million dollars under CMPD, but there's no evidence that the city is using any of that money to somehow subsidize general CMPD operations. That would actually be against federal law.
Stan Campbell and other airport authority backers also claim the city went out of its way to have CMPD investigate a high-profile security breach in 2010 and trumped up its report to justify taking over airport security after federal agencies cleared the airport of wrongdoing.
The truth is federal agencies – including TSA – declined to investigate the incident. The only investigation done was by CMPD. It's also true that report provided ammunition for the city to take over airport security, against the wishes of Aviation Director Jerry Orr.
And then there's the charge both sides are making in this debate: that the other side is playing politics with the airport.
In that case, both are right.