Controversial CLT Airport Authority Measure Moves to Senate Floor | Eastern North Carolina Now

   Publisher's note: The author of this fine report, Dan Way, is an associate editor of the Carolina Journal, John Hood Publisher.

Sponsors brush aside concerns about debt, management, compensation to city

    RALEIGH     Charlotte officials believe Senate Republicans have an ulterior motive in sponsoring legislation to create a regional authority to own and operate Charlotte-Douglas International Airport.

    Frustrated Democrats on the Senate Finance Committee grilled bill sponsor Bob Rucho, R-Mecklenburg, Wednesday about transferring the city-owned airport to a multicounty board.

    Rucho, the Finance Committee chairman, brushed aside a litany of concerns from Senate Democrats about the speed with which the bill is moving, the lack of research on the complex issue, the genesis of the move, and lingering legal questions about outstanding bonds and compensation to the city.

    "They are grabbing a $10 billion asset from the city with no explanation why," Charlotte City Councilman Andy Dulin said after the committee meeting.

    "I'm very, very frustrated. The citizens of Charlotte were not well served today by a man who was elected to serve them," Dulin said in reference to Rucho's role. Dulin added that Senate Republicans have refused to do due diligence on this complex matter, which makes him believe there is a hidden agenda.

    The largest sticking point, and the reason the bill was referred to Senate Finance for review, is uncertainty over the status of airport-issued revenue bonds if the property is turned over to a regional authority.

    Legislative staff said there are more than $800 million in outstanding revenue bonds. The best-case scenario would be a bond counsel concluding that the switch to a regional authority is nothing more than a simple administrative change resulting in no harm to the bondholders and no need to obtain bondholders' consent to transfer the obligations under the current covenant.

    The worst-case scenario would be the need to recall and reissue current bonds. A little more than $700 million of those can't be recalled until 2015, and those would have to be advance refunded, meaning the money would have to be put into some type of escrow. That scenario would be much more expensive.

    Sen. Dan Blue, D-Wake, said "this cloud that's put over these bonds" troubled him. He said typically a bond attorney gives a legal opinion on such matters before legislative processes begin and votes are taken.

    "The [state] treasurer is in the process of getting that done," Rucho said of obtaining a ruling from a bond counsel. That would happen before a vote on the Senate floor, he said.

    "I think it's important to know whether we're in a worst case or best case before we vote," said Sen. Dan Clodfelter, D-Mecklenburg.

    "The city's bond counsel has issued an opinion, and that opinion is that the consent of the bondholders is required or otherwise there is a default by the city," Clodfelter said. "I don't know whether the treasurer agrees with that, but I sure want to know the answer before I vote."

    The decision that is made could have impact beyond the airport or the city of Charlotte, he said.

    "If we mess this kind of thing up it impacts the credit of every local government in the state of North Carolina and probably the state's credit, too," Clodfelter said. Bondholders and underwriters don't take such miscues lightly.

    Democrats weren't the only ones raising warning flags.

    "I strongly support regional authorities," said Sen. Fletcher Hartsell, R-Cabarrus, who tried unsuccessfully to help broker such a deal between Charlotte and Concord when establishing Concord Regional Airport as a reliever to Charlotte-Douglas.

    "I do have a problem with this potential interference with the bond covenants because that's playing with fire," Hartsell said, "and unless we've got some kind of opinion from somebody that says that this does not impair a contract, we're violating the dadgum state constitution. ..."

    Sen. Floyd McKissick, D-Durham, raised another potential obstacle to the deal.

    "It always gives me some concern when there is a taking or transfer of assets by any government or any unit and given to some other entity without compensation," McKissick said. He asked whether any study has been done to determine how much Charlotte invested in the airport, since inception, and if the city would be "compensated or made whole."

    "There was a time when the city did fund this airport with general obligation bonds," Clodfelter said. "It's been built up largely by the financial investments of the city of Charlotte," and that needs to be taken into consideration.

    McKissick also said he was uneasy about the airport transfer because the Mecklenburg County delegation is split on the issue.

    "I'm wondering where this is coming from, if you could share with me what the genesis of this," he asked.

    Rucho said USAir, which recently merged with American Airlines, "wants to have certainty in making sure that they continue to have a low-cost hub so that they can operate from it and hopefully expand."

    As he has said in the past, the city has operated the airport with an assistant city manager who also has other duties. It is time to add a professional board fully dedicated to running the airport as it continues to expand, Rucho said.

    "There is another component of this that requires additional leadership and knowledge and expertise, because there is an intermodal park over there," Rucho said. The park is designed to be the inland port of the state's eastern seaboard, handling cargo that will be distributed throughout the country, Rucho said.

    A full-time board will ensure the airport "reaches its full economic potential" in revenue and "tens of thousands of new jobs," he said.

    Clodfelter took issue with the need for expertise and leadership at the airport.

    "I think we've had that since 1936. The proof is in the pudding or this airport wouldn't be where it is today," he said. Several airport directors and numerous city administrations and city councils have nurtured the growth of the airport, and "the current operation structure is very committed to the growth of this airport."

    Sen. Joel Ford, D-Mecklenburg, said, "there seems to be sufficient enough" questions about the deal to slow the process and conduct a study that would "bring back some factual information" to facilitate a more informed decision.

    Dana Fenton, intergovernmental relations manager for Charlotte, said the city is conducting a study on the impact of transferring ownership and asked that the vote be put off until that is finished.

    But Rucho said there was a prior study done by former Lt. Gov. Walter Dalton, and there will be further debate opportunities as the bill moves to the Senate floor and then to the House. The measure passed on divided voice vote and moved to the full Senate.