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City braces for financial uncertainty in airport takeover

Original post made on Jul 3, 2014

As Palo Alto prepares to take full control of its namesake airport for the fist time in nearly half a century, city officials are wrestling with gaping uncertainties about how much it will cost to fix up the small but bustling Baylands facility — and where the money will come from.

Read the full story here Web Link posted Friday, July 4, 2014, 12:00 AM

Comments (13)

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Posted by senor blogger
a resident of Palo Verde
on Jul 3, 2014 at 1:14 pm

Please, Let me suggest :
The airport should be fully , financially, self supporting.
Any loans should carry a reasonable interest rate, and be publically reviewable. With no other hidden subsidies.
The airport is a business enterprise and should be treated as such.
Very few Palo Alto citizens derive any benefit whatsoever from the airport or its operations.

There is a reason that the County wants to be free of the burden of the airport.

Do any of our Council members know what the actual reasons are?

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Posted by resident 1
a resident of Adobe-Meadow
on Jul 3, 2014 at 4:09 pm

I am concerned about the funding from the FAA. What strings are attached concerning who operates at the airport? The San Carlos Airport survives by funding grants from the government that require it to accept any organizations that wants to use the airport - so they say. They are saying that Surf Air can operate out of that airport and they are required to allow that.
I am concerned that the desire to show a profit will drive PAO to allow other small airlines to operate and increase the noise. We have a lot of drama right now concerning both San Jose and SFO planes. Bulking up the "services" is undefined. "High Demand" is undefined.
A further problem is that the flood control effort may possibly truncate the runway - the flood control section is at the end of the runway.
A lot of unknowns.

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Posted by Resident 2
a resident of Professorville
on Jul 3, 2014 at 4:57 pm

Airports are necessary infrastructure just as roads and harbors. Just because not everyone uses them directly doesn't mean they are not needed. All the emergency medical evac for entire west bay is based at PAO for example.

The primary reason PAO is in the red at this time is because any and all development was delayed/blocked for years by county. An airport makes money primarily by leasing parking space just like any other parking facility. Yet, they were not alowed to build more hangars (which fetch about 5x to 10x the price of a tiedown for same surface area) and were not allowed to raise parking rates either (which are county wide).

Ownership by county was a management disaster in hindsight. Original intent was to save cost by sharing overhead but the result was just simple neglect. PAO is one of the airports that can be easily and substantilly profitable exactly because of the location and substantial demand. But it still needs maintenance just like a bridge or a road.

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Posted by Resident
a resident of Another Palo Alto neighborhood
on Jul 3, 2014 at 5:11 pm

Palo Alto should be promoting the airport as a city and council amenity. It should be using the convenience of the airport as an attraction for local businesses to use air taxi services, etc. On top of that, there should be a move to have supporting infrastructure close to the airport. At present there isn't even a coffee shop anywhere close.

With the Baylands close by infrastructure could be supported by users of both the airport and the Baylands as well as the golf course and athletics center.

City planners should start looking at the East of Embarcadero area and start using some common sense and out of the box innovative ideas to get the best use of this area and get some tax dollars into city coffers from those that use these facilities.

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Posted by FBO Lover
a resident of East Palo Alto
on Jul 3, 2014 at 6:34 pm

The Senior Blogger makes good points, but missed one main things...that no resident derives any benefit from the airport...Everything is mobile now and speed is key in mobile world...getting a heart specialist to a senior thru air is a pretty good benefit...getting a person airborne within walking or bicycle distance is a good benefit...helping a person learn to fly is a good benefit, especially for the youth in East Palo Alto...Incorporating micro jets to deliver a person outside first tier radius is a good thing...and lastly in the area of earthquake where the Earth turns to mush, a runway for air resupply is a Tri-City bonus when bridges collapse and roads are clogged...

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Posted by Chris
a resident of Community Center
on Jul 3, 2014 at 8:03 pm

Personally I'd love it if new hangars were built there. The current hangars fetch over $1000/month in rent, which is huge compared to the $650/month at San Jose. (San Jose is far from cheap.)

Hard to imagine new hangars operating at a loss -- and they'd stop the nicest (read most profitable to the airport) planes from relocating elsewhere.

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Posted by Anonymous
a resident of Another Palo Alto neighborhood
on Jul 3, 2014 at 10:10 pm

Palo Alto isn't going to be making $13.7 Million off this airport. It's going to require cash infusions for years. So what are the terms on the initial $560,000 loan? At what point does Palo Alto even think it is going to break even running this airport?

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Posted by Jetman
a resident of Another Palo Alto neighborhood
on Jul 5, 2014 at 10:29 am

From an environmental point of view, there is little room for PAO to expand. The EPA has been studying lead emissions at general aviation airports, and POA did not fair very well:

0.33 ug/m^3 (San Carlos, CA)
0.17 ug/m^3 (McClelland, CA)
0.12 ug/m^3 (Palo Alto, CA)
0.09 ug/m^3 (Reid-Hillview, CA)
0.07 ug/m^3 (Gillespie, CA)
0.07 ug/m^3 (Merril, AK)
0.06 ug/m^3 (Van Nuys, CA)
0.06 ug/m^3 (Auburn, WA)
0.04 ug/m^3 (Deer Valley, AZ)
0.03 ug/m^3 (Brookhaven, NY)
0.03 ug/m^3 (Stinson, TX)
0.02 ug/m^3 (Harvey, WA)
0.01 ug/m^3 (Republic, NY)

At 0.12 ug/m^3 Palo Alto Airport is only 0.02 below the EPA's limit of 0.15 ug/m^3. Even a small increase in activity at PAO could push PAO over the limit. Even without exceeding the limit, what is Palo Alto's legal liability?

A Duke University study found that children attending schools within one kilometer of an airport, had elevated levels of lead in their blood.

Leaded Fuel Is a Thing of the Past—Unless You Fly a Private Plane
Mother Jones ~ January 3, 2013 Web Link

EPA Airport Lead Monitoring Program Update: Web Link

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Posted by where's the sunshine?
a resident of Midtown
on Jul 6, 2014 at 11:30 am

Another reason the airport appears to be in the red is because of the county's (should be criminal) behavior. They run the revenues into the county general fund, then pay for the airport out of the airport fund. Anything would appear to be in the red when you discount the income!!

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Posted by resident 1
a resident of Adobe-Meadow
on Jul 6, 2014 at 12:41 pm

Sunshine's comment is relevant to every bond issue we vote on. We authorize funding for a specific purpose, then the funding gets merged into the general fund and is used for other purposes. Jerry Brown is very good at that. Anything you vote for on HSR or the airport will somehow lose it's identity and get spread to other purposes.
Same for social security - it is not an entitlement - it is deducted out of the payroll in the form of FICA taxes which are matched by the employer. If you considered all of the money deducted and matched then listen to them say it is broke - boo hoo. That is what is wrong with government - no accountability.

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Posted by Crescent Park Dad
a resident of Crescent Park
on Jul 7, 2014 at 5:55 pm

The problem is that the public didn't get to vote on the airport acquisition by the city from the county. Our wonderful CC decided to do this all on their own. Never mind the red ink...

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Posted by curmudgeon
a resident of Downtown North
on Jul 8, 2014 at 10:07 am

"All the emergency medical evac for entire west bay is based at PAO for example."

Emergency medical evac services use helicopters. Helicopters don't need a 2,443-ft runway. Therefore, if we're justifying PAO on this basis, we can close that runway, reserve 5 acres or so for medical evac, and open the remaining 97 acres for public use.

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Posted by Jetman
a resident of Another Palo Alto neighborhood
on Jul 8, 2014 at 12:14 pm

Are general aviation airports like PAO really viable businesses, or are they just financial zombies, just barely surviving on the life support of FAA Airport Improvement Program (AIP) funds?

General aviation has been in decline for years. The up and coming generation of potential GA pilots are not even interested in driving, let alone flying. The young Google and Facebook employees with the discretionary income to become aircraft pilots and/or owners, prefer to have their adventures in the safety of the virtual world. The future of PAO seems to be as a hub for a smaller regional carrier (like SurfAir), or as a base for domestic surveillance drones, a business Google and Facebook are eager to enter.

If Palo Alto accepts AIP funds, Palo Alto will lose control of many of the aspects of PAO's operations important to the Palo Alto community. Palo Alto's hands will be tied by an elaborate network of strings which come attached to all FAA AIP funds that are designed to protect the aircraft industry from local governance.

"MacArthur drops noise-surcharge"
AINonline ~ May 27, 2008 Web Link

"Young Americans Lead Trend to Less Driving"
New York Times ~ May 13, 2013 Web Link

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