Airport closer to reality

Published 12:00 am Saturday, June 23, 2001


BATON ROUGE – The vision of a regional airport between Baton Rouge and New Orleans came another step closer to taking off Thursday as the Louisiana Airport Authority received a report from the URS Corporation on the risk analysis of the project. Holding a public meeting in Baton Rouge, the LAA heard Winfield Beyea, vice president for air transportation at URS, present the results of the company’s six-month study of the financial feasibility issues for the proposed mammoth intermodal transport center. For supporters of the project, the news was reassuring. Though no site has yet been selected for the proposed Louisiana Transportation Center, the concept was judged financially sound by the consulting firm. In the past two months, Beyea reported, URS has completed three working papers, forecasting demand, projecting facility requirements, and providing a preliminary financial analysis. URS met with the Federal Aviation Authority in Washington, D.C., earlier this month, and is engaging in continuing coordination with governmental officials in Louisiana. According to Beyea, “The LTC concept has the potential to attract private investment as a master developer and the State of Louisiana incurs no financial risk in paying for the project under the assumptions of this risk analysis.” The assumptions included a 30- to 50-year lease between LAA and the master developer, with up-front and annual payments, which would leave LAA as the owner of the property, and require tenants to pay payroll taxes and fuel taxes. Most importantly, the study assumed that master developer would absorb the financial commitment, not LAA or the State of Louisiana. LAA would only serve as a conduit for municipal bond financing. Included among the preliminary financial results reported in the study was the estimate of $2.1 billion for the first phase of the project, with a minimum up-front investor equity investment of nearly $200 million. Cumulative cash flow to the investor over a 25-year period was expected to generate an internal rate of return between 15 and 19 percent. Revenue to LAA during the same period was anticipated to be between $175 million and $210 million. Air cargo potential, according to the study, was projected between 287,000 and 535,200 annual tons by 2020, depending on the assumptions made in various scenarios. Surface-related cargo was projected between 13.8 and 30.6 million tons by the same year. “Surface-related cargo,” Beyea explained, “includes the primary markets of New Orleans and Baton Rouge as well as the secondary markets of high value goods that originate or terminate in Louisiana.” Currently included among the world’s top 20 airports in terms of cargo tonnage are two airports in the southeastern United States: Miami, at number 8 with 1.9 million tons, and Atlanta, at number 20 with 0.8 million tons. To handle the projected growth, warehouse space requirements by 2020 were pegged between 13.3 and 28.9 million square feet. Air cargo building requirements were said to range between 430,500 and 502,800 square feet. The air cargo and airfield component of the center were estimated to need 3,000 acres. “The overall site,” Beyea indicated, “would be in excess of 20,000 acres.” The study assumed that the airfield would initially have two parallel runways, 12,000 feet and 10,500 feet, perhaps expanding ultimately to four runways. “I told you,” Governor Mike Foster said after the presentation, “the runway cost is areas not wetlands, or near wetlands, or near a lot of populated areas.” Foster explained how he had come to change his view of the concept of the Louisiana Transport Center. “I have to tell you,” he said, “that I was one of the major skeptics early on as to whether this had any viability or practical outcome. “It was a long distance from being a complete skeptic to a supporter of the project in its present form. I do not think there is any question that we would be remiss if we did not continue to explore the feasibility at this point.” The state recently committed $545,000 in funding towards the project. The state is responsible for paying 10 percent of a $4.5 million feasibility study; the FAA will pay the other 90 percent of the cost. The project has been extremely controversial, and has been opposed by some officials at current airports in Baton Rouge and New Orleans. Concern has also been expressed by a number of residents of the River Parishes, particularly St. James Parish, which has been mentioned as a likely site for the massive development. “What happened, in my opinion,” Foster commented, “is you are talking about a freight airport, and I know some people feel threatened. But the truth is, we have serious limitations in our airport structure. “To increase there does not make me less supportive of an extra runway in New Orleans.” A few years ago, Foster said, “None of us thought it was practical to fund any of these things with private funding. That has changed. I have met enough people that have come into my office that have the ability to raise large amounts of capital, who were seriously interested not only in projects like this, but in projects like the Millennium Port Authority.” Foster said Louisiana is the right place to develop new methods of moving material. “We know for a fact without any doubt that if we do nothing in the area of port development we are going to lose a hugh amount of the traffic we have. It is well known that the port if it is going to survive has to be able to handle vessels that are much bigger, and with much deeper draft, that are not going to come up the Mississippi River and are not going to come up the Mississippi River and are not going to come up any of the rivers. The truth is airports are going to have to be big enough, with very long runways to handle the bigger aircraft,” he concluded.