Red flags on PIT project & barons of sport
Uh-oh. More trouble for Pittsburgh International Airport’s (PIT) $1.1 billion (at least) modernization project. And, yet again, the Allegheny County Airport Authority is telling the public to pay no attention to that shouting marketplace behind the curtain.
The Post-Gazette reports that the Standard & Poor’s (S&P) rating agency has downgraded the Findlay Township airport’s credit outlook. That guidance went from “stable” to “negative.”
From the agency report:
“Given the weak state of the airline industry, any [capital expenditure] that is dependent on higher charges may not eventuate until there is confidence in economic returns through appropriate charges.”
The PIT rejiggering, already delayed by the coronavirus pandemic, could face higher borrowing costs to finance a project already surrounded by serious and growing questions.
The project involves building a new ticketing, baggage claim and check-in/security terminal in an attempt to right-size the facility, the Airport Authority says.
But the project was pretty much sprung on the public with little or no input, the airlines expected to help pay for right-sizing (through landing fees and such) had yet to sign any lease agreements even before the pandemic hit and the final design remained, well, hardly final.
Lest we forget, the initial $1.1 billion price tag suddenly became a “placeholder” price with nowhere to go but up.
Even some in the typically chummy “airport analyst” community have turned into something close to doubting Thomases. One expert even suggests the project might need to be abandoned.
Have no trepidations, an Airport Authority spokesman says, the credit outlook might be negative but the facility’s bond rating remains at A-minus.
But it remains quite difficult to imagine the airlines, crushed by the pandemic and with not much to cheer about for the rest of the year, rushing to sign new leases at PIT.
It would be too easy, and far too convenient, to blame all the airport’s woes on the pandemic. And it appears that some officials are doing just that.
As previously noted, there were serious questions about operations at PIT before the pandemic hit. Board conflicts. Management issues. Failed subsidies to airlines, with one even incentivizing failure. Subsidies to one foreign carrier that helped drive another carrier’s foreign flights into oblivion.
Attempting to put a coronavirus mask on those pre-existing conditions is an intellectually dishonest sleight of hand that must not be abided by the public.
The Wall Street Journal reports that two decades of using borrowed money to pay for new playgrounds for the barons of sport is coming back to haunt cities in this coronavirus pandemic era.
“The National League of Cities, an advocacy group, projects that American cities, towns and villages will experience a combined shortfall of roughly $360 billion through 2022, raising questions about decisions to allocate public money to sports franchises,” The Journal notes.
“The borrowers envisioned the sports facilities as a form of economic development that would attract fans from near and far, raising cities’ national profile and boosting their revenue beyond what was needed to pay back the bonds.
“The pandemic has turned that calculus on its head, crushing tourism proceeds and turning stadiums into a strain on city budgets—when cities are already hemorrhaging revenue from coronavirus shutdowns.”
And as Frank Gamrat, the Allegheny Institute’s executive director, reminds:
“That’s something no one really considers. The dreamers that put these things together always assume that the money will continue to roll in indefinitely.
“While I think PNC Park and Heinz Field are safe, their bonds will get paid from Regional Asset District (RAD) dollars, leaving other organizations to fight over the scraps.
“I wonder about PPG Paints Arena,” he says. “What if the team struggles to make its payment as its season was cut short?”
Gamrat’s bottom line:
“The stadiums and arenas, built to enrich private sports owners, will take money away from more deserving public-serving ventures like museums, libraries, etc. It’s yet another reason why these investments were bad ideas.”
Colin McNickle is communications and marketing director at the Allegheny Institute for Public Policy (firstname.lastname@example.org).