County expected to leave fate of airport management in County Executive’s hands

Wilmington Airport

This story was originally published April 28 and was updated May 2.

NEW CASTLE – New Castle County Council will consider a resolution at its May 12 meeting to send a notice of non-renewal to the Delaware River and Bay Authority and let County Executive Matt Meyer determine next steps for management of the Wilmington (New Castle) Airport.

The recommendation to terminate the current 30-year lease and issue an RFP came from a task force of business and community leaders, local airport experts and elected officials to consider the current and possible new economic vision for the Wilmington Airport (ILG). The taskforce, which unanimously approved the recommendation, was headed by Alan Levin, owner of the former Happy Harry’s drug store chain and former Delaware Economic Development Office chief.

The council resolution, which will be submitted this week by Democrats George Smiley and Ken Woods, does not include the RFP recommendation.

“We are bringing forward the will of the task force without some of the language,” Smiley said Friday night. “But it’s clear that we should not accept the status quo” of the current agreement the Delaware River and Bay Authority (DRBA), which currently operates the facility, said last week that if Council opens a competitive bidding process for management of the airport it will not participate, according to DRBA spokesman James Salmon.

“We have an agreement. If the county thinks there is a better agreement to be had, then they should pursue it. But they need to do so with the accurate facts and not the misrepresentations made by the consultants,” Salmon said April 28.

The county has until June 30 to decide whether it wants to renew the DRBA’s current 30-year lease at its current terms, try to negotiate a new lease with DRBA, or issue a Request for Proposal, a competitive bidding process for a new lease that would allow DRBA to participate. The River and Bay Authority, which manages many of the state’s airports, would continue to manage the airport until 2025 during that process.

The DRBA said it “is proud of its operation of the Airport” and saying that “the Authority was asked to step into operations 25 years ago because the County did not have money or expertise to run the facility. It has invested millions of its own dollars in the enterprise, has secured tens of millions of Federal matching funds, and the facility has prospered greatly.”

The DRBA has defended its management of the complex, citing continuing improvements and plans by Frontier Airlines to return to the airport. Due to the coronavirus crisis, Frontier is now posting a mid-November timeframe for offering flights from Wilmington to and from Orlando.

Under the terms of the lease, DRBA is supposed to pay the county $1 per year, but has apparently not made that payment since 1995, according to a white paper issued by Airport Business Solutions, a North Carolina-based consultant hired by the county to analyze and assess opportunities to support the growth of existing tenants, new job creation and revenue generation at the airport.

Salmon disputed that, saying in a statement that Article 4 (page 3) of the Ground Lease sets the rent payment at $1.00 per year together with a sum equal to the debt service on certain obligations of the County as set forth in Exhibit C of the Lease.  The total amount of that debt service obligation was just under $7 million.

The detailed white paper can be viewed HERE and the supplement HERE.

Describing the existing agreements with the DRBA as “poorly written” and not providing “adequate protections or revenue for the County,” the consultant listed a number of concerns, including:

• “The airport operates outside of the County’s economic development efforts and “little to no effort is made by DRBA to coordinate its operation and development plans with those of the County.” The consultant concedes that the lease agreement does not require that, which it says is a “major flaw” in the contract.
• The county has no right to receive non-public information regarding the operation and management of the Airport, including information about tenants and customers.
• The county has no role in decision making at the Airport, and often learns of decisions only through third parties, litigation, or coincidence.

DRBA responded by saying “the task force’s recommendation to terminate the agreement seems based on a serious misunderstanding of the scope and magnitude of the Authority’s contributions—and of the true cost of running the airport— as well as the terms of agreement negotiated 25 years ago. In all events, the Authority is committed to providing accurate information to the County and clearing up any misunderstandings created by the consultants about the Airport operations and finances…We feel the best way to achieve this result is to meet face to face with the County officials, to hear their concerns and to try to reach agreement on a path forward.”

“I just want what’s best for county taxpayers,” Meyer told the Delaware Business Times. “I have never run an airport in my life. The task force was an attempt to get smart people that all have an interest in this facility.”

Meyer said the county was in a “pinch” when it signed the original agreement, adding that he couldn’t imagine having to shoulder the “drain on my budget” back in 1995 when the lease was signed.

“We need to trust the process,” he said, adding that DRBA “seems to have done a good job for county taxpayers but I am relying on the task force for all the other questions.”

By Peter Osborne

posborne@delawarebusinesstimes.com