O'Brien Outlines Final Airport Deal
The City of Worcester will receive a compensation package worth about $17 million in cash for the Worcester Regional Airport, according to a memo City Manager Michael O'Brien intends to present to the city council Tuesday.
The transfer of the airport property from the city to Massport, which operates the facility, will take place on July 1, according to O'Brien's memo, and it will absolve the city from any further operational responsibilities, debt service or capital expenditures.
According to O'Brien, Massport will:
• Reimburse the city $7.4 million for previous operating deficits and debt service.
• Pay the city $3.1 million to retire municipal bonds from previous airport improvements.
• Pay the city $5 million for airport employee retirement expenses.
The city will retain the Airport Industrial Park, the current appraised value of which is $2.6 million and which generates $400,000 annually in property tax revenue. The city is working with a potential private buyer for the industrial park, O'Brien said.
The city will pay $375,000 of its proceeds to retain property for public water and public park purposes and will split the cost of $1.45 million for the treatment of known environmental problems at the airport site.
The agreement also relieves the city of any federal and state grant obligations and related financial responsibilities.
The agreement must be approved by Massport and the Federal Aviation Administration, which stipulates that airport revenue may not be used for non-airport uses, like traditional real estate sales.
O'Brien also lays out a proposal for how the net $14.4 million in cash proceeds can be used by the city.
He suggests:
• Transferring $3.1 million for remaining WRA debt service.
• Spending $3 million on street and sidewalk improvements.
• Spending $750,000 on neighborhood park improvements.
• Using $2 million to "stabilize" the 2011 city budget.
• Putting $400,000 toward city employee retirement.
• Putting $1.07 million toward city employee retirement health care costs.
• Setting aside $2.08 million to cover state 9C budget cuts.
• Putting $2 million in escrow for future city retiree health care costs.
The city and Massport, which operates Logan International Airport, have been negotiating the sale of Worcester Regional since last year. The 1,300-acre, two-runway airport runs at an annual $3 million operating deficit of which the city is responsible for 20 percent.
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