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FOR IMMEDIATE RELEASE
PR- 288-03
October 15, 2003

MAYOR MICHAEL R. BLOOMBERG AND GOVERNOR GEORGE E. PATAKI ANNOUNCE LEASE EXTENSION AGREEMENT THROUGH 2050 FOR JOHN F. KENNEDY AND LAGUARDIA AIRPORTS

Agreement Secures City Immediate Payment of $700 Million, $50 Million For Queens Capital Projects, and Operations Oversight Through Joint Airport Board

Announcement Includes Agreement to Increase Future PILOT at World Trade Center and $90 Million Commitment to Study Airport Access for Lower Manhattan

Mayor Michael R. Bloomberg and Governor George E. Pataki today announced the Port Authority and the City of New York have reached an agreement that will extend the current lease on John F. Kennedy International (JFK) and LaGuardia airports through 2050.  The agreement secures New York City a minimum payment of $700 million up front and includes $50 million in funding for Queens capital projects.  In addition, the agreement calls for joint oversight of JFK and LaGuardia operations through the Airport Board, and commitments from the Port Authority to provide funding for one-seat rides from downtown Manhattan to JFK and Newark Liberty International airports. Until today, the long-term future of the airports had been in doubt as it was not clear who would operate them after the Port Authority’s lease runs out in 2015.  The agreement, which still must be approved by the Port Authority Board of Commissioners before it is finalized, will eliminate that uncertainty for the next 47 years, and ensure that the necessary airport upgrades, vital to the region’s economic future, will go forward.  The Governor and Mayor also announced today that the Port Authority would increase its future Payment In Lieu Of Taxes (PILOT) for the World Trade Center site. 

Queens Borough President Helen Marshall, Port Authority of New York & New Jersey Vice Chairman Charles Gargano and Executive Director Joseph J. Seymour, NYC Deputy Mayor for Economic Development & Rebuilding Daniel L. Doctoroff and Economic Development Corporation Andrew M. Alper attended for the announcement held at LaGuardia Airport.

“In my first State of the City, I pledged to establish a revitalized relationship with the Port Authority to ensure that New York City, and particularly Queens, receives fair compensation for the airports within our borders,” said Mayor Bloomberg. “This proposed agreement will give Kennedy and LaGuardia airports the sound financial foundation and governance structure worthy of these vital entryways to the World’s Second Home, and ensures that the Port Authority has the ability to make the appropriate investment in our airports going forward.  And for the first time, the City will have a substantial role in making sure that our airports are managed properly.  I want to thank Governor Pataki and the Port Authority for their hard work and cooperation.  The investment we are making today will benefit the entire region for decades to come and secure New York City’s status as a premier international City.” 

“Today’s agreement promises hundreds of millions of dollars to the City in the short term and billions of dollars over the life of this lease for New York City,” said Governor Pataki.  “We will continue to do everything we can to help New York, and I’m delighted we were able to make this happen for the people of this great City, while extending the proud tradition of the Port Authority operating these world-class airports for more than 55 years.”

The airports’ lease extension agreement provides the City with an upfront payment of almost $700 million, which includes a $500 million lump sum payment plus a new $93.5 million minimum annual rent payment for 2002 and 2003 (with interest). This minimum annual payment is a $90 million-per-year increase over the previous minimum.  In subsequent years, each year’s rent payment will be the greater of this minimum payment (which starts at $93.5 million but may increase every five years depending on airport gross revenues) or 8% of the current year’s airport gross revenues.  The proposed up-front payment was anticipated in the City’s current financial plan.

The agreement will also benefit the borough of Queens directly by having the Port Authority agree to commit $50 million in Port Authority funds to capital projects in Queens chosen by the City.

Moreover, the City and Port Authority have established the Airport Board to review airport standards, operations and performance.  The Board will be comprised of City and Port Authority officials, and is funded by both entities using a small percentage of the City’s rent payments plus an additional contribution from the Port Authority.  The City will have full audit rights with respect to the airport rents, and the Port Authority will provide all requested financial and non-financial information concerning airport operations and performance standards.

Agreement to Increase Future PILOT at World Trade Center

The City and Port Authority have also reached an agreement with regard to the World Trade Center site PILOT, a major step forward in revitalizing Lower Manhattan.  The restructured PILOT agreement would eliminate a great deal of the uncertainty surrounding the redevelopment of the World Trade Center site.  Currently the City receives only $1.7 million per year in PILOT payments for the World Trade Center site.  The new minimum PILOT payment would be 12% of annual rents received by the Port Authority, or approximately $14 million.  When the World Trade Center site is fully developed along the lines of the Libeskind Plan, those annual payments will increase to $55 million, and continue to escalate over time. 

Should the Port Authority acquire the Deutsche Bank and Milstein sites, the Port Authority also agrees to pay the equivalent of full property taxes on both sites until those sites are developed.  Once developed, the Port Authority will pay a PILOT that will reflect as-of-right incentives offered to private developers, and which will rise to the equivalent of full property taxes after 15 years. 

The agreement also calls for the Port Authority to provide funding commitments for direct airport access from Lower Manhattan to JFK and Newark Liberty airports.  The Port Authority will allocate $30 million to study extending the PATH to Newark Liberty Airport, and allocate $60 million to study a direct connection from Lower Manhattan to JFK.  If the projects are feasible, the Port Authority will construct the PATH extension to Newark, at an estimated cost of at least $500 million, and contribute an equivalent amount for airport access to JFK.

“Governor Pataki recognizes what lies at the heart of this agreement: As economic engines, JFK and LaGuardia airports are unrivaled,” said Port Authority Vice Chairman Gargano. “Together, these airports contribute more than $28 billion in economic activity in the New York metropolitan area.  More importantly, they provide about 50,000 on-airport jobs while supporting more than 270,000 additional jobs in the region, generating in excess of $9 billion in wages.  The PILOT agreement for the World Trade Center Site also will act as an economic stimulus for the City, State and region.”

“This is a great day for the City and State of New York, and for the Port Authority, but most of all, it’s a great day for the tens of millions of people who use JFK and LaGuardia,” said Port Authority Executive Director Seymour.  “Under the Port Authority’s stewardship, the airports have enjoyed tremendous growth, in large part because the Port Authority and its airport partners have invested more than $10 billion in improvements and enhancements over the years to ensure the vibrancy of these two historic facilities.  And today, after a decade of stops and starts in negotiations, I’m proud to say we have reached an agreement with the city that makes everyone a winner. It’s also important to note the significance of the new PILOT structure for the World Trade Center site.  The agreement establishes a fair and equitable payment to the city that will increase as the renaissance in Downtown Manhattan progresses.”

“The City’s airports are the gateway to the New York City experience,” said EDC President Alper. “Not only do the airports support an enormous number of jobs, but they also provide important ancillary benefits in areas such as tourism, business travel, and basic infrastructure support.  It’s critically important to maintain our airports so that we ensure New York’s position as the business capital of the world.”

The Port Authority has operated the two commercial airports in New York City for more than 55 years.  The original 50-year lease was signed in 1947 and extended to 2015 under an agreement struck in 1965.  Today’s agreement culminates negotiations between the Port Authority and the City that began about a decade ago.  The Port Authority Board of Commissioners must approve the agreement before it is finalized.







MEDIA CONTACT:


Ed Skyler / Jennifer Falk   (212) 788-2958

Lisa Stoll / Mollie Fullington (Governor)   (212) 681-4640




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