City seeks operator to develop airport and pay $1.2 million debt - with tough restrictions

OCEANSIDE -- Anyone who has flown knows the meaning of a holding pattern.

Supporters of the Oceanside Municipal Airport apply that description to the airport now, as they wait to see if the city will succeed in finding a private operator for the small airfield.

The city's request for proposals seeks a lot from a private operator.

The request wants someone to pay the airport's $1.2 million debt, build more hangars and tie-down spaces for aircraft, and construct an administration building with a restaurant. The operator also must pay the city 10 percent of gross profits.

It must do all this without operating a flight school or renting aircraft -- two of the more revenue-producing activities an airport can offer.

Finally, at the end of the 20- or 30-year contract, all improvements made by the private operator would belong to the city.

"What they're asking, it ain't going to work," said Joe Deggendorf, a former Oceanside airport manager who is now retired. "No one in their right mind would do it."

Pilots' rave reviews

Pilots seem to love the airfield on state Route 76, about two miles east of North Coast Highway.

The 50-acre airport, with a 3,000-foot runway, accommodates planes weighing less than 12,000 pounds -- primarily propeller-driven craft.

Pilots post comments on airports on an aviation-based Web site,, and the Oceanside airfield typically gets glowing reviews.

It is a "good place to stop for fuel," Ned Linch wrote July 1. "Small town airport with old timers offering help on how to get around L.A. while flying (under visual flight rules). I'll stop there again."

Rico Sharqawi wrote in May, "nice little airport. Only $5 overnight fee! Very much worth parking there and supporting this little airport."

Last year, John H. Tiner said he liked taking the bike path from the airport to the beach, and Marc Coan called the field "a little gem."

But the City Council has wavered in its support for the airport.

A master plan for improvements was written in 1994 and approved by the council in 1997, but it has not been implemented.

In recent years, city officials have considered turning the airport into a shopping center or residential neighborhood.

A stern warning from the Federal Aviation Administration last year ended that discussion and led to the city's search for an airport operator.

In a strongly worded letter in late January, FAA officials told Mayor Jim Wood that the airport must be maintained in perpetuity.

FAA spokesman Ian Gregor reiterated that position recently.

"Oceanside Municipal Airport is an extremely valuable aviation asset," Gregor said in an interview via e-mail. "In accepting federal airport improvement grants, and using some of the money for land acquisition, the city committed to keeping the airport open indefinitely.

"The FAA would not agree to any request to close the airport."

The city has run the airfield since January 2003, taking over operations from Sea Winds Aviation, the last private company to lease it. At one time, in the mid- to late-1980s, there were 150 planes and 80,000 takeoffs and landings per year, Deggendorf said.

Now, there are 67 aircraft based at the airfield and fewer than 20,000 takeoffs and landings annually.

County-owned McClellan-Palomar Airport in Carlsbad has a 4,600-foot runway, 331 aircraft, more than 200,000 takeoffs and landings and two commercial airlines.

The Oceanside council's debate last year over commercial development at the airport site led the county to consider taking it over. County staff recommended against it, warning of legal and financial entanglements surrounding the airfield.

Now, the city awaits an Oct. 16 deadline for responses to its request for proposals from private operators.

Following master plan

The city has stipulated that the airport operator must build out the airport according to the 1994 master plan.

Understanding exactly what that would entail can be confusing.

The master plan says the airport can accommodate 250 aircraft, butCity Manager Peter Weiss said the likelihood of more than 190 aircraft is remote.

The final number of planes would depend on the layout proposed by the bidder and accepted by the City Council, Weiss said.

For example, more maintenance hangars means fewer hangars for aircraft. The shape of the hangars, as well as the space between them also influences the number of planes, he said.

The city's request for proposals says the operator must ensure there is a maintenance hangar, at least 50 hangars and 40 tie-down spaces on the south side of the field.

The airfield now has 34 hangars, some new and some decrepit, and 55 tie-downs.

The city's request for proposals says the vacant land north of the runway should be developed in accordance with the master plan, which lacks specifics on that subject.

The airport operator also is expected to pay back $486,000 the airport owes the city's general fund for subsidies throughout the years and to assume a $740,000 loan that was used to build 11 hangars.

If the master plan improvements are made within eight years, city consultants say the airport could realize about $733,000 in annual net revenue.

The airport operator can look at the fiscal 2006-07 budget for guidance. Operating costs for the airport ran about $473,000.

"We ended up in the black this year," said Gary Gurley, city general services manager, even though an $80,000 deficit was predicted.

Hangar rents have been raised significantly to bring in more revenue.

Worth the chance?

Rene de Lathauwer, a private pilot and chairman of the Oceanside Airport Association's political action committee, said he doesn't see any private operator willing to do all that the city is asking without income from a flight school or aircraft rental.

That doesn't mean no one will bid on the package, de Lathauwer said.

"You always bait your hook with the biggest worm," he said of the city's stance. "It's part of negotiations."

Association President Ben Meyers said, "My sense is folks will bid, but they will propose some options that might exclude or modify" the city's stated restrictions.

With no revenue other than hangar fees, fuel sales and the restaurant, there is no way an operator can stay in business, Meyers said.

"We see these restrictions as egregious," he said.

Meyers said he estimates the proposed improvements will cost $6 million to $10 million. Gurley predicted the cost of the total buildout at $13 million to $15 million.

The city's demands are "kind of over the top," said Pete Sandhu of Union City, an airport operator who made a presentation to the council more than a year ago about taking over the field.

Sandhu and his partners operate David Wayne Hooks Airport north of Houston.

"It's the kind of deal that cannot be won. It's an excuse not to support an airport," he said of the city's plan.

"It's just too onerous a lease" to ask a private operator to sink so much capital into the airport and only have 20 years in which to earn it back, he said.

City Councilman Rocky Chavez, a longtime supporter of keeping the airport open, voted with the council's unanimous approval of the stringent conditions. Chavez agreed with de Lathauwer and Meyers that there is always room for negotiation.

"The council is committed to building the airport," Chavez said. "If we have to negotiate to build the airport, we will negotiate."