South Terminal Highstar contract: remove capital recovery

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Don Zimmerman
Posts: 168
Joined: Fri Jan 09, 2015 11:05 am

South Terminal Highstar contract: remove capital recovery

Post by Don Zimmerman »

Dear Mayor & Council,

I will be proposing an amendment to Item 1 on 27-Aug-15 agenda, the Highstar south terminal lease agreement: Strike Section 10, Capital Recovery, which starts on page 6.

Highstar is a for profit corporation seeking a very long term (30 year) contract on an airport private/public partnership that has no precedence in the USA, on airports of such size as ABIA.

On principal, I believe we must refuse contract provisions which allocate potential profits to the private interest, while leaving risk with the public airport patrons and constituents. I do not see why the airport needs to be on the hook for $11+ million. The assumption of full risk to the private interest is part of the justification for awarding full profits.

I personally asked Austin city staff multiple times for the anticipated lease terms to cap the financial liability the city/Airport under Section 10, and I still don't have that information in writing.

Finally, the posting language says "Authorize execution of a lease agreement...". The City of Austin letter dated August 4, 2015, addressed to Mr. Brent Tasugi (Senior VP, Oaktree Capital Management), cites four phases, starting with "negotiation" back in June, and then "to execute the Lease with Highstar" on August 13th, 2015.

Was the actual "Lease" posted in the backup material? We only have a letter "... to set forth the current mutual understandings between the City and Highstar and include the minimum terms and conditions upon which the City and Highstar and include the minimum terms and conditions upon which the City would lease the Sourth Terminal to Highstar...".
Don Zimmerman
Council Member District 6 (northwest Austin)