December 19, 2014
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RIAC should move ahead with glycol treatment plant

To the Editor:

"Fitch warns T.F. Green execs against borrowing $65 million." That was the headline of a WPRI Television Nesi's Notes blog on August 18, 2011.

Ted Nesi of WPRI Television pointed out that the Rhode Island Airport Corporation (RIAC) was planning to borrow $65 million in bonds. He noted that Fitch Ratings, a bond-rating company that specializes in airport bonds, publicly announced in August that: "Fitch believes the airports ability to maintain financial flexibility and credit quality on the current traffic base will be materially diminished by additional leverage and inconsistent with the current rating."

If RIAC attempts to build the glycol management plant and extend its runways with the proposed $65 million of borrowed money, it is going to run into bond-ratings agency problems. And that is not just a problem for RIAC but for the state as a whole. A bond-rating downgrade at RIAC handed out when it attempts to borrow $65 million could threaten the entire state's bond rating.

At the conclusion of the WPRI blog, Mr. Nesi points out: "RIAC spokeswoman Patti Goldstein did not respond to phone and email messages from WPRI.com. The agencys executive director, Kevin Dillon, did not respond to an email message."

I encountered a similar lack of comment from RIAC when I passed the following proposed letter to the editor of the Warwick Beacon by the airport corporation. This is what I sent them:

"It's interesting to note that RIAC does not have the authority to borrow money for infrastructure. Its parent, the Economic Development Corporation (EDC), does that. The Rhode Island General Assembly must approve this borrowing. RIAC and EDC must comply with Rhode Island's debt-ceiling laws and regulations.

"One of the regulations is that the EDC cannot float a bond that will cause rating agencies to lower bond ratings. Fitch Ratings has already warned RIAC that additional borrowing will cause a ratings downgrade unless passenger counts increase substantially. There is no evidence that many more passengers will use T.F. Green in the near future.

"RIAC has about $40 million in unallocated cash in its coffers, enough to build the $23 million pollution-control plant. In December, the RIAC Board voted to build two jetways on speculation, using $1.7 million to do so. There is no guarantee that a new airline will come by to use these jetways. RIAC still has plans to purchase more commercial property on Post Road, potentially adding to the existing fallow lots that blight the gateway to the airport. This money should be used to fix the pollution problem.

"Where does that leave the safety-enhancement project for the crosswinds runway? The State of Rhode Island must come up with a 20 percent match to federal grants to complete this project. RIAC must show in its grant application for federal aid that it has the capacity and the plan to finance the remainder of the project's costs. How does RIAC/EDC do that with the Fitch Ratings warning of a credit downgrade sounding an alarm?

"Here's an idea: RIAC has acquired a fair amount of property around the airport for noise mitigation purposes. It has plans to lease out some of that property to commercial venues. Perhaps it should simply sell this property as the U.S. Government Accounting Office advises. The proceeds could be used to help fund the safety improvements."

RIAC's response to these observations was simple. Management denied all of the above. When pressed, RIAC management reported: "(We) will sort out his (Langseth's) reference again to a state bond law."

Then silence.

The Warwick City Council is in non-public negotiations with RIAC regarding airport expansion. Labor unions and the Greater Providence Chamber of Commerce are demanding that the City Council cave in and agree to let RIAC grab Winslow Park, a city property, without any known financial capability to complete the expansion of T.F. Green Airport.

RIAC should focus on building the glycol plant. This will help fix the pollution problem and create some construction jobs for union people. RIAC has the money to do this project now and should commence construction as soon as possible.

Richard Langseth
Executive Director, Greenwich Bay Watershed Group
Warwick

Editor's Note: RIAC CEO Kevin Dillon, who was shown this letter, questioned Langseth's figures and said many of his assumptions are faulty.


Comments
6 comments on this item

Here are some answers to Mr. Dillon's concerns about the figures in this letter:

Page 113 of Rhode Island's FY 2013 Capital Budget - FY 2013 – FY 2017 Capital Improvement Plan shows the following:

"As part of the FY 2013 – FY 2017 capital budget process the Governor recommends a total $174.0 million in a Kushner bond authorization for the financing of various (airport) capital projects for FY 2013 to FY 2017 including costs associated with a deicer management system, runway and taxiway acquisition, and facility developments."

That is an astounding number which raises RIAC's borrowing to $500 million. (Mr. Nesi's figure above was $65 million in new borrowing about one third of the airport's request for $174 million announced in the state budget.)

The glycol management plant need of $23 million is confirmed in the state capital budget. The $1.7 million for the gates is from a RIAC Board of Director's meeting minutes. The 20% state match is an FAA number.

There are no other "figures" in my letter to the editor. I don't know why Mr. Dillon is questioning them. They are his own numbers!

This is what bothers me about the whole RIAC/Dillon attitude...

Many people intimately knowledgeable about TF Green, their need to comply with environmental law, and the (false) need we need an 8700' runway, agree with the writer's comment that "RIAC SHOULD FOCUS ON BUILDING THE GLYCOL (TREATMENT) PLANT: AS A PRIORITY. IT IS TRUE

For those not familiar, TF Green airport operators have been dumping toxic chemicals from aircraft deicing and other operations, into the watershed east of the airport, for years, allegedly in violation of state and federal laws. This harms the environment, and is harmful to property owners east of the airport and fish life in the brook and Narragansett Bay. Because of this, RIAC is now required by law to build a glycol pre-treatment plant to process chemicals used to de-ice aircraft. The processed material will be sent to the Warwick Sewer Plant as waste that will then help the WSA with its processing of wastewater from the community.

Many agree with the Op/Ed write that building the plant "will help fix the pollution problem and create some construction jobs for union people."

IN FACT: (attention union business managers!) The Glycol Pre-Treatment Plant will likely create more individual jobs than the runway extension itself. The glycol processing plant should be given priority over the runway, it will reduce pollution to the watersheds east of the airport, improving the quality of life for people living along the watershed between the airport and Narragansett bay, and the treatment plant IS REQUIRED by both the RIDEM and the MOU Agreement between the City of Warwick and RIAC. It will potentially create more individual jobs than the runway extension.

During the EIS process, there were updates to the aircraft fleet mix. The more current fleet utilizes newer aircraft that are more efficient on take off thereby requiring less runway than what was originally proposed based on older aircraft, which are practically all no longer in the fleet serving TF Green as they have been replaced with the more efficient aircraft, negating the need for an 8,700' runway.

With this, perhaps the union business managers will realize that with the legally mandated requirement to build the glycol pre-treatment plant and potential to create more individual jobs, hopefully the unions will lobby to move RIAC to secure funding for the glycol pre-treatment plant asap, as that project is the best probability to create union jobs asap as the design is complete and it is now out for bid. Let all push for this.

As for Mr. Dillion's comments, would you really believe anything he says?

Remember, he was paid nearly $300,000 a year to reach certain goals.

1) To ensure the construction of an 8,700' runway (he failed to accomplish that)

2) To improve relations with residents negatively impacted by the airport (he failed to accomplish that)

3) To improve annual passenger counts (he failed to accomplish that)

4) To secure funding for the work proposed in the EIS (he failed to accomplish that)

5) To improve the profitability of TF Green (he failed to accomplish that and left us with a lower bond rating)

Note that the EIS approval did not ensure a longer runway will be constructed. It only attempted to disclose environmental impacts and anticipated mitigation.

The main problem here is the airport is a politically managed airport. Goals are based on pie in the sky dreams that ignore reality. TF Green is a super "regional" airport. Trying to make it an "international" airport when that defies reality of national and regional economics and common sense, will only leave TF Green over invested in infrastructure and fixed costs that it cannot afford, with those costs being passed to local passengers, making it more expensive to use TF Green, and the end result that us already happening, is that TF Green will continue to lose local market share to Connecticut and Massachusetts airport Bradley and Logan. Its already happening.

Build the glycol pre-treatment plant now, it's designed and ready to build. It will help residents living around the watershed east of the airport, it will help the Warwick Sewer Authority, it will help the unions now!

Many people intimately knowledgeable about TF Green, their need to comply with environmental law, and the (false) need we need an 8700' runway, agree with the writer's comment that "RIAC SHOULD FOCUS ON BUILDING THE GLYCOL (TREATMENT) PLANT: AS A PRIORITY. IT IS TRUE

For those not familiar, TF Green airport operators have been dumping toxic chemicals from aircraft deicing and other operations, into the watershed east of the airport, for years, allegedly in violation of state and federal laws. This harms the environment, and is harmful to property owners east of the airport and fish life in the brook and Narragansett Bay. Because of this, RIAC is now required by law to build a glycol pre-treatment plant to process chemicals used to de-ice aircraft. The processed material will be sent to the Warwick Sewer Plant as waste that will then help the WSA with its processing of wastewater from the community.

Many agree with the Op/Ed writer that building the plant "will help fix the pollution problem and create some construction jobs for union people."

IN FACT: (attention union business managers!) The Glycol Pre-Treatment Plant will likely create more individual jobs than the runway extension itself. The glycol processing plant should be given priority over the runway, it will reduce pollution to the watersheds east of the airport, improving the quality of life for people living along the watershed between the airport and Narragansett bay, and the treatment plant IS REQUIRED by both the RIDEM and the MOU Agreement between the City of Warwick and RIAC. It will potentially create more individual jobs than the runway extension.

During the EIS process, there were updates to the aircraft fleet mix. The more current fleet utilizes newer aircraft that are more efficient on take off thereby requiring less runway than what was originally proposed based on older aircraft, which are practically all no longer in the fleet serving TF Green as they have been replaced with the more efficient aircraft, negating the need for an 8,700' runway.

With this, perhaps the union business managers will realize that with the legally mandated requirement to build the glycol pre-treatment plant and potential to create more individual jobs, hopefully the unions will lobby to move RIAC to secure funding for the glycol pre-treatment plant asap, as that project is the best probability to create union jobs asap as the design is complete and it is now out for bid. Let's all push for this.

As for Mr. Dillion's comments, would you really believe anything he says?

Remember, he was paid nearly $300,000 a year to reach certain goals.

1) To ensure the construction of an 8,700' runway (he failed to accomplish that)

2) To improve relations with residents negatively impacted by the airport (he failed to accomplish that)

3) To improve annual passenger counts (he failed to accomplish that)

4) To secure funding for the work proposed in the EIS (he failed to accomplish that)

5) To improve the profitability of TF Green (he failed to accomplish that and left us with a lower bond rating)

Note that the EIS approval did not ensure a longer runway will be constructed. It only attempted to disclose environmental impacts and anticipated mitigation.

The main problem here is the airport is a politically managed airport. Goals are based on pie in the sky dreams that ignore reality. TF Green is a super "regional" airport. Trying to make it an "international" airport when that defies reality of national and regional economics and common sense, will only leave TF Green over invested in infrastructure and fixed costs that it cannot afford, with those costs being passed to local passengers, making it more expensive to use TF Green, and the end result that is already happening, is that TF Green will continue to lose local market share to Connecticut and Massachusetts airports Bradley and Logan. Its already happening.

Summary:

Build the glycol pre-treatment plant now, it's designed and ready to build. It will help residents living around the watershed east of the airport, it will help the Warwick Sewer Authority, it will help the unions now!

Editor's Note: RIAC CEO Kevin Dillon, who was shown this letter, questioned Langseth's figures and said many of his assumptions are faulty.'

Seems now that the FAA is in the process of a written "Re-Evalution" and made a written disclosure that "In 2012, the Rhode Island Airport Corporation and the Federal Aviation Administration determined that more detailed cost estimates had rendered the alternative selected in EIS infeasible." Infeasible financially. Infeasible environmentally. Infeasible as a sustainable business model.

Seems the politicians, union members, and chambers of commence are the ones who's assumptions are faulty. They can't even recognize that they do not have a sustainable business model and have financially damaged the airport's ability to remain as competitive.

To all politicians, union members, and chambers of commence who promoted this boondoggle, remember this. It is not the length of a runway or money spent that attracts more passengers. What attracts more passengers are the lowest air fares and that can only be accomplished with the lowest operating cost per passenger and that's obtained by holding back on building unnecessary infrastructure as an unnecessary 8,700' runway and unnecessary $300 million dollar garage.

Do the safety improvements, build the glycol pre-treatment plant, add business conference rooms within the terminal, allow distribution of our local paper, the Warwick Beacon in the terminal, and don't build anything that is not necessary including an 8,700' runway. For those who still don't agree, re-read the EIS chapter on runway length requirements, and look at the current fleet and airports served, airline business models, and you will agree that funding an 8,700' at this time will do more economic harm than good

How's that other boondoggle doing, the Wickford Train Station?

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