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State plays down report that BWI might be sold

Gov. Martin O'Malley's administration moved quickly Friday to play down an online report that the state was interested in the sale of or an initial public stock offering involving BWI Airport.

A report published Thursday on FT.com, the Financial Times' Web site, quoted O'Malley as saying that the state is open to acquisition offers for Baltimore-Washington International Thurgood Marshall Airport and would also consider the possibility of an IPO. The article was based on remarks O'Malley made in response to a question at a cybersecurity summit held this week at the National Institute of Standards and Technology in Montgomery County.

The question was prompted by the state's recently concluded deal for a long-term lease of Seagirt Marine Terminal at the port of Baltimore. But Jack Cahalan, a spokesman for the Maryland Department of Transportation, said that agreement should not lead to the conclusion that others are imminent - particularly at the airport.

"There is no proactive effort by the administration to change the status of BWI Marshall," Cahalan said. He said the idea of an initial public offering is not plausible now because "we're not a private company."

Cahalan said the department would continue to monitor trends and "best practices" in the airport industry, but added that state officials know of no realistic privatization models worth looking at, let alone duplicating.

While private ownership of airports is common overseas, the idea has been slow to catch on in the United States. A 2008 deal to sell Chicago's Midway Airport for $2.5 billion fell through the next year when investors could not raise enough capital. Even if that deal were revived, it would not necessarily start a trend. Federal law restricts the number of airports that can be privatized to five.

O'Malley was quoted on FT.com as saying that the state had received expressions of interest in acquiring BWI but all of them undervalued the airport.

Cahalan said there are no current offers on the table for BWI or any other of the state's transportation assets. But he said the O'Malley administration is "open to new ideas" and has a process in place at the Maryland Transportation Authority to evaluate any unsolicited offers it might receive for state assets.

He said the administration's policy on public-private partnerships is that in order to merit consideration, they would have to bring public value, create jobs and improve a public service. Cahalan said last year's lease deal with Ports America Group at Seagirt met those criteria, but he cautioned that such an arrangement might not work at the airport.

"Just because one has worked for the port doesn't mean that other public-private partnerships will automatically work for every other property," Cahalan said. "Each property would have to be evaluated and examined thoroughly on its own merits because each proposal is different, as is each property."

The idea of privatizing state assets has been raised frequently in recent years but little has come to fruition.

During his 2002 campaign for governor, Robert L. Ehrlich Jr. raised the possibility of selling BWI, one of a handful of airports in the country to be owned outright by a state rather than an independent authority. But within months of Ehrlich's inauguration, his administration began backing off the idea and instead talked about limited sales of airport land.

One privatization plan that did get traction under the Ehrlich administration was a move to sell the Maryland Port Administration-owned World Trade Center at the Inner Harbor to a private company. But in one of his first policy decisions as governor, O'Malley scrapped that idea in 2007, contending that it would be better for the state to redevelop the property than to sell it when its low occupancy rate might hold down the price.

Early in his administration, after some well-publicized public infrastructure deals in other states, O'Malley expressed skepticism about privatization in general while refusing to close the door on the sale or long-term lease of some state assets.

Last year, his administration entered into the only significant public-private partnership in Maryland history when it signed a contract under which Ports America would operate Seagirt in return for investing about $105 million to create a 50-foot-deep berth and make other improvements at the terminal in time to accommodate the larger ships that are expected after the widening of the Panama Canal is completed in 2014.


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