West Side Airport Development

The city’s General Fund is not legally obligated to pay an airport expense or debt service payments.However, the City Council has discretion over the allocation of general fund monies in general, and may approve an allocation of general fund monies for airport expenditures. This includes payment of debt service. The allocation of general fund resources to the airport would be a policy decision by the City Council, not a legal obligation.

Our airport is much like a child that leaves the nest. Everything is going great, they have a job, they bought their own home and they are by all means financially independent. But what happens if that adult child runs into some issues? For example, the child does not save enough money and then purchases a bigger house and is doing everything he/she can to keep up with the payments. To make matters worse, the “child” loses their job and now does not have a regular stream of income coming in. Although the parent does not have a legal obligation to help out, the parent may choose to help anyway.

Our airport is similar to the child, and the first paragraph spells out the legal relationship between the city and the airport. The airport budget is also called an Enterprise Fund in that all the fees collected go back to the airport to pay for expenses. However, if the airport’s economic condition worsens—and it most likely will—then inevitably there is risk to the general fund. Prior to that ultimate policy decision, the airport could face more outsourcing to non city employees to save money or even put our curfew at risk to gain more long-haul flights. The airport could try to grow revenue through the development of vacant land on the west side of the airport, which may or may not create other externalities.

If you are curious about this topic, consider attending a public meeting at City Hall Council chambers tonight at 6:30pm. The airport management will present alternatives on future development.

9 Comments

  1. The City of San Jose has wasted *billions* on SJC, regardless of which fund you supposedly use. Dollars are simply dollars, and while citizens suffer service reductions and employees are scapegoated, the so-called leaders lament which budget or which fund to keep flushing OUR money into…

    The PEOPLE voted for police and fire service, libraries and parts about a decade ago, setting aside bond money to improve exactly those services.  City leaders, despite knowing that facilities would be built and need staffing instead chose to fund many other non-charter items.  From RDA waste, to golf courses, airport remodels, low-income housing and of course a new City Hall- billions of dollars.  The peoples’ libraries, police substation, fire houses and community centers sit mostly shuttered.

    Mr. Oliverio, you and you Council majority can take your Fiscal Emergency, your Measure B, your airport funding and shove it!

  2. Pierlugi,

    Please explain why San Jose residents should bail out the bondholders if there is no legal obligation?  The bondholders need to share some of the pain if residents must suffer even more service reductions to pay off the airport debt.

  3. So first the City has to take on all of the RDA debt because the City overspent while it ran that agency and moved the profitable assets to a new agency for the ballpark as opposed to using those asssets to pay off that debt which is now a City obligation and now the City wants to take on airport obligations too. I guess if you continue to blame the workers for the budget crisis as the sole problem you will get support for a measure requiring employees to work for free and the city will be able to pay for everything else.

    PS—weren’t we just in a fiscal emergency?  This type of spending sure doesn’t sound like tightening the belts of a fiscal emergency.

  4. Pierluigi Oliverio lets get real here.  All the debt assiciated with the Airport’s improvements were done on the false promise/premise that the improvements were going to attract passenger traffic which would increase the number of flights and attract more airlines to SJC which would quickly pay off the debt and make the airport a cash cow for the City – then the worlds economys tanked and decades worth of San Jose’s and California’s anti-business governmental interference came home to roost and we are left holding the bag.

    A more accurate parent-child analogy might be the parent forcing the child in modern age to get schooled to make buggy whips even though we have been in automobiles for more than a century.

    And please, developing “vacant land” west (given its close proximity to Lew Wolfe’s soon to be built SJ Earthquakes Stadium) is simply code for “what else can we give Lew Wolfe” (his own hangar at the airport?)

  5. SJC is just another example of city mismanagement. Confirm the airport director, Bill Sherry,  the person behind all the remodeling and budgetary shortfalls was recently rewarded with a position as director of the failing convention center also?
    This laughable city management team and council adhere to the slogan, “screw up, move up.” Mr Greed, you are responsible for the deficiencies of this city yet you choose to blame the line workers when “management” should always be accountable. Perhaps you should familiarize yourself with a true leader, Harry S truman, and his famous slogan ” the buck stops here”
    The mayor and council has to make the decisions and accept the ultimate responsibility for those decisions.

    Attributing another person or group with responsibility for one’s own actions is a cowards move.

  6. It is a curious world in which a city that was just a few months ago, according to the mayor (and his majority), in a fiscal emergency of biblical proportions, is today in a position to consider bailing out the airport. Gee, and here I thought the council was still quivering over Chuck Reed’s 650 million dollar nightmare. It’s enough to make me think that Lew Wolff owns one of the runways.

    I guess we’re supposed to be impressed by the council’s “parental” inclination to pay without obligation, but given that this same council is, in regards to employee contracts, so committed to not paying despite obligation, I think I’ll just continue to be disgusted.

  7. PLO: Are you freakin’ Nuts? You make some BS case for spending more money on the airport
    THEN YOU VOTE AGAINST spending more money because you want to continue to push for the “known cost savings” of out-sourcing jobs rather than engage in speculation associated to development????

    Well The Meyer was correct again in his speculation that any development would include hangar facilities for sports team’s planes…

  8. All I can say is “delusional and completely out of touch!”  I’ve just described the Mayor, Pier and other Council Members who find it wise to spend general fund monies on the airport.  Keeeeeeripes, keep your greasy hands off of our general fund!!!

    And forget about extending takeoff and landing times to 24 hours for smaller jets.  You will have a tough road to hoe if you try to do that.  Besides, your crack City Attorney’s office would have to rely upon outside counsel in the face of legal challenges.  They just don’t have the skill to litigate, as witnessed by past cases.

  9. Pierre , your absolute ignorance would be funny , if it didnt affect real peoples lives. you use “the Child analogy’’  but how about this , The City employees are the children , who work their butts off to keep this city running. They collect a paycheck and are able to purchase a home here in good old San Jose . the economy hits a rough patch , people get laid off, people try to steal from you (Mayor/Council). I guess this would be where the Parent would step in and help the ailing child.  City Employees are losing everything thanks to severe mismanagement of the city , possible misallocation of funds, possible illegal transfer of debt (RDA). This City and its employees deserve more .  A Change is a coming