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Lehigh Northampton Airport Authority plans to sell 753 acres to pay off old lawsuit debt

By Randy Kraft, WFMZ.com Reporter, RKraft@wfmz.com
Published On: Apr 23 2013 08:57:59 PM CDT
Updated On: Apr 24 2013 05:46:09 AM CDT

The Lehigh-Northampton Airport Authority (LNAA) has approved plans to sell nearly 753 acres of land around Lehigh Valley International Airport to The Rockefeller Group, a New York City-based commercial real estate developer and broker.

The six parcels Rockefeller plans to buy, which range in size from 16 acres up to 424 acres, are in Northampton County’s Allen, East Allen and Hanover townships. Portions of two properties also are in Hanover Township, Lehigh County.

On Tuesday afternoon, the airport authority approved The Rockefeller Group’s letter of intent to purchase those properties, with two dissenting votes.

No dollar figures were discussed regarding the possible value of the land at the board meeting, but the cash-strapped authority hopes money from sale will enable it to pay off a $14 million legal judgment coming due over the next few years.

“These are the beginning steps to generate some income to satisfy the lawsuit,” said authority chairman Tony Iannelli. He declined to put a price tag on the value of the 753 acres, but said selling it should get the authority very close to satisfying that suit, which ironically involved real estate transactions.

According to the legal settlement’s payment schedule, the authority must pay $3 million before the end of 2013, $5 in 2014 and $6 million in 2015. It paid $2 million last December.

With the letter of intent approved by the board, the airport’s staff will begin negotiating an acquisition agreement with Rockefeller, which should be completed within 90 days.

Rockefeller has up to five years to complete the purchase of the properties, but less than three years to purchase at least 150 acres, explained Darren Betters, director of commercial services at the airport.

An unnamed party is interested in a portion of the property Rockefeller intends to buy, said Betters. “Their interest is increasing as we go. The important part is to keep the process moving now so we don’t miss the boat on that.”

Board member Robert Buesing added: “Rockefeller has a very important person looking for a big piece of this property. They are a for-profit company. They are going to do this as quickly as they possibly can to get that person in. We don’t know who it is.”

Rockefeller proposes putting warehouses, truck terminals and other storage facility buildings on properties it will acquire, according to concept plan drawings it prepared for the authority. Its concept plan also was approved, with one abstention.

Betters said Rockefeller has spent $175,000 on the project so far, for such expenses as engineering, legal fees and traffic studies. “They’ve got skin in the game with us,” he told the board. “They’re obviously motivated to make some transactions here.”

The airport has no plans for future use of the land, which Betters described as “surplus.” He hopes selling it will make enough to pay off the airport’s legal obligation, but added that won’t be known until after the land appraisal process is completed.

Betters said any sale of airport land requires the approval of the Federal Aviation Administration, adding: “The FAA will mandate that we sell this at fair market value. We will not be allowed to sell this under fair market value.”

Last August, the airport authority voted to have LVIA’s staff begin negotiations to reach an agreement with the Rockefeller Group that ultimately would result in the sale of surplus airport property. In September, the board approved a master agreement with Rockefeller.

Opposing views

Before voting against the letter of intent, board members William Berger and Ed Pawlowski expressed concern about the authority agreeing to take so much land off the market for up to five years.

Said Pawlowski: “If we just lock this up, we’ll be giving away the vast majority of our land to one user who hasn’t given us anything but a $250,000 deposit.”

Berger said even if the unnamed individual buys 200 acres, the rest of the land will be off the market for a long time. But Betters said Rockefeller “wants to move forward as much as we do.”

Berger, a licensed real estate broker, attorney and pilot, got no answer when he said he would like to know what a minimum price will be for the land.

Berger, who has been on the authority board for three months, said he was uncomfortable discussing the land sale deal in front of television cameras and reporters and asked if it could be done in private executive session.  Authority Solicitor Robert Donchez told him it could not, explaining “the board’s discussion of this should occur at a public session.”

Pawlowski, Allentown’s mayor, referred to the property sales as “a one-time kick,” which won’t help the authority develop new long-term funding sources. He suggested it should consider a more comprehensive strategy by keeping the land and leasing it to generate on-going, non-aviation revenue. Betters said other surplus airport properties not being purchased by Rockefeller can be leased to generate more revenue.

Pawlowski also said: “It does not look like this transaction will get us anywhere near the time period to help us pay off our huge numbers.”

Board member David Haines said he shared Pawlowski’s concern that the timeline seems to be expanding, but added: “We’re pretty far down the road on this and to re-invent the wheel at this point could be counter-productive.”

And board member Michael Dowd said: “This isn’t a surprise. We’ve been talking about this for probably a year with Rockefeller.”

Braden Airpark still could be sold

In addition to identifying properties it wants to buy from the airport authority,

Rockefeller Group’s April 15 letter of intent also lists five parcels of airport land – totaling nearly 182 acres – that it is not interested in buying.

Four of those properties, ranging from 17 to 74 acres, are in Hanover, Forks and East Allen townships in Northampton County. The smallest, just under two acres, is in Bethlehem.

Betters said the authority can sell or lease those properties on its own, with Rockefeller or with another broker.

The 74.37 site in Forks Township that Rockefeller does not want is identified as Braden Airpark in the letter of intent.

Iannelli said other parties are interested in buying the Braden Airpark property but the authority has not received any offers. He said he also realizes many people do not want it to be sold.

One of those people is Paul Braden, who told the airport authority he realizes it is facing difficult economic times, but asked it to “resist the temptation to sell Braden Airpark as a short-term strategy to raise a relatively small amount of capital to help with your debt and instead embrace that grander vision for preserving airports in Pennsylvania – especially one that is really valued by the Easton and Forks community.”

Braden said his family owned and operated Braden Airpark – formerly known as Easton Airport – for almost 60 years, before selling it to the authority in 1999.

Erik Chuss, chairman of the Forks Township board of supervisors, said Braden has economic value to that area, including by helping to promote business. “An asset like Braden Airpark is gold,” said Chuss, who noted it is the only aviation facility in Northampton County.