PERSPECTIVES ON THE AIRPORT : Who’s Right on How Much LAX Is Worth? : Calling for bids on its sale or lease would tell us whether this is the best way to raise revenue for the city.

Nearly every day, mayoral candidate Richard Riordan promotes his plan to lease Los Angeles International Airport to a private operator, using the revenue to pay for adding several thousand police officers. Nearly every day, mayoral candidate Michael Woo counters that such revenue is a pipe dream, obscuring the need for real alternatives such as tax increases.

Which answer is right matters a great deal to this city’s future. Regardless of who wins next month’s election, the new mayor is going to take office facing a fiscal chasm between expected revenues and spending demands. If the Legislature follows through on its plan to transfer property-tax revenues away from cities and counties, Los Angeles faces a $500-million gap between revenues and expenses. Selling or leasing major assets like LAX may be one of the few good options we have for maintaining (let alone expanding) essential services.

This assumes, of course, that advocates of privatization are correct in estimating that LAX is worth at least $2 billion, and that this value can be realized via either selling or leasing the airport to private investors. How can we find out whether this kind of number is real? The simplest way is for the city to issue a request for proposals (RFP) seeking bona-fide bids for LAX.

Issuing an RFP would not commit the city to selling or leasing LAX. It would simply be a way of finding out whether the private sector has a serious interest in coming to the table, giving us a ballpark estimate of what the airport is really worth.

This exact approach has been proposed in the Maryland Legislature, with a bill directing the state’s transportation secretary to “publish an announcement inviting interested persons to submit a written proposal for the purchase or lease of Baltimore-Washington International Airport.”

There’s no requirement that the state actually sell or lease the airport--the RFP would simply be a way of smoking out the extent of the private sector’s interest. A New York state senator is considering similar legislation regarding Kennedy and LaGuardia airports.

Los Angeles’ long-time airport consultant, John F. Brown Co., initially estimated the value of LAX at $2 billion to $3 billion in its detailed airport privatization study last year. Recently, Brown submitted a three-page update applying revised numbers to a single future year: fiscal 1994. That analysis, reflecting lower recent passenger counts due to the recession and higher operating costs, projected only a $15-million operating surplus for LAX in 1994. On that basis, critics of privatization, including Michael Woo and The Times, have dismissed the sale/lease idea as not viable.

Other information suggests that the critics are being far too hasty. London’s privatized airports, Heathrow and Gatwick, sold for $2.5 billion in 1987 and are today worth more than $4 billion. LAX is certainly in the same league as these world-class airports, and is potentially as profitable as they are, if it were managed entrepreneurially.

Moreover, investors considering LAX would not look at a single bad year, such as Brown’s projected fiscal 1994. They would look at a 30-year financial model of projected revenues and expenses, and on that basis determine how much the airport would be worth to them. This is what the original, detailed Brown study did, in concluding that LAX is worth at least $2 billion.

The Reason Foundation’s most recent financial assessment estimates the net present value of a 30-year lease of LAX to be $3.7 billion and suggests that this kind of lease would permit the city to get the maximum value out of the airport, compared to either selling it or continuing to operate LAX itself.

If numbers like these are in the right ballpark, it would be highly irresponsible for the new mayor and the City Council to avoid looking into the sale or lease of LAX. But if the airport’s true potential is to earn only $15 million per year, then the critics are right, and the idea should be shelved.

The way to find out is to put the question--seriously--to the private sector. And the sooner we do so the better. Los Angeles’ fiscal crisis is likely to worsen in the next year, and we urgently need to know what options we really have for resolving it.