ORANGE COUNTY IN BANKRUPTCY : County Concludes Selling Airport, Landfills Not Worth It : Privatization: Airline ticket and trash fees would have to go up to make deals feasible, officials say. Maybe later.

County officials exploring whether it is feasible to sell John Wayne Airport and the county’s three landfills concluded that there are financial hurdles that could take years to resolve and would probably lead to higher costs to taxpayers.

Despite the temptation to dangle the county’s most-prized assets before private interests and reel in big money, Chief Executive Officer William J. Popejoy and his team of advisers decided that it would be in the county’s best interests to keep the facilities as collateral for future borrowing.

Board of Supervisors Chairman Gaddi H. Vasquez noted that there are a number of federal grants and bonds that must be repaid before the airport can be sold.

“There are many complicated obstacles that stand in the way of (selling) John Wayne Airport,” he said. “You have federal government involvement in terms of finances, in terms of day-to-day operations, and you also have a lot of limiting conditions that anyone . . . would have to weigh in evaluating financial merits.”

Privatization of the airport and landfills has gained increased support since the county declared bankruptcy in December. Among the proponents of such a move are acting County Treasurer Thomas E. Daxon and the Reason Foundation, a libertarian public policy think tank based in Los Angeles.

The foundation, for example, believes that packaging John Wayne Airport and part of El Toro Marine Corps Air Station, which a majority of county voters support converting into a commercial airport, could bring in as much as $500 million. Daxon estimated that selling landfills and waste-management operations could net another $800 million.

But Popejoy and the strike team determined that there were too many obstacles to consider in selling either asset, for at least the next three to five years. Popejoy determined, for example, that in order for the county to set “a sales price of any significant amount” for either the airport or the landfills, airline tickets and trash fees would have to be raised.

The airport, for example, earns about $60 million in gross income per year. In order to make it profitable, county officials said, it would need to take in about $75 million a year, which would require that airline landing fees or a “passenger facilities charge” be applied.

Before the airport could be sold, officials said, the county would first have to repay $253 million in bonds and $66 million in Federal Aviation Administration grants and get federal law changed to allow the proceeds of the sale to be kept in the county’s general fund.

To sell the county’s three landfills, some $82 million in bonds would have to be repaid. Gate fees of $22.75 per ton would have to be doubled. The three landfills together earn a gross annual income of some $72 million.

County supervisors said they were not surprised by Popejoy’s conclusions.

“We’re just not there yet,” Supervisor Marian Bergeson said. “We need to take some time to see if selling it (airport) is feasible and consider the El Toro issue, which is still a significant factor.”

Added Supervisor William G. Steiner: “I’m not surprised at all. I think Popejoy is being very realistic on the airport.”

But others expressed disappointment in Popejoy’s analysis, particularly Robert W. Poole Jr., president of the Reason Foundation.

“If the supervisors don’t seize this opportunity to get the benefits from selling to private interests, they never will,” Poole said. “I hate to be too judgmental, but this plan is not as ambitious as it should be.”

John Wayne Airport should be packaged along with the rights to the proposed airport at El Toro, he said, and sold to a private bidder. If a commercial airport is built at El Toro, he said, passengers will expect to pay higher fees for a world-class facility.

As for the landfills, few county jobs would be lost and, although gate fees would be higher, the county could realize a financial windfall from allowing customers from outside Orange County to dump their trash here.

“This could be a real missed opportunity for the county to replenish a significant portion of what was lost,” Poole said.

Reed Royalty, executive director of the Orange County Taxpayers Assn., wants Popejoy to continue efforts to sell the airport and landfills rather than seek a tax increase as some urge.

“If he’s going to sell the easy things first, that’s a good place to start,” Royalty said. “But when it comes to the airport, the landfills and difficult things, the taxpayers association would ask that he not give up. We’d insist that the county continue to pursue legislation as needed to allow those sales.

“Even those people who are proposing tax increases should realize that we need to do all these things--privatize and asset sales--because what happens if we put all our eggs in one basket and the tax fails to get the approval of voters? Then we’re in worse shape.”

But if it takes several years to resolve all the legal and financial entanglements to sell those facilities, Popejoy said, the county might not have the same concerns and could very well be out of bankruptcy.

“Those two assets don’t meet our short-term recovery needs,” he said.

He said county officials will continue to evaluate whether the airport and landfills could be sold in the future. Right now, Popejoy said, “it’s not feasible.”

“Down the line, they both may have considerable potential.”