Sale of John Wayne Airport Is Ruled Out

Federal law prohibits Orange County from selling John Wayne Airport as a way to eliminate almost $850 million in debt left from the county’s 1994 bankruptcy, a new report concludes.

The study requested in May by Supervisor Charles V. Smith found that any deal would be blocked by a host of provisions, legislation and agreements going back to the end of World War II, when the U.S. government granted the former Army Air Corps base to the county.

Faced with a tight budget year, Smith had hoped the sale of John Wayne Airport would emerge as a potential option to help retire the county’s outstanding debt of $847.8 million and free up funds for threatened programs.

“The answer we got was what we expected,” said James Campbell, an aide to Smith, who was on vacation Tuesday and unavailable for comment. “We need to look outside the box. Selling the airport is looking inside the box.”

Campbell said the report’s conclusions do not shut the door on Smith’s long-standing interest in the airport as a revenue source to reduce the county’s bankruptcy-related debt payments, which run about $75 million a year.

The county might be able to generate funds from John Wayne Airport, Campbell said, by selling partnerships in its governance for millions of dollars to surrounding municipalities, port authorities or transportation agencies.

“Would an outside entity be willing to pay a fee to the county to have a seat at the table, to have a say in the future of Southern California aviation? My boss will be looking for those answers,” Campbell said.

At a May 7 budget hearing, Smith ordered the county staff to create a management team to study whether the airport could be sold.

The study, which was recently distributed to the Board of Supervisors and high-ranking county officials, uncovered no loopholes in federal regulations that would allow the sale. They state that assets and revenue from a commercial airport can be used only for an airport -- a requirement that was strengthened by Congress in 1994 and 1996 in response to a move by Los Angeles to divert airport funds for nonaviation purposes.

County researchers found that any deal would require approval from the Federal Aviation Administration, which appears unlikely under existing law.

Ultimately, researchers said, a sale would require changing federal statutes through Congress, a step that would be “difficult, contentious, and firmly opposed by commercial airlines.”

Complicating matters further, the county would have to pay off all outstanding bonds sold to make airport improvements and obtain waivers for restrictions issued when the U.S. government conveyed the military base to the county. Under terms of the grant, the field must be an airport “in perpetuity.”