The Port Authority of New York and New Jersey, with LaGuardia Gateway Partners, has sealed the biggest public-private partnership in the history of the agency by Daniel Geiger
Photo: Associated Press
LaGuardia Airport’s Central Terminal Building will be getting a much needed makeover.
A consortium of private partners closed on a deal Wednesday to develop a $4 billion replacement to the maligned LaGuardia Airport’s Central Terminal Building and operate the new facility through 2050.
The agreement marks the completion of the biggest public-private partnership in the history of the Port Authority of New York and New Jersey, which owns and operates the region’s major airports. The Port Authority entered into the deal with the consortium, LaGuardia Gateway Partners.
The group, whose members include airport operator Vantage Airport Group, construction firm Skanska and the investment company Meridiam, won the bid for the project last May. But a competition last year to create a more holistic redesign of the entire airport delayed the deal’s closing, and political wrangling at the Port Authority also almost derailed the plan in recent months.
“Today’s contractual closing of the public-private partnership and the imminent commencement of construction represent a huge step forward,” Pat Foye, the Port Authority’s executive director, said in a statement. “The new terminal will be a 21st-century facility offering a high level of customer service and amenities.”
LaGuardia Gateway Partners will begin work on the project this summer, first demolishing a large parking garage in front of the current Central Terminal. The new 1.3 million-square-foot building will rise on that site and feature dual pedestrian bridges spanning active aircraft taxi lanes that connect the terminal to two island concourses. The islands-and-bridges design—the first of its kind to be built at a major airport—allows for improved airline circulation and gate flexibility, which will help reduce airport delays.
Last month, the consortium raised about $2.5 billion through a municipal bond offering to finance the project. The structure of the deal reduces, but does not eliminate, investment in the project required from the Port Authority, whose capital budget is under strain. As part of the agreement, the consortium will pay roughly $1.8 billion of the new terminal’s cost, with the Port responsible for the remaining $2.2 billion, much of which will be used to pay for infrastructure around the new terminal.
By taking on the construction for the bulk of the project, LaGuardia Gateway Partners will assume the risk of completing it on time and on budget. In return, LaGuardia Gateway Partners will receive a cut of the revenue generated at the new facility—from retail tenants and/or fees from airline companies using the new terminal—when complete.
“We are committed to delivering this project on time and within budget,” said Stewart Steeves,LaGuardia Gateway Partners’s CEO, in a statement. “Our focus on delivering a great customer experience is rooted in knowing that an airport terminal is the first and last experience a passenger may have when visiting a city and region. We will build and operate a facility that New Yorkers can be proud of.”
Port Authority staff spent years securing a private partner to rebuild the Central Terminal Building, but in late 2014 the effort, then in midstream, was complicated when Gov. Andrew Cuomo announced a design competition to solicit ideas on a wider revamp of the airport. The process resulted in substantial design changes to the Central Terminal Building, requiring the developers to include a grand entranceway that would serve as a front door to the entire airport and through which passengers could walk to neighboring terminal buildings, which would be built by Delta Air Lines. The modification added roughly $400 million to the terminal building’s cost.
Then in March, Port Authority chairman John Degnan, a New Jersey appointee at the bistate agency, threatened to pull his support for the LaGuardia deal unless a new $10 billion Port Authority Bus Terminal on Manhattan’s West Side was also placed in the agency’s $30 billion capital plan. Degnan eventually backed the LaGuardia deal after Scott Rechler, the Port Authority’s former vice chairman and a New York appointee, relented on his call to explore other options for the bus terminal’s redevelopment. Rechler called the quid pro quo a “horse trade.”