Westchester airport parking: What extended deal would mean; legislators say they were misled

In two years, the lucrative 30-year parking privatization deal at Westchester County Airport was expected to pay off for the county.

That’s when the three-story parking garage, built and owned since 1993 by a partnership that includes Westchester's preeminent developer, Louis Cappelli, would be transferred to the county, with an estimated $10 million a year in annual revenues primed to flow to public coffers.

That cash could be used for any number of pressing issues at the hilltop airport, including the parking crunch sparked by the pent-up demand of Hudson Valley and Fairfield County, Connecticut, travelers since COVID restrictions were lifted this spring.

The 1,100-space garage was filled to the brim on the first two weekends of October, with travelers scrambling to find spots on the grass, along the entrance ramps to the garage, or in the county’s cellphone waiting lot.

Westchester County Executive George Latimer, though, is in no hurry to take public control of the parking garage, located in the village of Rye Brook.

Instead of taking over in August 2024, Latimer wants to give Cappelli’s partnership with SP Plus Parking an additional 29 months in a yet-to-be negotiated extension until 2027. The county Board of Legislators in September voted to give Latimer permission to end the old lease and finalize a new one, which will not come before the panel for approval because it’s only for five years.

The lease would be retroactive to January 2022, which could be the most lucrative year yet for the county, as the private vendor pays an incrementally higher rent and percentage of revenue share for each advancing year. However, county Operations Director Joan McDonald said the five-year deal they've negotiated would have lower fees in the first three years, with a final balloon payment in the final year.

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It was a mutually agreed upon path forward, McDonald said.

"If everybody is comfortable to disclose those terms, I'd be happy to do that," she told county legislators on July 11. The county has yet to disclose the terms.

Legislators, meanwhile, say they were misled by McDonald, who told them in July the county had already abated Cappelli's rent of $727,000 over 13 months, when that action has yet to take place.

The renegotiation has occurred as Cappelli’s construction and development companies continues to redefine the skyline in White Plains and New Rochelle, where more than $1 billion of construction is underway.

His company is constructing the Gateway II project at the White Plains train station, putting up five high-rises in downtown New Rochelle, and preparing to construct the first phase of the mixed-use high-rise complex at the site of the White Plains Mall, with four towers surrounding an acre of public space in downtown White Plains.

It's across the street from Cappelli's Renaissance Square office, and next door to Greca, his wife, Kylie's Mediterranean restaurant.

The parking crunch has emerged as private developer Jeffrey Brown prepares to break ground in 2023 on an 850-space garage on New King Street in North Castle, along the airport's northwestern boundary, with a projected opening in 2025.

Private parking company Purchase Park 2 Fly continues its shuttle operation from nearby Purchase College, at $27 a day. You can reserve at Cappelli's garage for the base rate of $30 a day plus a daily reservation fee of $5. The best price is at the airport's overflow lot, at $17 a day, with a three-day minimum.

Delivering profits to Cappelli

To best understand how parking revenues are shared in the parking deal, it’s illustrative to look back on 2016, when the administration of then-County Executive Rob Astorino proposed turning over airport revenues over the next 30 years to a private equity firm. The parking garage was among the airport’s prime revenue generators.

At the time, county officials said parking revenues were about $10 million, with the county receiving about $3 million in rent and revenue sharing that year. The company's debt service and operation costs were pegged at $4 million, leaving $3 million in profit to Cappelli's company.

The Latimer administration wants to help Cappelli make good on the profit margins his company projected over its 30-year contract. Doing so would ensure the private company not only met its financial obligations on debt service during the COVID shutdown, but also received a chunk of the profits contemplated originally.

McDonald said the county wants to let the Cappelli partnership have a chance to regain the revenue it lost during COVID, which she estimated at $6 million in 2020 and $6 million more in 2021.

“There were two years of lost revenues − in 2020 and 2021 − that were not anticipated when they first entered into the lease,” McDonald said.

Cappelli told Tax Watch airport parking suffered greatly during the pandemic.

“Well over $10 million was lost during the pandemic,” he said.

The company took in $1 million in 2020, down from $10 million in 2019, said county spokesperson Catherine Cioffi.

In only one year, 2020, does it appear Cappelli's debt obligations and operating expenses were less than revenues. In 2016, the county administration said those combined expenses were $4 million.

Cioffi said parking revenues at Westchester County Airport were $9 million in 2017 and 2018; $10 million in 2019; and $7 million in 2021 as air travel resumed. Through September 2022, revenues were $8 million, which projects to at least $10 million by year’s end.

'Bailout' worth debated

Airport Advisory Board Chairman Nick Hartman questioned whether it was a proper use of government power to ensure a private company’s profitability, when such a guarantee was not a part of the public contract.

“On the surface it looks like the county wants to bail out this company due to revenues lost during the pandemic,” said Hartman. “In the private sector, if business turns down, business turns down.”

Cappelli is a major financial players in New York state and Westchester politics. He was the biggest contributor in 2020 to the Westchester County Democratic Committee, the political organization for Latimer and 15 of the county board's 17 members. In 2020, Cappelli and his companies gave $35,000 to the committee, records show.

Cappelli contributes to Republicans as well, giving $50,000 in 2022 to Astorino's unsuccessful bid for the GOP nomination to oppose Gov. Kathy Hochul in November. Cappelli said he also chipped in $69,000 to Hochul's campaign.

He and wife are active philanthropists in Westchester. They pledged $2 million to White Plains Hospital for brain scan technology in 2021. They raised $1 million for the March of Dimes last November while the Louis and Kyle Foundation gave $500,000 to nonprofits that serve Westchester's poor, and $250,000 in COVID relief to the city of New Rochelle.

John Ravitz, executive vice president of the Business Council of Westchester, called Cappelli "a seasoned business owner" who deserves county's support at the airport.

"We should look to make sure that we are doing what we can in support of him because he's supporting the community is so many ways," he said.

Among the opponents of the new lease is County Legislator Ben Boykin, D-White Plains, who says there’s no good reason to give Cappelli’s partnership an extension, which he estimates will provide the company with an additional $10 million to $14 million.

“I think the existing lease should terminate in 2024, with the revenues staying at the airport to help fund operations,” said Boykin.

But Cioffi said Cappelli’s partnership deserved the new five-year pact, based on the downturn in travel during COVID times, and the fact that the company “did not receive a federal bailout.”

“We have already provided similar relief to other businesses inside the airport terminal that suffered during the pandemic,” she said.

Legislators misled over abatement issue

Questions have arisen over what relief Westchester has already bestowed upon Cappelli’s partnership.

McDonald told legislators on July 11 the county had received $29 million in federal pandemic aid for airport purposes and had used some of it to abate the rents of all airport leaseholders, including Cappelli's airport parking partnership.

She disclosed the abatement to the legislators as she pushed for quick approval to terminate the current lease when the county had inked the new five-year lease, with a bonus of 29 more months of parking income.

“Everybody got a rent abatement, including this lessee,” McDonald said.

A letter to the legislature from Latimer, as well as a local law approved by the county board, both stated the county had abated the partnership’s base rent of $727,000 over 13 months from mid-2020 through mid-2021.

That turned out to be untrue, Tax Watch found.

Cioffi acknowledged the county had yet to abate the rent.

"They are not inside the airport terminal, so since the garage is not in the terminal, their abatement is part of the renegotiation," Cioffi said.

That was a surprise to Legislator Nancy Barr, D-Rye Brook, who recalled that was not what the legislators were told.

“That’s misleading, for sure,” said Barr. “That’s concerning.”

When asked why the administration would mislead the legislature, Cioffi said the administration did nothing of the sort.

“Not true,” she said. “No one was misled.”

Parking solution still to come

As for the parking crunch at the airport this fall, Cioffi said the county was monitoring the situation.

It has authorized parking on the grass, the entrance and exit ramps, as well as in the 50-space "cellphone lot" that in the past was reserved for those waiting to make a pick-up.

Any long-term solution, said Cioffi, will await completion of the county's airport master plan next spring.

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This article originally appeared on Rockland/Westchester Journal News: Westchester airport parking lease extension plan; what it would mean