Asserting it would be too devastating for Los Angeles to continue to mismanage an airport nearly 60 miles from LAX, the City of Ontario submitted an administrative claim to the City of Los Angeles relating to L.A.’s control over Ontario International Airport (ONT). The claim seeks the termination of a Joint Powers Agreement (JPA) between the two cities and the transfer of ONT to the Ontario International Airport Authority (OIAA), among other remedies.
The filing of the claim came one day after Ontario formally rejected a counter offer by Los Angeles World Airports (LAWA) to divest ONT for $474.5 million. “The demanded amount is inconsistent with the parties’ Joint Powers Agreement and LAWA’s (Los Angeles World Airport’s) fiduciary duties, contrary to applicable facts and law, and reflects several inaccuracies and unjustified assumptions….”, said Ontario City Manager Chris Hughes in a letter to LAWA Executive Director Gina Marie Lindsey.
A study by the consulting firm Oliver Wyman released last week by the Ontario International Airport Authority calculated that ONT’s valuation range currently is a range from negative $78 million to negative $104 million. Ontario officials noted none of the eight U.S. airports that shifted ownership from one government agency to another over the last 20 years involved a sale like that demanded by LAWA.
OIAA President and Ontario City Council Member Alan D. Wapner said the claim was filed out of legal necessity as a procedural matter and does not preclude the two cities from working toward an amicable agreement to transfer the airport to the OIAA. He noted that the filing of the claim came three years after Ontario first approached L.A. officials to begin a process to transfer ONT to local control for the greater good of the region.
“We remain hopeful of finding a mutually agreeable path to return ONT to local control,” said Wapner. “We are committed to working with the current and future L.A. airport and city administrations to achieve our objective. At the same time, we are prepared – if necessary – to take additional measures to obtain control of ONT.”
Ontario initially owned ONT for decades and transferred the facility to LA in 1985 at virtually no cost for LA to manage in stewardship for the region.
“The agreements which transferred control of ONT to Los Angeles were never intended to be ‘death warrants’ for ONT, yet that is how Los Angeles now construes them,” said Roy Goldberg, an attorney for the City of Ontario. The lawyer added that the claim is being filed “because Los Angeles has a contractual and fiduciary obligation to do what it can to help ensure that ONT is a successful and vibrant airport. Instead, it has shunted aside the interests of ONT out of a single-minded focus to grow and maintain passenger levels at LAX at the expense of ONT.”
In the 30-page claim filed with LAWA and the City of Los Angeles, Ontario asserted that it has engaged in tireless efforts to work with Los Angeles to resolve the issues reflected in claim.
“Unfortunately, that effort has proven unsuccessful due to the unwillingness of Los Angeles and LAWA to engage in realistic discussions with Ontario to find a practical solution to this dire problem,” according to the claim. “Ontario is now left with a stark choice: Either watch passively as its Airport continues to suffer a financial and operational ‘tailspin,’ or take administrative, and if necessary, legal action to protect the critical municipal function of providing a well-managed, viable California airport.”
The need for action by LA has added urgency because future airline schedules indicate there will be a reduction in scheduled air service of nearly 8 percent in 2013 compared with 2012, based on the number of seats airlines are scheduled to operate through October 2013. This reduction is on top of passenger declines totaling more than 40 percent since 2007. Today, ONT operates at approximately the same passenger activity levels it did in the early 1980s.
More than 130 governments, elected officials, business and civic organizations, and newspaper editorial boards in four counties have endorsed local control for ONT. Their endorsements are available for viewing at the Set ONTario Free Official Site.
“There is an overwhelming consensus in the region that it no longer makes sense for L.A. to control ONT and that the airport will be more effectively and efficiently managed under local control,” said OIAA Commissioner and Ontario Mayor pro Tem Jim W. Bowman. “Restoring local control is good for Los Angeles and the entire region.”
OIAA Commissioner and former Riverside Mayor Ronald O. Loveridge said that in his more than three decades of public service he has never seen the region pull together in support of a single issue as it has in calling for local control for ONT. “Los Angeles has an inherent conflict of interest in controlling both ONT and LAX,” said Loveridge. “The only logical way to avoid this conflict is for LAWA to relinquish control of ONT to an airport authority with a vested interest in it making the greatest contribution to the regional economy.”
OIAA Vice President and San Bernardino County Supervisor Gary Ovitt said the OIAA is committed to ensuring ONT operates as an unconstrained regional airport providing the commercial aviation capacity Southern California needs to meet long-term demand for air travel. “Without sufficient, sensibly priced airport capacity, airlines will be forced to find other markets, which puts all of our travel and tourism economy at risk,” Ovitt said.
OIAA Commissioner and Orange County Business Council President and CEO Lucy Dunn said restoring ONT as a competitive secondary airport for Southern California is also important for environmental reasons. “We can reduce automobile traffic and emissions resulting from unnecessary reliance on LAX as a result of transferring ONT to the OIAA,” she said. She noted that an estimated 1.3 million motorists annually are forced to drive to LAX from the San Gabriel Valley, northeast L.A. County, northern Orange County and the Inland Empire.