09 October 2012

40-Year Flying Fuck: Revisited

Sometimes these things just write themselves...

I wrote about the idiocy and open thievery of the """privatization""" of Our International Airport, calling it--accurately, of course--a 40-Year Flying Fuck.

Move forward some weeks. Over at MuniLand, Cate Long's often-incisive blog about topics financial, with occasional glimpses in Our direction, comes this analysis of the "giveaway" of the Luis Muñoz Marín Airport deal. As ever, all emphasis is Mine:

"...The lease deal lasts 40 years. However, studying the financial terms of the deal, it is not clear that Puerto Rico will really benefit much financially from privatizing the airport."

"Looking at the financial data, which is sparse and hard to find, the deal is unlikely to generate any substantial cash for Puerto Rico. From the FAA application (page 9): Aerostar will make a one-time cash payment to the PRPA of $615 million (the “Leasehold Fee”) at the time of closing the Lease.  

The deal is structured with tiny annual cash payments from ASUR to Puerto Rico for the first five years. ASUR will pay $2.5 million per year for five years, for a total of $12.5 million. In years six through 30, ASUR will pay Puerto Rico five percent of gross airport revenues. It will pay ten percent of gross airport revenues in years 31 through 40. ASUR will also reimburse Puerto Rico $2.8 million per year for the costs of police and fire services. This amount will be adjusted once actual costs have been determined.

The airport lease also calls for “General Accelerated Upgrades” to the airport, but it does not require any major capital improvements. ASUR is not obligated to offer employment to airport employees. If the conditions are worked out, then ASUR can take control of the Puerto Rico Air National Guard facilities also."

"Juan Carlos Batlle, President and CEO of the Government Development Bank for Puerto Rico (GDB), was asked at the Bloomberg State & Municipal Finance Conference about the transaction. He said that the $615 million upfront payment would go to retire airport debt, and he did not know how financially advantageous the deal was for the buyers.

But knowing the advantages of the deal seems to be a basic fiduciary responsibility for the official in charge of the government agency that did the analysis of the deal. Batlle eventually conceded that Puerto Rico essentially receives no benefit from the upfront payment other than retirement of debt. He fudged his answer on any longer term benefits."

"The key to understanding the deal is knowing how much ASUR will earn. The company will receive $62 million per year from airlines that use the airport’s gates and facilities. ASUR will also earn approximately $36 million per year from “Passenger Facility Charges...

According to the financial statements of the Puerto Rico Port Authority for 2011, LMM generated $99 million in total revenue, including $70 million of operating revenue. Earnings (EBITDA) were approximately $40 million. 2011 was also the lowest year for passenger traffic (see chart above). 2012 numbers have already rebounded and are tracking to reach nine million passengers. This means that revenues and earnings will earn ASUR an even better deal.

"It was hard for me to do any deeper analysis because the financial statements of the Port Authority combines the activities of the airport and the marine terminals that provide bulk freight and cruise ship services. But the LMM deal is being lauded in financial circles, which means that investors will likely do very well."

So Cate does her thing and reaches the conclusion that We are being ungently screwed by The Larva's verminous horde of chancre-pocked thieves. (I use more colorful language...) Of course, investors are going ga-ga over the deal because--and this is a subtle point that My Brethren tend to miss--the deal is a steal.

On her blog, Juan Carlos Batlle, ol' "Mr. Waffle (Out)House" himself, piped in with a response. Here it (largely) be, with one comment, Mine:

"I am writing to clarify certain information on Cate Long’s October 5 MuniLand blog post, “Puerto Rico’s Airport Giveaway,” regarding remarks I made at the Bloomberg State Municipal & Finance Conference. With all due respect, her reference to my comments are, in fact, highly inaccurate, misleading and defamatory.

As a transcript of my remarks at the Bloomberg State Municipal & Finance Conference on October 3, 2012 clearly reflects about the Public-Private Partnership for the Luis Munoz Marin International Airport:

- It provides important and tangible financial benefits to the government of Puerto Rico and its citizens; to the tune of $615 million upfront cash payment, annual revenue sharing of over $550 (sic; or actually, quite accurate) and investment in capital improvements of $1.4 billion over the life of the lease

- Enables Puerto Rico to retire approximately 45% of the Ports Authority’s debt;

- Sets up funds to support regional airports and other purposes; and  

- Helps reestablish the financial stability of the Puerto Rico Ports Authority.

As I said at the Conference, given Puerto Rico’s high debt load, among the main objectives of our Public-Private Partnership Program are to reduce overall debt levels and reactivate infrastructure investment.

This transaction allows us to accomplish both objectives at the Ports Authority: “tackle the issue as we have to start lowering our debt load,” and “invest $1.4 billion over the life of the lease.” (these quotes taken directly from such transcript)."

Oh, brother, can you spare a whine? Let Me fire a few verbal bullets your pin-headed way, Mr. Waffle (Out)House:

1) You were accused--rightly--of incompetence for not knowing how this deal benefits the investors. Anything to say there? My thoughts are: Ms. Long was absolutely right and you are a baboon with a calculator. In any case, your time to answer that point was at the Conference, not some time later when you've had a chance for a flunky to draft your ape-like grunted response.

2) Who--who, goddammit--created the "high debt load"? Your so-called boss has limp-wristed his way to overseeing a massive increase in Our national debt, most of which has gone who-knows-where... but We've seen how a lot of it has gone to The Larva's cronies and party parasites. So you're saying the LMM deal is to "reduce overall debt levels" that were basically created by your own hyena pack's greed, corruption level and incompetence? Well isn't that special.

3) Your transcript quotes are ridiculous, lame and pusillanimous at best. "(T)ackle the issue as we have to start lowering our debt load,” is mealy-mouthed farting in the wind when the subject matter is facts and figures, dollars and cents, Waffle (Out)House, even when--or especially when--the cash seems to be going to crooks. And “(I)nvest $1.4 billion over the life of the lease” is merely a number anyone can toss out: where are the specifics? If you knew the amount (which I doubt, I'm sure a flunky gave it to you later), then why the hell didn't you have a breakdown of how it would or could be invested? Do you have ANY freaking idea how to do your job properly? Or are you just another lower primate in the monkey (out)house We laughingly call "Economic Development"?

4) And Let's be honest, Waffle (Out)House: you're supposed to be a banker. Ha-ha. You are writing a response to what you feel is an inaccurate portrayal of your presentation, on a government matter involving millions of dollars, you are responding in a public manner to said portrayal and you don't notice you have a humongously inaccurate number in your very own response? What are We to deduce from that?

That you're an idiot. That you don't know your job. That you were placed in it to facilitate financial shenanigans beyond your woefully-limited ken. And that the airport deal is just one of the many screwings We are having inflicted upon Us by your government cronies, ignorantly blessed by the full-scale incompetence of your fellow morons in """Economic Development."""

Ms. Long says it one way; I use more colorful--and truly--more accurate language.

The Jenius Has Spoken.

[Update: 19 Nov 2012: The Mexican half of the airport takeover, Grupo Aereopuerto del Sureste (ASUR), has been linked repeatedly to drug kingpins and trafficking. Hmm, seems like Our airport is part of some other business agenda...]

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