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Old Posted May 21, 2009, 7:09 PM
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Airport Commission Contemplates Parking Lot Purchase

By Art Marroquin, Staff Writer
May 20, 2009

Los Angeles World Airports is negotiating the purchase of a 21-acre parking lot as part of a transaction that could exceed $100 million, and some are speculating whether the land is ripe for other uses.

Park 'N Fly at Park One, located just east of Terminal 1 at Los Angeles International Airport, was put up for sale by San Francisco-based AMB Properties Corp., which has owned the property for seven years, according to David Hasbrouck, executive vice president of Cushman & Wakefield, the agency representing the sellers.

The Los Angeles Board of Airport Commissioners discussed the potential purchase during a closed session meeting on Monday, but no action was taken. The seven-member panel and the Los Angeles City Council would ultimately decide whether to approve the entire transaction.

LAWA executives declined to comment, citing ongoing discussions with the property owner.

Los Angeles City Councilman Bill Rosendahl, whose district includes LAX, also declined to comment.

Los Angeles City Councilwoman Janice Hahn said she supported the possible purchase because airport-area land is hard to come by.

"I think this opens up a lot of choices and possibilities," said Hahn, who chairs the council committee that oversees LAX.

"We know we have to modernize this airport," she said. "Maybe this property will give us options."

The possible land grab comes as the airport agency has struggled with a yearlong decline in passenger volumes and projected a slight drop in operating expenses for the next fiscal year.

"It's interesting because the land has been available for about 25 years and one has to wonder why LAX has this sudden need to buy it with little advance notice or community involvement," said aviation consultant Jack Keady of Playa del Rey.

Before it was turned into a parking lot in the early 1990s, the property was home to Garrett AiResearch, a military contractor that manufactured aerospace products.

Since then, the parking lot has been up for sale at least three times, according to two airport sources close to the deal who requested anonymity.

Each time, LAWA had an opportunity to purchase the land, but passed when it was deemed too expensive - even when it was offered for less that $30 million at one point, the sources said.

Even though negotiators say the selling price could exceed $100 million, the property has an assessed value of about $83 million, according to public records.

"It's unfortunate that we let it go the first time it was available," Hahn said. "It does seem like a lot of money, but I hope they can get the price down a bit."

The airport agency has always kept an eye on the parking lot and drew up a series of potential uses for nearly two decades. The possibilities included maintaining the land as a parking lot, turning it into a passenger drop-off zone or building an entirely new airline terminal, given it's close proximity to the airport, according to LAX sources.

But costs could run high to convert the land into use for airline passengers. The property has limited uses in its current state and would have to undergo a massive clean-up effort that could cost millions of dollars, given its prior incarnation as a manufacturing plant for aerospace products.

Additionally, the airport is barred from adding contact gates so that traffic levels do not exceed 78.9 million passengers until 2020, under the terms of a legal settlement reached in December 2005.

"They could keep it as a parking lot, but it doesn't make sense given the price of the property," Keady said. "There are a lot of questions about this but we have to remember that the gate cap will be lifted in about 10 years. In the grand scheme of things, it's not that far away."
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