TITLE
Recommendation to receive and file the Airport Finance Overview. (District 5)
DISCUSSION
On May 20, 2008, the City Council approved the expansion of the City's existing commercial paper program to increase the issuance of City Subordinate Airport Revenue Commercial Paper Notes from $15 million to $25 million. The increase of the Commercial Paper Program will provide short-term funding for the completion of the design development phase of the terminal improvement and new parking structure projects prior to the issuance of the bonds for the construction costs associated with these projects. The Council requested staff to return within 45 days with information that identifies the bond capacity and revenue sources for the terminal improvement and new parking structure projects.
The attached Airport Finance Overview provides preliminary background and discussion of the Airport's debt capacity. In summary, debt capacity is a function of several variables, including passenger traffic levels, the level of airline rates and charges, nonairline revenues, operating expenses, the level of Passenger Facility Charges (PFCs), and bond financing costs. Final costs for both the terminal and parking structure projects have not yet been determined since the projects are in the preliminary design phase, therefore dept capacity was developed for up to $65,000,000 for each project. Additionally, staff has assumed no change in current passenger traffic levels and an annual increase in operating costs of 6%.
Financing for the terminal improvement project would necessitate an increase in the cost per enplaned passenger (CPE) from $5.00 to a range of $9.50 - $11.00 to support a bond issue of $50,000,000, and $12.00 - $15.00 support a bond issue of $65,000,000. Financing for the new parking structure would necessitate an increase in the hourly parking rates from $1 to $2/hour, and increases in the daily parking rate in the existing parking structure from $17 to $19/day. The daily parking rate in the new parking structure would be $15/day.
The level of airline rates and charges will be discussed by Airport staff at its annual meeting with the air carriers in mid-July in addition to discussing the potential scope and cost of the terminal improvement and new parking structure projects. Following these meetings, staff will report back to Council on the results of those discussions. A comprehensive financing approach will be developed, once the terminal design has been completed.
This matter was reviewed by Assistant City Attorney Michael J. Mais on June 23,2008, and Budget Management Officer Victoria Bell on June 24, 2008.
TIMING CONSIDERATIONS
City Council action is not time critical.
FISCAL IMPACT
There is no fiscal impact related to this Council action. The fiscal impact of the proposed terminal and parking structure will be determined based on the discussions with air carriers related to ongoing operating rates and charges, and sizing and scope of the proposed terminal and parking structure. Council action approving the sale of revenue bonds will be required to fund construction.
SUGGESTED ACTION
Approve recommendation.
Respectfully Submitted,
CHRISTINE EDWARDS
ASSISTANT AIRPORT MANAGER
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APPROVED: |
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PATRICK H. WEST |
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CITY MANAGER |