Item 7a Supp
ITEM NO. 7a-Supp DATE OF MEETING May 12, 2009 Consolidated Rental Car Facility Financing Update May 12, 2009 Topics Updated CFC Forecast Business context for Airport traffic forecast Transaction Day forecast analysis Financial Market Update Rental Car Facility Financing Plan Project Update Process & Schedule 2 Sea-Tac has strong characteristics A key assumption for both the project and the financing is that demand for air travel will continue to grow long-term Sea-Tac has a history of weathering economic storms well Underlying demand is independent from airline mix Sea-Tac has strong airport characteristics Limited competition from other airports or modes of travel Natural demand/ high Origin & Destination (O&D) traffic 2008 passenger traffic results per ACI North American airports median: -3.1% Sea-Tac: +2.9% 3 Sea-Tac has strong history regardless of economy and carrier mix 1965 Other, 28% United , 51% North west, 21% 1990 Other, United, 38% 24% 2008 United, 8% Northwest/ Alaska, Delta, 13% 19% Other, 22% Northw Southwest, Horizon est, 9% , 7% 14% Alaska, 34% Horizon, 14% 4 Sea-Tac has a strong natural market and limited competition % of Origin & Destination Passengers at Sea-Tac Airport 100% Airport Driving Distance 80% Vancouver 150 miles International Airport 60% Portland International 40% 160 miles Airport 20% Spokane International 290 miles 0% Airport 2000 2001 2002 2003 2004 2005 2006 2007 Sea-Tac Top 10 Origin-Destination Markets in 2008 14% 11.6% 12% 10% 9.2% 8% 6% 4.4% 3.9% 3.8% 4% 3.2% 3.0% 3.0% 2.6% 2.2% 2% 0% Rental car demand is linked to O&D traffic Rental car transactions are highly correlated to O&D passenger traffic Airline passenger forecast is the primary driver of the CFC forecast Historical Rental Car Transactions vs. O&D Enplanements 14 1.50 (millions) 12 1.25 10 1.00 8 (millions) 0.75 O&D Enplanements 6 0.50 4 2 0.25 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 (1) Rental Contracts O&D Enplanements Rental Contracts (1) Projected 2008 O&D enplanements 6 Rigorous analysis of transaction day history resulted in a revised forecast Rental car transaction days are a function of Airline passenger traffic Percentage that is O&D traffic Percentage of arriving passengers renting cars Length of rental contract Enplanement Current Transaction Day Forecast in Budget Enplanement Forecast Forecast 2009 -3% -7% -12.7 2010 0% 0% 0.1% 2011 0% 0% 0% 2012 2.5% 5% 10.7% 2013 3% 3% 1.5% 2014 until 45 3% 3% 3% MAP * * MAP = million annual passengers 7 Enplanements & Transaction Days Sea-Tac Enplanement and Rental Car Transaction Day Growth 15.0% 10.0% 5.0% 0.0% -5.0% -10.0% -15.0% 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 Enplanements Transaction Days Enplanements Forecast Transaction Days Forecast 8 Rental Cars are important to the Airport In 2008, the rental car industry generated $36 million in non- aeronautical revenues for the airport. - This was the second largest source of non-aeronautical revenues and amounted to 24% of the total. - The most recent mode-split survey indicates that approximately 15% of origin and destination passengers get to the airport via rental cars. 9 Update of Financial Markets Treasury yields have risen slightly, but remain near their historic lows Market access and credit spreads for investment grade credits continue to improve During Q1 2009, corporate taxable debt issuance totaled $207 billion, well ahead of last year's pace, as the market was buoyed by increasing investor inflows and improving credit spreads The inaugural Build America Bond (BAB) issues have been very well-received by the markets Historical Interest Rates 10 9 8 7 6 5 4 3 2 1 May-89 May-90 May-91 May-92 May-93 May-94 May-95 May-96 May-97 May-98 May-99 May-00 May-01 May-02 May-03 May-04 May-05 May-06 May-07 May-08 May-09 10 Year TSY 30 Year TSY 1010 Recent Taxable Bond Issuance - Update Total Size Issuer ($MM) Maturity Ratings Yield Municipal Issues University of Minnesota $37 2028 Aa2/AA 6.300% University of Virginia $250 2039 Aaa/AAA 6.200% NJ Turnpike Authority $1,375 2040 A3/A+ 7.414% 2034 7.500% State of California $5,000 A2/A 2039 7.550% New York State MTA $750 2039 A2/AA 7.336% Corporate Issues 2019 5.496% Nokia Corp $1,500 A1/A 2039 6.664% 2015 5.712% BB&T Corp $800 A1/A+ 2019 6.873% 2014 9.375% Anglo-American Capital Plc $1,250 Baa1/BBB 2019 9.375% John Deere Capital Corp $750 2012 A2/A 5.329% Pacific Gas & Electric $550 2039 A3/BBB+ 6.343% 2012 3.127% BP Capital Markets Plc $3,250 2015 Aa1/AA 3.896% 2019 4.784% 11 Current Base Case - Assumptions CFC Revenue 2% annual inflation Transaction days based on forecast accepted by Industry Transaction days stop growing when airport reaches 45 MAP Revenue is sufficient to pay financing costs, transportation and major maintenance CFC revenue and debt service - $ million 90 80 70 CFC revenue 60 Debt Service 50 40 30 20 10 0 2012 2017 2022 2027 2032 2037 Financing Plan includes back-stops Base Plan Capital Appreciation Bonds (CABs) interest is deferred until principal is paid 30-yr fixed rate bonds approximately $150 million 10-yr fixed rate bonds Variable rate debt Back-up provisions Port cash (structured as a loan) up to $30 million Two - $100 million bank lines of credit 10-yr fixed rate bonds (in place of 30-yr bonds) 13 Project Plan of Finance Financing Structure Sources $19.8 million tax-exempt debt @ 6% VR Debt/USB loan $100.0 $100 million variable rate debt @ 6% Tax-exempt debt 19.8 (based on 20 year average short-term 30-yr fixed rate debt 150.0 rates plus fees) 10-yr fixed rate debt 100.7 CABs/Port loan 30.0 $150 million 30-yr bonds @ 8.25% CFC cash collections 69.0 $100.7 million 10-yr bonds @ 8% Total $469.5 $30 million Capital Appreciation Bonds (CABS) @ 8.5% or Port cash Uses CFC cash collected prior to July, 2009 Construction Fund $388.8 Debt service reserve 37.0 Transportation reserve 9.2 Notes RCF/major maintenance 5.0 Projected rates are above current market Capitalized interest 22.7 Assumes that $20 million Port loan is Coverage account 3.0 repaid Cost of issuance 3.8 Total $469.5 Assumes funding of multiple reserves Ability to invest Port cash is critical to manage CFC Most efficient use of CFC revenue curve is to include deferred interest Without deferred interest the CFC is higher Deferred interest can be accomplished through the use of Capital Appreciation Bonds (CABs) or by the use of Port cash with deferred payment Possibility of CABs in the current market, but amount is limited Airport analysis indicates that approximately $30 million of Port cash could be applied to this project without affecting airline costs This could be instead of CABs or In addition to CABs to further reduce the CFC Amended statute provides the ability to be repaid at a market rate In the long-term from CFC revenues or In the short-term from bond proceeds if CABs can be issued in the future 15 Current Base Case - Results Par Amount $400.5 million Capitalized Interest $22.7 million CABs/Port Cash $30 million Total Interest Cost (TIC) (1) 7.72% Opening CFC (2012) $6.50 Max CFC (2038) $10.88 ($6.12 current dollars) (1) Includes variable rate interest Current Base Case - Considerations Transaction days actual activity will differ from forecast and result in a CFC that is higher or lower than the forecast Forecast accepted by industry and independent feasibility consultant Interest rates lower rates could reduce the CFC, higher rates could increase CFC Bond resolution will include an interest rate cap set by Commission If rates are too high, the sale and project re-start will be delayed Market access current market provides access, but structure and rates might not be ideal Finance plan includes contingencies Use of Port cash up to $30 million to replace/supplement CABs Two bank lines-of-credit can allow for flexibility in timing of bond issuance Project History May 13, 2008 Commission authorized the CRCF project June 11, 2008 Notice to proceed with construction issued to Turner July 1, 2008 Commission authorized sale of bonds to fund the project, financial markets and economy had begun to be troubled September 15, 2008 Financial markets collapsed October 14, 2008 Commission approved the use of $20 million of Airport funds to continue project spending December 16, 2008 Project suspended for up to one year January 27 & March 5, 2009 Briefing to update Commission on financial markets and financing options 18 Project Update Construction Work to prepare the site for suspension is slightly over 50% complete Anticipate completion of site preparation by early July Budget Costs for suspension remain estimated at $15-20 million for program Revised Capital Budget now at $402 million, CFC portion $397 million Estimated costs based on a July restart of construction Schedule Facility opening now likely in 2nd Quarter 2012 Turner having to shift weather sensitive work based on restart date and remaining construction work 19 Existing funds and on-going collections are sufficient to pay for costs during suspension 20 Process & Schedule June Commission authorization First Reading June 2, Second Reading June 9 of: 2 Bond Anticipation Note (BAN) lines of credit Resolutions Revenue Bond Resolution Close BANs June/July Sell Revenue Bonds July Close revenue bonds Issue Notice to Proceed 21
Limitations of Translatable Documents
PDF files are created with text and images are placed at an exact position on a page of a fixed size.
Web pages are fluid in nature, and the exact positioning of PDF text creates presentation problems.
PDFs that are full page graphics, or scanned pages are generally unable to be made accessible, In these cases, viewing whatever plain text could be extracted is the only alternative.