7a Supp Revised
ITEM NO. ___7a Supp______ DATE OF MEETING: __May 11, 2010___ Intermediate Lien Revenue Bonds, Series 2010 May 11, 2010 Topics Overview Refunding Candidates New Funding for Airport Projects Schedule 2 Overview Staff will be requesting Commission authorization for the sale and issuance of Intermediate Lien Revenue Bonds, Series 2010 Bonds will be used to: Refund existing debt at lower interest rates for interest cost savings Fund Airport capital spending for various renewal and replacement projects pursuant to the approved capital budget Bonds are expected to fund or refund approximately $300-$550 mil. Refunding amount varies $153 - $385 million depending on which bonds are included for refunding New funding estimated at $150 million Bonds will be issued on the Port's Intermediate Lien which is targeted for Airport capital 3 Port Revenue Bond Lien Structure First Lien Port Gross Revenue Primarily for non-airport funding Legal coverage 1.35x O&M Expense Tax levy treated as an offset to O&M. Actual coverage strengthened due to reduced usage Port policy is to maintain Revenue Available for Debt Service coverage of at least 1.8x Intermediate Lien (introduced 2005) First Lien Primarily for airport funding Legal coverage 1.25x (from a Open Lien(s) combination of cash flow and cash reserves); Subordinate Lien PFC's used to pay Intermediate Lien Target for variable rate funding debt service may be used as an offset. Includes CP program Legal coverage of 1.00x Open Lien(s) calculated net of prior lien debt service Subordinate Lien 4 Refunding Candidates As part of the Port's on-going debt management, staff reviews opportunities to refund existing debt at lower rates Two series of bonds will be refunded Both are currently callable, First Lien Revenue Bonds Originally funded Airport projects Port policy requires minimum savings of 3% to refund Bond Issue Par Value Savings Savings Final Rate * Amount * Maturity 2000B $128 mil. 6.1% $7.8 mil. 2024 1998A $25 mil. 8.8% $2.2 mil. 2017 TOTAL $153 mil. $10.0 mil. * Savings rates and amounts estimates based on current market. Amount is the present value 5 Other Potential Refundings Other potential refunding candidates are: First Lien Revenue Bonds, Series 2001B Estimated savings is only 1%, does not yet meet the target Passenger Facility Charge (PFC) Revenue Bonds, Series 1998A&B Bonds are secured solely by PFC revenues Staff is reviewing options to refund as either PFC bonds or include in the 2010 Intermediate Lien Bonds Subordinate Lien Revenue Bonds, Series 2005 Variable rate bonds backed by a letter of credit (LOC) that expires August, 2010 Staff is reviewing options for replacing the LOC or refunding with fixed rate bonds included in this bond issue Staff will update Commission on the inclusion of any of the above 6 New Funding for Airport Projects The 2010-2014 Plan of Finance was presented to the Commission November 10, 2009 Airport Funding Plan is based on the capital program and operating budget (and related forecast) approved by the Commission as part of the budget process The Plan is developed with strict adherence to financial management policies Airport debt service coverage of 1.25x Airport minimum operating fund balances equal to 10 months operating and maintenance expenses The Plan funds $1.076 billion in Airport capital spending 2010-2014 Includes future bond funding for $444 million of capital spending Airport cash is also a significant funding source - $218 million 7 Aviation Capital Funding 2010-2014 2010-2014 ($mil.) Aviation CIP Committed 587 Business Plan Prospective 489 TOTAL 1,076 Aviation Funding Sources Net income and operating funds 218 Tax levy (1) 11 Grants 63 Passenger Facility Charge 61 Customer Facility Charge (2) 236 Existing revenue bond proceeds 43 Future bond proceeds 444 1,076 (1) Highline capital spending (excludes expense spending funded by tax levy) (2) Includes proceeds of CFC-paid bonds Source: Commission presentation November 10, 2009 8 Bond Funded Projects Airport capital plan assumes need for new bonds beginning in 2011. Issuance in 2010 expected to provide lower cost of debt due to "AMT window" in Economic Stimulus Bill Private activity bonds can be issued free from the Alternative Minimum Tax (AMT) unique opportunity scheduled to terminate end of 2010 In current market this window means approximately 1% lower interest rate estimated present value savings of $16 million Total new money component estimated to fund approximately $150 mil. 2010 scheduled principal payments for existing debt are $101 mil. Projects are primarily aeronautical Have been reviewed with the airlines Debt service will primarily be paid through airline rates and charges Debt service is reflected in CPE forecast reviewed by Commission 9 Bond Funded Projects Bond Projects ($ million) 2011 2012 2013 TOTAL Airfield pavement 6.2 6.0 0.0 12.2 Storm water & sewer pipes 2.4 1.1 0.0 3.5 Baggage handling improvements 10.5 5.3 0.9 16.7 Vertical circulation renewal & replacement 23.0 30.7 27.0 80.7 Preconditioned Air 3.0 3.0 2.1 8.1 GSE electrical charge stations 5.0 0.1 0.0 5.1 Other Terminal improvements 12.8 5.5 0.0 18.3 TOTAL 62.9 51.8 30.0 144.7 10 Process & Schedule June Commission authorization First Reading June 1 Second Reading June 22 July Sell Revenue Bonds August Close revenue bonds 11 Airport Bonds New Funding Issues The Port has generally issued new money bonds every 1-2 yrs to provide on-going funding for Airport capital projects Bond Issue Amount ($mil.) Purpose 1996 Rev. 106 General capital funding 1997 Rev. 140 General capital funding 1998 PFC 263 General capital funding (PFC projects) 1999 Rev. 231 General capital funding 2000 Rev. 352 General capital funding 2001 Rev. 428 General capital funding 2003 Fuel System 121 Fuel Hydrant System 2003 Rev. 555 General capital funding 2005 Rev. 252 General capital funding 2009 Rev. 317 Rental Car Facility 12
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