The $1 Billion Big Build

Sacramento makes adjustments, forges ahead on new terminal complex

“It’s on schedule, on budget; to be completed in the fourth quarter 2011. Because that falls into the holiday season, we’re looking at what it would cost us to accelerate the completion and open it sometime in the third quarter.”

The project has been split into two, airside and landside, and both will seek U.S. Green Building Council LEED certification, according to Acree. “The airside has already accrued the points for Silver certification; and the landside terminal is within a point of meeting Silver,” he says.

“Sustainability was very important to us. We learned lessons from others’ mistakes. As part of our due diligence, we went the design/build route versus the design/bid/build. So we used alternative delivery, where we brought the primes in at the 30 percent level of design, and we benefitted from their creativity and experiences. They brought a lot of cost-avoidance measures to the project.”

Airline leases
The airline use agreements at Sacramento International are commercial compensatory by ordinance, explains Acree, and are for 30-day terms. “Right now there’s no revenue sharing with the airlines, where previously under the prior agreement, which was a residual hybrid, there was a revenue sharing component,” he says.

Cost per enplanement (CPE) at the airport is around $10, explains Acree, and the carriers will not see a significant change in their rates and charges until the new terminal complex is complete.

“All of the cost of the program is being capitalized, so the cost of the program has not hit the rates and charges and will not hit the rates and charges until after DBO,” he explains. “We were subsidizing the airlines to the tune of about $25 million a year; the benefit of that subsidy has gone away. As a result, their CPE has increased.

“When we were operating under the previous agreement, we were at a split of about 72/28; meaning, 72 percent of all of our revenues came from non-airline, non-aeronautical sources and only about 28 percent from the airlines. That split right now is about 50/50.”

Expanded concessions could impact those charges, he says, as the airport looks to follow the Tampa model, which Acree says has the highest revenue per enplaned passenger among U.S. airports.

Incoming ACI-NA Chair Acree on the Issues

Sacramento County director of airports Hardy Acree was recently named chair of Airports Council International-North America during its annual meeting. At that time, he sat with AIRPORT BUSINESS to discuss issues facing North America’s airports and his goals for the coming year ...

On his goals as ACI-NA chair ...

“Among my goals reauthorization is at the top of the list. We need a $7.50 PFC; it needs to be indexed to inflation. Also critical is NextGen; it’s top of mind for just about everybody in this industry. The airlines are desperately needing it. As [ACI-NA president] Greg Principato likes to point out, NextGen begins and ends at the airport, so the airports have to be part of the process.”

On his confidence in FAA’s abiliity to implement NextGen ...

“I think we have to be honest. The FAA will have to look in the mirror. I’ve talked with the new Administrator and I think Mr. Babbitt knows firsthand the shortcomings of not having done more to date. We’re very fortunate to have an Administrator with his background and experience.

“I think the FAA will probably do a better job going forward. Confident? I feel better now than I felt in the past. I think there’s a political willingness to get something done. Hopefully we can deal with the diversionary issues out there like user fees; we have to focus on what needs to get done and everybody needs to be part of the solution.

On the need for permanent AMT relief ...

“Congress did the right thing by including a two-year holiday on the alternative minimum tax in the stimulus. It certainly has benefitted our program in Sacramento. We just recently sold $480 million in bonds in July that we might not have been able to sell had it not been for the AMT exemption.

“AMT is wrongly applied by IRS to penalize airport projects and classifying them as private activity bonds. So one goal is to get that exemption permanent.”

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