DENVER — Each year, the Airport Planning, Design & Construction Symposium attracts the people who plan, design, and operate our nation’s airports. Among this year’s hot topics was airport financing, with
discussions on how new airports in Florida and Utah are being funded, along with a look at how the current financial crisis in the U.S. is impacting airports. Planning was heavy on the agenda, focusing on the growing need for regional thinking and for a thorough environmental approach. Industry reps and FAA also addressed the growing concern over runway incursions and emphasized a need for improved airfield awareness and training.
The symposium is co-hosted by the American Association of Airport Executives and the Airport Consultants Council.
Dr. Stephen D. Van Beek, president and CEO of the Eno Transportation Foundation, a planning think-tank, says that there is a push by U.S. Department of Transportation Secretary Mary Peters to have industry pursue more public/private funding agreements, with the intent of reducing the federal financing role with airports. At the same time, he says that Congress remains reluctant to pursue transportation funding solutions.
Meanwhile, he cautions that the turbulence in the world’s financial and insurance markets is creating “angst and instability”.
Regarding the latter, Denver International’s deputy manager Stan Koniz relates how the dramatic swings in auction securities caused his staff to have to scramble to refinance some of its bonds via more traditional means. The “auction bond meltdown,” he says, is something that became a crisis in just a few weeks. Of Denver International’s long-term debt of some $3.2 billion, some $760 million was auction rate debt, the interest rate on which went from 2.5 percent to 10 percent in a matter of days during February, costing DEN as much as $75,000 extra per day.
Koniz says that the ratings agencies were behind the curve in terms of not alerting airports soon enough about the pending crisis. The lesson learned, he relates, is that “creative financing has its drawbacks.”
Funding airports at Panama city, St. George
Two high-profile industry projects are new airports being built in Panama City, FL and St. George, UT. Both were the subject of discussion, notably on how each project was financed.
Darin Larson, program manager for PBS&J, says of the Panama City initiative, “It’s really an environmental project that just happens to have an airport as part of it.” The new site is some 20 miles from the current airport and half of its 4,000 acres are large environmental impact areas. As a result, the airport has had to mitigate another 10,000 acres to offset the loss of wetlands. It is also several years behind schedule due to environmental lawsuits.
Sasha Page, vice president with Infrastructure Management Group (IMG), has been involved with the financing plan put together for Panama City. IMG was part of a Bechtel Infrastructure team hired by the airport to conduct a financial feasibility analysis. According to IMG, it developed a financial plan for the new airport that includes FAA and state grants; proceeds from the sale of the existing airport property; a bond issuance leveraging an FAA letter of intent (LOI); a general airport revenue bond supported by airport revenues; passenger facilities charges (PFCs); and other sources of innovative financing, including the donation of land from a private developer.
Page explains that the goal was to pursue one-third federal, state, and local funding. The 4,000 acres were donated by the St. Joe Company, a real estate developer, and the property was valued at $40 million. The Panama City/Bay County International Airport was able to sell its 700 acres on its current site ‘as is’, generating some $50 million in a deal consummated with Leucadia Corporation just prior to the real estate downturn in Florida. “If we had sold it six months later we would have gotten half of that,” says Page.
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The airport would be the first to be built since the Sept. 11, 2001, attacks.