SUBJECT:
An ordinance ratifying and confirming Ordinance No. 2015-1004 relating to the Airport System Inferior Lien Appropriation Facility and the delegated authority to issue Airport System Inferior Lien Revenue Bonds in an aggregate principal amount not to exceed $450 million to support and fund such Appropriation Facility based on the conditions and parameters approved by City Council pursuant to Ordinance No. 2015-1004.
RECOMMENDATION:
Approve an ordinance ratifying and confirming Ordinance No. 2015-1004 relating to the Airport System Inferior Lien Appropriation Facility and the delegated authority to issue Airport System Inferior Lien Revenue Bonds in one or more series in an aggregate principal amount not to exceed $450 million to support and finance such Appropriation Facility based on the conditions and parameters approved by City Council pursuant Ordinance No. 2015-1004; authorizing the Mayor, the City Controller and/or certain other designated City Officials to approve the amount, interest rates, prices, and terms subject to such conditions and parameters; ratifying and confirming the execution and delivery of one or more bond purchase agreements and such other agreements relating to the Bonds.
SPECIFIC EXPLANATION:
Over the next five years, the Airport System’s capital improvement plan expects to fund approximately $2.25 billion in capital projects. These capital projects are projected to be funded with existing airport funds, grants, passenger facility charges, and airport revenue bonds. The Airport System anticipates substantial appropriation needs related to the Intercontinental Terminal Redevelopment Program (ITRP) beginning in FY2017, which will require additional appropriation and interim financing capacity.
On October 21, 2015, City Council approved Ordinance No. 2015-1004 which authorized a Forward Bond Purchase Agreement with RBC Capital Markets in an amount not to exceed $450 million. The structure allows the City the flexibility to use the facility similarly to a commercial paper program, but at a reduced cost for undrawn purposes. The agreement with RBC has a term of 7 years, of which 6 years remain. During the term of this Appropriation Facility, City Council is annually required to ratify the Appropriation Facility and the authority to issue bonds.
This transaction was presented to the Budget and Fiscal Affairs Committee on October 4th, 2016.
Recommendation:
The Finance Working Group recommends approval of this transaction.