Tulsa Airports Improvement Trust Completes Successful Sale of Bonds to Fund Concourse A Reconstruction
The Tulsa Airports Improvement Trust (TAIT) recently completed the sale of two series of bonds totaling $36.94 million. The Series A Bonds, in the amount of $33.665 million with a 30 year final maturity, will finance the renovation of Concourse A and be principally repaid by Passenger Facility Charges. Preliminary work began on the concourse in August, with the bulk of the work scheduled to begin in January. The project will replace the electrical, mechanical, and plumbing systems of the 40+ year old structure, renovate all restrooms, gate hold rooms, the military lounge, and common areas, and add a business center. Work is expected to be complete mid 2015.
The Series B Bonds, in a principal amount of $3.275 million with a 11 year final maturity, will refinance outstanding debt of the Airport for total savings of approximately $888,000, and be repaid from general airport revenues.
Airports Director, Jeff Mulder, credits the successful transaction to the knowledge and experience of the airport’s financing team led by the Deputy Airports Director of Finance and Administration, Carl Remus and Michael Newman of First Southwest. “Carl and Mike crafted a strategy that allows the airport to maximize access to a limited PFC funding mechanism in order to keep this project on track.”
Each series of bonds was guaranteed as to principal and interest by an insurance policy issued by Build America Mutual (“BAM”). The BAM Insurance saved the Airport approximately $1.6 million in debt service over the life of the bonds. On the basis of the credit quality of the Airport and BAM’s insurance policy, the bonds were rated “Baa1” by Moody’s Investors, and “AA” by Standard & Poor’s with an underlying rating of “BBB+”. The tax-exempt Series A Bonds, which are subject to the Alternative Minimum Tax, had a bond yield of 5.58%, and the taxable Series B Bonds had a bond yield of 4.52%.