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HomeMy WebLinkAboutTransmittal - 6/3/2025SALT LAKE CITY TRANSMITTAL To:  Salt Lake City Council Chair Submission Date: 04/29/2025 Date Sent to Council: 04/29/2025 From: Department * Airport Employee Name: Christensen, Brett E-mail Brett.Christensen@slc.gov Department Director Signature Director Signed Date 04/29/2025 Chief Administrator Officer's Signature Chief Administrator Officer's Signed Date 04/29/2025 Subject: Salt Lake City Airport - 2025 Bonds - Resolution Additional Staff Contact:Presenters/Staff Table Bill.Wyatt@slc.gov Brian.Butler@slc.gov Document Type Resolution Budget Impact? Yes No Recommendation: Adopt Resolution. Set Public Hearing Background/Discussion See first attachment for Background/Discussion Will there need to be a public hearing for this item?* Yes No Public Process See Transmittal This page has intentionally been left blank ERIN MENDENHALL Mayor P.O. BOX 145474 451 SOUTH STATE STREET, ROOM CITY COUNCIL TRANSMITTAL Jill Love, Chief Administrative Officer Date Received: April 29, 2025 Date Sent to Council: April 29, 2025 TO: Salt Lake City Council DATE: April 29, 2025 Chris Wharton, Chair FROM: Bill Wyatt, Salt Lake City Department of Airports, Executive Director SUBJECT: Issuance of Airport Revenue Bonds, Series 2025 for Financing the Construction of the New SLC International Airport STAFF CONTACTS: Bill Wyatt, Executive Director, 801-575-2408 Brian Butler, Airport Chief Financial Officer, 801-575-2923 DOCUMENT TYPE: Resolution RECOMMENDATION: (1) That the City Council adopt a resolution (the “Bond Resolution”) on June 3, 2025, authorizing the issuance and sale of up to $700 million principal amount of Salt Lake City, Airport Revenue Bonds, Series 2025 (the “2025 Bonds”), and giving authority to certain officers to approve the final terms and provisions of and confirm the issuance of the 2025 Bonds, from time to time, within certain parameters set forth in the attached Bond Resolution; (2) Set a public hearing date for July 1, 2025, and (3) Hold a public hearing on July 1, 2025. This timeline (the adoption of the Bond Resolution on June 3, 2025, the subsequent publication of the notice of public hearing and bonds to be issued, and the holding of a public hearing on July 1, 2025) accommodates the required 30-day contest period to close the transaction in August of 2025. BUDGET IMPACT: This financing will have no impact on the City’s General Fund budget as no General Fund revenues are pledged toward the repayment of the 2025 Bonds. Further, neither the full faith and credit nor the taxing power of the City, the State or any political subdivision or state agency is pledged to the payment of the principal of, premium if any, and interest on the 2025 Bonds. Instead, 100% of the debt service on the 2025 Bonds will be paid from the various types of revenues generated at Salt Lake City International Airport (the “Airport). Such revenues include the landing fees, terminal rentals, and other fees paid by the airlines serving the Airport, as well as various revenues generated from sources other than the airlines. Such non-airline revenues are derived from sources such as parking, rental cars, food and beverage concessions, news and gift concessions, ERIN MENDENHALL Mayor P.O. BOX 145474 451 SOUTH STATE STREET, ROOM cargo revenues and various types of rental income. The passenger facility charge (“PFC”) revenues that the Airport receives from the $4.50 charge imposed on passengers boarding planes at the Airport will also be applied toward the payment of project costs and debt service. BACKGROUND/DISCUSSION: In 2014, the City entered into a new 10-year Airline Use Agreement (“AUA”) with the airlines serving the Airport. In the AUA, the airlines authorized the City to undertake the full Terminal Redevelopment Program (the “TRP”) planned for the Airport. The TRP is a comprehensive and integrated series of projects that will result in the replacement of substantially all of the Airport’s landside and terminal complex facilities. The TRP has a current estimated cost of $2.83 billion. On April 30, 2015, the airlines that are signatories to the AUA voted unanimously to approve construction of the North Concourse Project (the “NCP”),a separate, but integrated project with the TRP. The NCP was undertaken in lieu of renovating the Airport’s then- existing Concourses B, C and D. The NCP originally included an additional concourse with approximately 31 gates and capacity for future expansion, and a connecting tunnel to the main terminal complex. The NCP has a current estimated cost of $2.31 billion. Phase I of the TRP (including Concourse A West (25 gates)) opened on September 15, 2020 and Phase I of the NCP (including Concourse B West (21 gates)) opened on October 27, 2020. The TRP and the NCP are now collectively referred to as the New SLC. Due to the global pandemic of Covid-19, the City, in consultation with the airlines, decided to accelerate demolition of the existing facilities and advance the schedule for Concourse A East. Rather than completing Concourses A and B in several phases while maintaining elements of the previous concourses in service, in the spring of 2020, the City demolished all of the remaining terminal elements and began constructing Concourse A East in a single phase. As a result, Concourse A East (22 gates) was completed in October 2023. Since 2020, and after consultation with the airlines, the City also determined that a full build-out of Concouse B (47 gates) was necessary to accommodate the projected airline demand. The Department expects to complete construction of the final phase of Concourse B East and, therefore, all gates in the New SLC (94 gates), by October 2026. In anticipation of the acceleration of the TRP phases, the City offered an extension of the AUA through June 30, 2034, which was executed by Delta Air Lines and United Airlines. When it became apparent that acceleration of Phase IV of the TRP would present substantial savings to the City by monoloplizing on an already mobilized construction force and present day construction costs, the City offered the airlines an amendment, or in the case of Delta Air Lines and United, a second amendment, to the AUA to finance Phase IV development. The new AUA Amendment updates and modernizes various provisions to the AUA, including key business terms to bolster the Department’s ability to fund the New SLCand maintain financial stability. Proceeds of the 2025 Bonds will be used to for the purposes of (a) financing additional components of the New SLC (the “Series 2025 Projects”); (b) funding capitalized interest on all or a portion of the 2025 Bonds; (c) repaying the line of credit that is used to provide interim financing for costs of the New SLC; (d) funding any necessary reserves in connection with the 2025 Bonds; (e) paying the costs incurred in connection with the issuance and sale of the 2025 Bonds (including, but not limited ERIN MENDENHALL Mayor P.O. BOX 145474 451 SOUTH STATE STREET, ROOM to, the purchase of one or more municipal bond insurance policies), and (e) reimburse for capital costs incurred up to sixty (60) days prior to adoption of the resolution. After the issuance of the 2025 Bonds, the Airport does not expect that any additional bonds will need to be issued to finance the costs of the New SLC. The Airport currently projects that the costs of the New SLC will be funded from the following sources: Amounts in Proceeds of 2017 Bonds $926 Total $5,135 Assuming interest rates remain at their present levels at the time the bonds are sold, the City’s financial advisor and underwriters estimate that the 2025 Bonds will be sold at a true interest cost of approximately 5.55% per annum. The current plan calls for the 2025 Bonds to be sold on or about August 4, 2025. The Designated Officers defined in the attached Bond Resolution are authorized to approve the interest rate(s) and other terms and provisions relating to the 2025 Bonds by executing the Certificate of Determination, the form of which is also attached. The Certificate of Determination will need to be signed in-person by the Mayor and Council Chair or their respective designees on the afternoon of the date of pricing and sale of the 2025 Bonds, which is currently scheduled for August 4, 2025. Included in section 11 of the Bond Resolution is a Declaration of Official Intent (Reimbursement of Expenditures) that allows the Airport to seek reimbursement with proceeds of the 2025 Bonds, additional Bonds and/or the Subordinate Revolving Obligations for expenditures related to both the TRP and NCP. This will allow the Airport to have more flexibility when reimbursing construction costs when there is a gap in debt financing of construction costs. Draft copies of the Bond Resolution, the Certificate of Determination, the Form of the Fifth Supplemental Trust Indenture, the Form of the Preliminary Official Statement (including the Report ERIN MENDENHALL Mayor P.O. BOX 145474 451 SOUTH STATE STREET, ROOM of the Airport Consultant), the Form of Bond Purchase Agreement, the Form of Continuing Disclosure Agreement, Notice of Public Hearing, and Notice of Bonds to Be Issued are included for your review. Please keep in mind that these are preliminary drafts and are subject to change and completion. Attachments: Bond Resolution Exhibit A: Certificate of Determination Exhibit B: Form of Fifth Supplemental Trust Indenture Exhibit C: Preliminary Official Statement (including the Report of the Airport Consultant) Exhibit D: Form of Bond Purchase Agreement Exhibit E: Form of Continuing Disclosure Agreement Exhibit F: Notice of Public Hearing Exhibit G: Notice of Bonds to be Issued