Airport staff asks council to authorize up to $700 million in revenue bonds to finish terminal program

Airport officials briefed the Salt Lake City Council on May 13 about a planned bond issuance that would fund remaining work in the Salt Lake City International Airport redevelopment program.

Bill Wyatt, executive director of the Salt Lake City Department of Airports, said the planned bond sale would fund the final phase of the airport redevelopment program, bringing total project debt under contract to roughly $4 billion. Wyatt and Brian Butler, airport chief financial officer, told the council they expect to borrow about $634 million but asked authorization to sell up to $700 million to allow flexibility amid market volatility.

Butler described a tentative schedule: council adoption of a bond resolution in the June 3 formal meeting, a 30-day contest period after notice on June 9, a July 1 public hearing and bond pricing in late July with a closing in August. "We're going to ask you on June 3 in the formal session to actually adopt the bond resolution," Butler told members. He said the airports plan would include a typical 30-year bond with a 10-year call and that current market assumptions anticipate mid- to low-5 percent interest ranges; he added the airport would not proceed if rates rose beyond a threshold (above roughly 6.5 percent as an example).

Why it matters: The airport redevelopment is a multi-billion-dollar capital program. The airports department said the financing will pay construction invoices and maintain required debt-service reserves; the airlines are contractually responsible for repaying airport debt under the current airline-airport use agreements, and airport debt is secured by airport revenue streams (passenger facility charges, airline rents and fees and certain customer charges).

Council activity and next steps: This was a briefing; airport staff requested council authorization to proceed with the bond resolution and schedule required public notices and hearings. No formal council vote occurred during the work session. Staff outlined contingencies including use of an existing $300 million line of credit (roughly $100 million remains available) as a stopgap should market conditions prompt a delay.

Background detail: Butler said the airport expects to issue approximately $633.8 million in bonds (with an estimated $5 million premium) with proceeds to fund construction, capitalized interest, a debt-service reserve and transaction costs. The airport reported it has already contributed more than $500 million in cash to the $5.13 billion project and that about 75 percent of the full program will ultimately be financed by debt.

Ending: Council members asked technical questions about market timing, the effect of a recession on investor demand, and the schedule for future concourse construction; staff said refinancings would follow in later years and that decisions about new concourses would depend on airline demand and debt paydown schedules. The council will consider formal action on the bond resolution at its June 3 meeting and will conduct the advertised public hearing in July as part of the statutory process.