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Commission approves $1.5 million budget move to subordinate obligation fund for bridge‑loan interest
Summary
The Airport Advisory Commission voted unanimously Feb. 12 to advance an ordinance authorizing a $1.5 million transfer to the Aviation Department's Subordinate Obligation Fund to pay interest and costs tied to an anticipated $50 million draw on a $150 million revolving note facility with Wells Fargo.
The Airport Advisory Commission on Feb. 12 approved an item to amend the Fiscal Year 2024–25 Aviation Department Subordinate Obligation Fund budget, increasing transfers and appropriations by $1,500,000 to cover interest payments and related costs tied to draws on the airport’s subordinate lien revolving revenue note program.
Rajeev (Reggie) Thomas, the department’s chief financial officer, told commissioners the airport has a $150 million credit facility with Wells Fargo and expects to draw about $50 million in March or April. Interest expense associated with that draw had been budgeted in the operating fund but, after consultation with bond counsel and review of the bond ordinance, must be paid from the subordinate obligation fund. The requested $1.5 million transfer had already been budgeted in the operating fund and the ordinance would move the appropriation into the subordinate obligation fund so the city council could authorize the expenditure.
Thomas described the facility as a three‑year revolving credit facility, renewed annually, with an interest rate tied to the secured overnight financing rate (SOFR). At recent rates, the all‑in interest cost used in staff’s calculations was about 3.85 percent on drawn amounts; the unused portion carries a fee of about 0.2 percent. Commissioners were told the airport will have flexibility to draw as needed under the facility.
A motion to approve the ordinance passed unanimously. Eller moved the motion and Hendricks seconded. All commissioners present voted yes.
The commission’s approval sends the item to Austin City Council for final authorization to use the subordinate obligation fund for the planned interest payments.
