DALLAS -- City officials and investment bankers are expected to decide next month on the structure, size, and timing of a bond issue to help finance construction of a $582 million airport in Austin, Tex., according to project managers and advisers.
Bill Newman, an executive with Public Financial Management in Austin and financial adviser for the airport project, said yesterday that more details on the issue will be finalized after Aug. 11, when bond industry representatives and city officials plan to meet in Austin.
Among the items to be discussed will be proposed federal limits on airline user fees and a report on whether up to $200 million in federal grant money is available to build the grants before we can determine the sizing of the bond issue," Newman said.
The airport project, which would be built on te former Bergstrom Air Force Base, was authorized by Austin voters in 1993 when they approved the issuance of up to $400 million of revenue bonds.. The base was closed last year as part of U.S. defense cutbacks.
Since then, plans have been progressing on schedule to" begin construction next year of the new airport, which would be located southeast of Austin and would replace the existing Robert Mueller Municipal Airport. The Mueller airport, built in the 1930, is too small to serve Austin, which is booming as high technology and other industries expand in the Texas city.
If all goes as scheduled, the new airport would open in 1998 with two runways for commercial aircraft and 20 gates, an improvement from the one runway for commercial aircraft and 16 gates at Robert Mueller. It would be 4,100 acres, almost six times the size of the existing airport. So far, an environmental impact statement has been completed, and contracts have been awarded, including selection of an investment banking team to underwrite the issue. More than 40 investment banking firms submitted proposals for the deal, and 10 finalisis were interviewed, according to Leslie Browder, finance manager for the airport project.
Late last year, the Austin city council approved Smith- Barney Inc. as senior manager and eight co-managers: Goldman, Sachs & Co.: Lehman Brothers; PaineWebber Inc.; Alex Brown & Sons; Nations Bank Pryor, McClendon, Counts & Co.; Apex Securities; and Artemis Capital Group.
Browder said she expects that the investment banking teal will sell more than $300 million of revenue bonds, probably in two issues. "The earliest issue would be November 1994;and the latest would be in January or February of 1995," she said.
She predicted that the city would not need to use the entire amount authorized by voters because the city has requested about $200 million in federal funds. About $145 million of that amount would come from the Federal Aviation Administration through the agency's airport improvement program, $30 million through the agency's noise abatement program, and $25 million in military assistance funds because a closed U.S. Air Force base is being used.
Officials said they hope to get word on the federal funding by early next month, so the airport timetable can be met and a full financial feasibility study can be prepared before the bond sales. Preliminary studies indicate that $336.4 million of debt its feasible, with almost half the debt service and other expenses to be funded by revenues from airlines.
In the meantime, they hope to negotiate business agreements with the 10 carriers that serve Robert Mueller Airport by the end of the year. The. largest carriers serving Austin are Southwest, American, and Delta airlines.
"We are out of room in a big way at Robert Mueller Airport," said Holland Young, planning and environmental manager for the project. "We can't bring in anymore aircraft, and there is no plance to expand."
In addition to passenger flights, he said cargo facililties need to be substantially suspended partly because of the growth in highh technology industry shipments in Austin which has become a nationwide hot spot for computers and computer peripheral products.
Bergstrom Air Force Base, which is located seven miles southeast. of the Austin central business district and within the city limits, is about 3,200 acid, and the city of Austin is acquiring about 900 acres of surrounding land to enlarge the airport site. As a result, there is plenty of room to accommodate passenger and cargo growth, which was predicted to more than doubie in 20 years, according to the airport master plan.
However, now. even those flutes are low and will be revised upward when a full financial feasibility study is complied in coming months, Young said.
For example, the master plan projected that passengers according to fly from the Austin region would increase to five million in 2012 from two million in 1991 In addition, outbound cargo is forecast to increse to 38,000 tons in 2012-from 16,337 tons.
Total aircraft takeoffs and landings are predicted to increase from 188,394 in 1991 to 251,000 in 2012, according to the master plan.