Mayor Wellington Webb yesterday said Denver has finalized a 30-year agreement that commits United Airlines to the $3.1 billion Denver International Airport when it opens in lat 1993.
The mayor said in a late afternoon press conferene that he finalized terms of the agreement shortly before noon in a telephone conversation with United Airlines Chariman Stephen Wolf.
"This agreement secures the successful future of Denver International Airport," he said. "This will siginificantly increase investor confidence in this multibillion dollar project."
In a statement, the mayor said the agreement calls for a 30-year lease to United for airport space and operating rights, including 45 gates and 18 commuter gates.
All provisions of the June 26 preliminary agreement between the city and the airline remain in effect and no additonal financial incentives were added to the final agreement, he said.
The United site at Denver International will provide for a maintenance hangar, flight kitchen, and cargo building to be developed by United with special facility bonds issued by the city and repaid entirely by United.
The new airport will also include a fully automated baggage handling system -- the first of its kind in the world -- that will cost an estimated $190 million.
Further, Mr. Webb said the city has agreed to cap airport construction costs at $2.7 billion in actual dollars spent and said the city will make its best efforts to limit cargo and commercial operations from nearby Front Range Airport.
The agreement also provides United with the right of first refusal if Continental Airlines abandons or rejects its agreement for gates on Concourse A.
The agreement comes after renewed rumors that a final pact with Chicago-based United was near and as the Denver City Council last night was set to approve a $106 million contract to build Concourse B at the new airport for the exclusive use of the carrier.
It was not clear when the final agreement would be signed. A United spokesman said the details of the agreement were reached by last Friday and the terms were reviewed over the weekend.
Just last month, city officials said it might be early next year before a final agreement with United was reached, in part because of continuing uncertainty over the future of bankrupt Continental Airlines at the airport.
But the long-sought agreement is likely to boost the project as the city prepares next February to sell another $300 million fixed-rated offering.
Denver has already sold $2.1 billion in debt, which bears a conditional Baal from Moody's Investors Service BBB from Fitch Investors Service, and BBB-minus by Standard & Poor's Corp.
On Wall Street, news of a final accord was well received as city officials conducted previously schedule meetings with rating agencies. However, analysts said late yesterday that they could not comment until they reviewed the pact and its terms.
Airport finance experts said the ideal agreement with United would give the city flexibility in raising rates and charges and retain control of gate use.
"On the face of it, it's a strong positive," said Todd Whitestone, managing director at Standard & Poor's Corp., who meets with city officials today. "It doesn't resolve everything, but it would be a strong step in their favor."