CHICAGO -- Nearly $1 billion of bonds could be issued over the next three years to build and equip a new United Airlines maintenance facility in Indianapolis, according to possible scenarios outlined by Indiana government officials.
United tentatively selected Indianapolis last week as the location for a new maintenance facility to service its Boeing 737 aircraft. The airline and government officials have set a Nov. 22 deadline to work out details on the financing and to sign contracts finalizing the deal.
The Indianapolis Airport Authority -- owner and operator of Indianapolis International Airport, where the facilitiy would be located -- would like issue the bulk of the bonds, according to Elaine Roberts, the authority's deputy executive director.
The bonds issued by the authority would be special facility revenue bonds secured by annual lease payments by United, Ms. Roberts said.
She explained that the amount of bonds the authority would issue is still uncertain, but added that it probably would be about $700 million, the approximate difference between the estimated $1 billion cost of the facility and a $291 million incentive package promised the airline by the state, Indianapolis, and Hendricks County.
Hendricks County borders the proposed site of the maintenance facility.
The incentive package is the largest ever offered by Indiana to attract an economic development project, according to Michael Higbee, director of the Indianapolis Department of Metropolitan Development.
The state would finance $171.5 million of the incentive package, comprised of a $15.5 million cash grant from a state economic development fund and a $156 million bond issue, according to Mark Moore, deput state budget director.
Mr. Moore said the bonds probably would be issued through the Indiana Transportation Finance Authority and serviced by biennial appropriations of the state General Assembly. He added that the structure of the state's offering has not been determined yet.
Indiana is barred by the state constitution from issuing general obligation debt.
Indianapolis's $111.5 million share of the incentive package also would probably be financed by a bond sale, according to Mr. Higbee.
He added that the structure of the city's deat has not been determined, but that it probably would be a revenue bond issue rather than a GO bond issue.
"We're looking at two or three alternatives as far as revenue sources for the bonds," Mr. Higbee said.
The $8 million to be provided by Hendricks County would be financed by a revenue bond issue backed by the county's Economic Development Income Tax, said Hursel Disney, president of the Hendricks County Commission. The 0.25% income tax generates $2.8 million a year, according to the Indiana Department of Revenue.
Larry McKee, a spokesman for the revenue department, said counties in the state are allowed to levy an income tax up to 0.5% for economic development purposes.
If a final agreement can be reached with United, Mr. Higbee said all the bonds that make up the incentive package would be issued early next year. The airport authority then would issue special facility revenue bonds as needed during the three years it is estimated it would take to build the 3 million-square-foot facility, Ms. Roberts said.
The United maintenance facility has been described by Indiana officials as the largest economic development project in the United States.
"This is the opportunity of a generation," Mr. Higbee said.
The facility would employ as many as 7,000 people earning average annual salaries of $45,000 per year, according to a United press release.
United officials said the financial incentives package was one of the reasons the airline selected Indianapolis, but other factors included its location and the quality of the area's labor force. The three other finalists for the facility were Denver, Louisville, Ky., and Oklahoma City.