The Massachusetts Port Authority this week unveiled a $1.5 billion plan to renovate and expand Logan Airport, stimulate job growth in the Boston area, and ease regional congestion.
The "majority" of the $1.5 billion would be raised through tax-exempt issuance spaced out in small increments over the next 10 years, said Elizabeth Taylor, director of financial policy at the authority. The first sale will take place in 18 months to two years, she said.
While Ms. Taylor said specific borrowing projections will not be available until environmental clearance has been granted, she emphasized that the project will go forward.
"We don't legally need the environmental clearances," Ms. Taylor said, "but we think it prudent to match the issuance with the construction schedules. It's also cheaper."
The port authority expects to undertake about 32 separate projects in the expansion plan, including terminal upgrades, ground transportation improvements, a new federal inspection building, new fire safety facilities, and other improvements. Logan Airport is the 10th-busiest in the nation, serving more than 23 million passengers a year.
Although the project is expected to employ about 1,000 full-time workers a year for 10 years, neither Gov. William Weld nor the Massachusetts Secretariat for Transportation and Construction would take credit for the plan.
"It's their baby," said Thorn Mead, assistant secretary for transportation and policy in the secretariat, referring to the Massachusetts Port Authority.
The environmental compliance issue is of substantial importance in the Boston area. The Logan project would increase air traffic 20% in the next 20 years and ground traffic 50%, worsening air quality.
The automobile emissions are particularly worrisome, according to regulators, because motor vehicles are the single largest source of air pollution putting Massachusetts in violation of the federal Clean Air Act.
"The whole state's in noncompliance with air regulations," said a spokeswoman for the Boston office of the Environmental Protection Agency.
"Boston and most of the state are in violation year after year," said a spokesman for the Massachusetts Department of Environmental Protection. "In the last 15 to 20 years, we've taken care of the stationary sources . . . but there are a lot of cars and trucks out there."
State regulations are modeled after and "locked into" the Clean Air Act amendments of 1990, the spokesman said.
In the generic environmental impact report filed with state's executive office of environmental affairs, Alden Raine, executive director of the port authority, wrote that the expansion "will not increase the environmental effects of Logan Airport on its neighbors."
"The basis for many elements" of the expansion plan, the report says, is to manage and mitigate environmental damage, including parking consolidation, reduction of vehicular traffic to and from the airport, more efficient airplane fuel delivery systems, and an "enhanced noise barrier" for nearby residents.
Ms. Taylor of the port authority said the future Logan bonds could be secured by revenue streams different from the authority's outstanding consolidated bonds. All port authority bonds are currently backed by all port authority revenues, such as landing fees and terminal rentals, she said.
"To finance a project of this size, we will explore a variety of things," Ms. Taylor said. "The general revenues will be a component, as will airport parking revenues and [passenger facility charges], and it's possible -- though not at all certain -- that we'll do conduit financing.
"It will be double-barreled," she added. "What mix of conduit and revenue we will use I cannot say, but the majority of these bonds will be [secured by] consolidated revenues."
Credit enhancement is a possibility, but given the authority's high ratings, it is unlikely that many of the airport bonds will be insured, she said. The port authority has used insurance only once in the past for a small part of one borrowing.
Moody's Investors Service rates the authority's debt Aa, while Standard & Poor's Corp. rates it AA-minus.
