DALLAS - Dallas-Fort Worth International Airport is moving toward a $1.5 billion bond-financed renovation of the four original terminals that debuted 35 years ago.
With the approval of the DFW board last week, URS Corp. of Dallas has begun preliminary design work for the project under a $20.75 million contract.
Meanwhile, DFW is preparing for a $600 million refunding this month and next to remove alternative minimum tax requirements from revenue bonds issued in 2004 and 2008.
The federal stimulus act signed by President Obama allows airports to sell debt that is not subject to the AMT and to refund their AMT debt with non-AMT bonds through the end of 2010.
Spreads on AMT debt versus non-AMT bonds has grown to about 150 basis points from 10 to 30 basis points when the bonds were originally issued, according to Michael Phemister, vice president for treasury management at DFW.
"We need to take advantage of this opportunity to refund our AMT debt with non-AMT bonds," he said. "This window will close at the end of 2010."
On the remodeling of the terminals, construction would begin 'in 2011 following the issuance of debt. Additional funding would come from available capital and other sources. Costs could run as high as $2 billion, airport officials indicated.
"While they have served us very well, our four original terminals are 35 years old now, and their internal systems need replacement," said Jeff Fegan, chief executive officer for DFW. "The renovation of these terminals is critical for the airport's long-term outlook, because this project will keep DFW highly attractive to customers and cost-effective for airlines well into the 21st century."
The DFW project will coincide with other major bond-financed projects, including rail links to downtown Dallas and Fort Worth and a massive highway construction project from the Texas Department of Transportation known as "the Funnel" that will connect the numerous highways and tollways leading to the airport's north entrance.
The Dallas Area Rapid Transit authority is building the Orange Line light-ail route from downtown through the suburb of Irving with a final destination at DFW in 2013. The Fort Worth Transportation Authority's commuter rail line will connect to the airport from the west.
The airport is also considering an automated rail system to link the new transit stations to the terminals along the road that bisects DFW from north to south.
The terminal redesign is expected to resemble the new Terminal D that serves as the international passenger hub. Terminal D opened in 2005 at a cost of $1.2 billion.
"We certainly know that International Terminal D works extremely well, and passengers worldwide have consistently named it one of the top airport facilities in the world," Fegan said. "We hope to apply what we have learned with International Terminal D to the other terminals, so every passenger who visits DFW will want to come back here time and again."
The redesign is part of the airport's current master plan.
Construction is expected to begin in early 2011, just after Super Bowl XLV is held in nearby Arlington. Terminal A will be the first terminal completed, sometime in 2014, and the entire project should be complete by the end of 2017. The project requires one-third of each terminal to be shut down at a time for construction.
Situated halfway between Dallas and Fort Worth, DFW is the world's third-busiest airport, offering nearly 1,750 flights per day and serving 57 million passengers a year. While traffic is down this year due to the recession, airport officials and officials from the two cities continue to see DFW as a major economic engine that has helped attract Fortune 500 headquarters to the region.
When it opened in 1974, DFW was the largest airport in area in the world, later surpassed by Denver International Airport. Construction of the airport resolved a lawsuit by Fort Worth against the city of Dallas, claiming monopolization of air traffic at Love Field Airport.
"A great deal has changed since these terminals were designed in the 1960s, including vastly different modern requirements for security and customer services," said Jim Crites, executive vice president of operations for DFW. "The renovated terminals will be very customer-focused, so we should see big gains in customer satisfaction as well as operational efficiency and revenues."