BRADENTON, Fla. - The Louisiana State Bond Commission Thursday gave its approval for the New Orleans Aviation Board to issue up to $700 million for a new terminal.
Bond proceeds will be used to build a new, 650,000-square-foot terminal at Louis Armstrong New Orleans International Airport. It will replace the aging, 1.2 million-square-foot existing facility, where a number of concourses are unused.
The bonds are expected to price in February, and will be secured by non-airport revenues, such as parking and concessions fees, with airlines agreeing to pay the remaining debt service cost.
The project is expected to enable the airport to bring more passengers to the state and recruit new businesses as well as cut operational and airline costs, according to Iftikhar Ahmad, director of aviation.
"I think the idea of, 'you build it they will come,' is not a good idea for airports," he told the Bond Commission, referring to the new terminal's size. "We believe with this, we will become a world class airport."
As examples of how airports are important to the business sector, Ahmad cited the 2011 move by Chiquita Brands International Inc., to relocate its headquarters to Charlotte, N.C., from Cincinnati, Ohio where enplanement costs are some of the highest in the country.
In 2009, he said NCR Corp., moved from Dayton, Ohio because there weren't enough airlines servicing that airport. NCR then moved to Gwinnett County, Ga., but recently announced that it plans to move to downtown Atlanta.
"We're trying to make New Orleans a better place for businesses to do business," Ahmad said.
When asked by Commission Chairman John Kennedy if any property taxes would be used to pay the new debt, Ahmad said no taxes would go toward bond payments, and that the airport is not requesting additional state funds for the project.
The Bond Commission also approved costs associated with the sale of about $596 million in state fuel and gas tax refunding bonds.
Citi plans to price the negotiated deal Wednesday for retail investors and Thursday for institutional sales.
Bank of America Merrill Lynch, Raymond James & Associates Inc., and Loop Capital Markets are co-managers.
The bonds are rated Aa1 by Moody's Investors Service and AA by Standard & Poor's. Both have stable outlooks. The refunding is estimated to bring about $63 million in net present value savings.
Lamont Financial Services Corp. is the state's financial advisor. Foley & Judell LLP is bond counsel, and Breazeale, Sachse & Wilson LLP is underwriters' counsel.
The Bond Commission also gave approval for the state's finance team to issue up to $250 million in state general obligation refunding bonds. The pricing date depends on market conditions.
