DALLAS - The Phoenix City Council has unanimously approved a $103 million construction contract to begin the renovation of Terminal 3 at Sky Harbor International Airport.
The phased modernization of the terminal is expected to cost $590 million, with completion anticipated in 2020, officials said.
The city issued $200 million of commercial paper for the airport through its Phoenix Civic Improvement Corp. on Oct. 1. The notes were backed by letters of credit from Bank of America and Barclays Bank. The city does not anticipate issuing long-term bonds until 2016.
The project will be financed through airport revenues such as parking, concessions and tenant fees. No local tax dollars will be used, officials said.
Plans call for the south concourse to be razed and replaced by a 15-gate concourse designed for greater efficiency. Additional gates built at the concourse will enable the closure of Terminal 2 to airline operations.
Areas targeted for improvement include new food and retail concessions, larger airline hold rooms, and new customer amenities.
Eventually, Terminal 2 airlines will be moved into Terminal 3, but there are no plans to demolish Terminal 2, officials said.
Under the contract approved Oct. 15, the joint-venture firm Hunt Austin will manage the design-build project.
Designed in 1977, Terminal 3 is limited by its small checkpoint size and configuration, antiquated passenger support areas, inadequate concessions, and aging infrastructure, according to city staff.
Sky Harbor, one of the 10 busiest airports in the nation, has seen steady increases in traffic in 2014 with March setting a record as the busiest month with more than 4 million passengers. The airport's major tenant is American Airlines, which merged with the airport's dominant carrier, Tempe, Ariz.-based US Airways, last year.
Phoenix, which owns and operates Sky Harbor, carries general obligation bond ratings of Aa1 from Moody's Investors Service and AA-plus from Standard & Poor's. Outlooks are stable.
