DALLAS – The Austin City Council is expected to approve up to $150 million of taxable revenue bonds Thursday to build a new consolidated car rental facility and parking garage at Austin Bergstrom International Airport.
The issue is expected to be about $142 million, according to Moody’s Investors Service, which has rated the bonds Baa1 with a stable outlook.
“The rating is based on the strong fundamental demand for rental car transactions at the airport, limited facility construction risk and strong expected debt service coverage,” wrote Moody’s analyst Kurt Krummenacker.
Ratings from Standard & Poor’s and Fitch Ratings had not been issued as of Wednesday.
Opened for service in 1999 at the site of the former Bergstrom Air Force Base in Southeast Austin, ABIA has grown steadily over the years, with Southwest Airlines accounting for most of the market share.
Debt for the parking and rental car facility is supported by only the single revenue stream of customer facility charges on rental cars. If CFCs are insufficient to pay debt service, the car rental companies are required to pay contingency fees, according to Moody’s.
“The initial CFC rate of $5.95 is relatively high among U.S. airports and is expected to increase to $6.25 at facility opening in 2015,” Krummenacker noted. “This may limit rate raising flexibility.”
Under current plans, the bottom floor of the new three-story garage would have about 900 spaces open to the public, with the top two floors set aside for rental cars. That would allow the airport to take over the top floor of the existing parking garage adjacent to the terminal. The top floor of the existing garage now serves the rental car companies.
The rental car companies plan to provide fueling and maintenance facilities at the new garage, allowing the companies to ready cars for rental more quickly.
The Austin project is one of several bond-funded expansions and renovations at Texas airports. Dallas-Fort Worth International Airport, Dallas Love Field, Houston George Bush Intercontinental and Houston Hobby International airports are all undergoing multi-billion-dollar improvements.