Baton Rouge, La., Sets $57M Airport Deal for Post-Katrina Passenger Growth

DALLAS — Baton Rouge, La., next week will sell about $57 million of sales tax revenue bonds to upgrade Baton Rouge Municipal Airport to serve a sudden but sustained growth in passengers since Hurricane Katrina.

“We thought we had a pretty good amount of capacity in terminal space, plenty of parking, and ample ticket counters at the airport, but all the spare capacity evaporated the day after Hurricane Katrina hit,” said Anthony J. Marino, Baton Rouge’s director of aviation. “The day after Katrina, the passenger load went up 106%.”

The surge slackened as other airports in the region reopened, but Marino said demand for passenger service at the airport remains at an elevated level.

“We had 750,000 passengers in 2004, the last full pre-Katrina year, and now we’re at about 1.3 million a year,” he said. “We expected a 35% increase from 2004 to 2007, but it was actually 50.9%.”

East Baton Rouge Parish’s pre-Katrina population was estimated at 413,500, but permanent relocations caused by the storm that hit New Orleans on Aug. 29, 2005, have pushed current population estimates to as high as 463,000 in the parish and about 700,000 in the area.

Baton Rouge Metropolitan Airport is an agency of the combined city and parish government, but it operates on its own revenues without receiving money from the general fund.

The bonds are being issued in three series. The city will sell $1.9 million of revenue bonds to finance a new passenger loading bridge and expand ticket counter facilities, a $9.3 million series of taxable revenue bonds for portions of a parking garage to be used by on-site car rental companies, and a $45.2 million series of revenue bonds to expand the terminal atrium and extend a runway, and to refinance the existing debt issued by the city on behalf of the airport.

“When it is all said and done, we should have about $36 million in new money,” Marino said.

The bonds are insured by Financial Security Assurance Inc. The bonds have underlying ratings of Aa3 from Moody’s Investors Service and AA from Standard & Poor’s and Fitch Ratings.

The underwriting team consists of Merrill Lynch & Co. and Citi.

Bond counsel is Breazeale, Sachse & Wilson LLC. Government Consultants of Louisiana Inc. is the financial adviser.

The airport will use the bond proceeds along with a $30 million grant from the Federal Aviation Administration to complete the final phase of a $350 million expansion project, Marino said.

“When this is completed, we’ll be in great shape,” he said. “We’ll have our third parking garage, the atrium will be expanded, and security will be enhanced.”

The city has pledged to support the bonds with revenue from a 2% sales tax that brought in $97.7 million in 2006. However, an intergovernmental agreement between the city and the airport calls for the city to loan the proceeds to the airport. In turn, the airport has pledged to repay the loan, including debt service on the bonds, with revenues from a surcharge on airline tickets known as the passenger facility charge and a fee levied on car rentals at the airport.

“We’re taking advantage of the city’s good credit rating to borrow money at a lower rate than the airport can by itself,” Marino said.

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