The sale of $163.6 million in bonds for a cargo project at John F. Kennedy International Airport has been delayed for a second time because of a protracted battle between New York City and the Port Authority of New York and New Jersey for future control of the airport.
The two parties have not be able to resolve their differences over who gets the lease payments from the cargo project developer, Airis Corp., after 2015, when the city hopes to take control of JFK back from the port authority.
"We are now awaiting what I hope will be one final language change," said Bob Kelly, senior vice president for Airis, which is based in Atlanta.
The deal -- $155 million in tax-exempt bonds and $8 million in taxable -- was originally expected to be sold through the New York City Industrial Development Agency on May 30. Officials characterized the first delay as a minor inconvenience, predicting the sale would proceed this week. But Kelly yesterday said there is still no resolution to the question of who controls the money between 2015 and 2028, when the bond issue would mature, but added that he expects an agreement to be reached soon.
If Mayor Rudolph W. Giuliani succeeds in his battle to wrest control of JFK and LaGuardia airports back from the port authority, the money would have to go directly to the city in order to assure investors that the bonds are safe after 2015.
Deputy mayor Anthony Coles went on the offensive in June, telling the New York Daily News that the port authority is insisting on language that would allow it to keep the lease payments. The port authority has denied that it is holding up the deal.
Kelly said being caught in the middle of a regional political war has been frustrating. "We'll make payments to whichever entity deserves those payments after 2015," he said.
However, Kelly added that he remains optimistic that the deal will proceed eventually. "We're still very optimistic," he said. "We still feel that this is an excellent project."
The planned cargo facilities total more than 400,000 square feet and would be constructed in a location near JFK's main terminal complex and taxiways. Prospective tenants include Lufthansa Cargo, Lufthansa Technik, Alliance Airlines, and Cargo Service Center.
The deal carries ratings of BBB-minus by Standard & Poor's and Baa3 by Moody's Investors Service. Fitch does not rate the deal.
UBS PaineWebber Inc. is serving as underwriter on the deal.
