The Massachusetts Port Authority on Wednesday will sell $215 million of special facilities revenue debt, including $156 million of taxable bonds, in a two-tranche offering to help finance the construction of a consolidated rental car facility at Boston’s Logan International Airport.
Under the project, one single rental location for nine companies will replace several sites.
MassPort also intends to construct a four-level garage and a customer service center in the southwest portion of the airport and eliminate 72% of its bus shuttles there, to 28 from 100.
The bonds are rated A3 by Moody’s Investors Service, A by Standard & Poor’s and A-minus by Fitch Ratings. The outlook from all three agencies is stable.
“Strong, stable economic conditions have led to a history of stable rental-car demand at the airport that has shown strong resiliency following substantial downturns in demand,” Moody’s said in its May 12 report.
Moody’s did say the reliance on only the single revenue stream of collections through a customer finance charge — initially $6 — is a challenge, though a requirement for rental car companies to pay contingent rent if customer fees are not enough provides an additional source if required.
“We’re very pleased about the ratings, which we consider excellent for a consolidated rental-car facility offering,” Betsy Taylor, MassPort’s director of finance, said Tuesday.
Citi is lead manager. Government Finance Associates Inc. is the authority’s financial adviser. Foley & Lardner LLP is bond counsel. Edwards Angell Palmer & Dodge LLP is disclosure counsel and Mintz, Levin, Cohn, Ferris, Glovsky and Popeo PC is representing the underwriters.
PricewaterhouseCoopers LLP is MassPort’s auditor for the airport care rental project.
The authority intends to open the new facility late in 2013.
The taxable portion, Series 2011B, includes $30.7 million of serial bonds that mature from 2012 through 2021, $59.3 million of term bonds that mature from 2032 through 2031, and $63 million of term bonds that mature from 2032 through 2038, according to the preliminary official statement.
The non-taxable term bonds are scheduled to mature in 2041.
Debt service on the proposed bonds is to be paid primarily from the imposition of a customer facility charge, MassPort chief executive Thomas Kinton Jr. said in the preliminary statement.
Taylor said there is no retail period, though retail orders will receive preference Wednesday for the tax-exempt bonds.
“We don’t anticipate any retail interest for the taxable bonds,” she said.
According to Taylor, the par amount of the bonds is $59 million for the tax-exempts and $156 million for the taxable bonds.
The tax-exempts have a 10-year par call and the taxable bonds offer a make-whole redemption price. The bonds are not insured, she said.
The original cost of the project is $300 million, according to MassPort, whose board approved an expenditure for that amount on April 21.
Funding will also come from a grant under the Federal Aviation Administration’s voluntary airport low-emissions grant, which covers some of the purchase price of alternative-fuel buses.
According to the preliminary official statement, MassPort and Suffolk Construction Co. have agreed to a guaranteed maximum construction price of $234 million.
Over the past decade, Logan has spent $4.5 billion on a modernization program that included new terminals, parking facilities, roadways, and airport concessions, according to MassPort.
Logan handled 27.4 million passengers in 2010.
