BRADENTON, Fla. — Broward County, Fla., has reached a milestone in its effort to move forward with an $800 million financing to support the $1.5 billion cost of a major runway extension and other improvements at Fort Lauderdale-Hollywood International Airport.
County commissioners approved a landmark interlocal agreement last week with the city of Dania Beach to fund a “precedent-setting” noise-mitigation program for the city and its residents living near the airport, officials said.
The program includes paying residents for the potential diminution in property value as a result of the runway extension, and an end to litigation between the city and the county.
Some 80% of the estimated $175 million, multi-year noise mitigation program will be funded by Federal Aviation Administration grants as they become available, according to Broward’s chief financial officer, Dinah Lewis.
The county plans to fund $35 million of the program using passenger facility charge revenues, she said.
The FAA still has to approve certain portions of the agreement.
The program is an essential part of the county’s long-planned effort to spend $1.5 billion on airport improvements, including a $751 million runway extension to relieve congestion and delays.
The capital plan also includes work on the airfield, terminal, parking, and related improvements.
The controversial runway extension has been planned for decades but was often delayed due to litigation and objections from residents near the airport concerned about increased noise.
Broward anticipates issuing $300 million of airport revenue bonds in fiscal late 2012 or early 2013, and $450 million in fiscal 2013-2014, Lewis said.
“The board has not specifically approved a tentative borrowing schedule,” she said. “We continue to monitor the cash flow requirements of this project, and will adjust the borrowing schedule according to project needs.”
The runway extension was approved by an FAA record of decision in 2008 giving Broward County authorization to proceed with the expansion and elevation of runway 9R-27L, though it has been delayed by litigation filed by Dania Beach.
In April, the FAA awarded the county a $21 million grant for the runway project, and more federal grants are anticipated.
The runway will be lengthened to 8,600 feet from its current 5,275. It will require a new runway and taxiway to be elevated by 64 feet to extend over a railroad and the famous U.S. 1 highway.
“The landmark agreement is the first of its kind in the United States in that it offers homeowners a one-time payment of 20% of fair market value of the home,” county officials said. “The agreement also offers assistance that includes financial reimbursement and extensive home improvements to lessen the noise caused by an increase in jet traffic.”
In addition to including a sound-proof ing element, the agreement also includes a requirement that the expanded runway close from 10 p.m. to 5 a.m., a $100,000 cash grant to the city, and the transfer of some county property to Dania Beach.
If the FAA gives final approval to the agreement, Dania Beach officials said they would drop their litigation.
“This agreement brings us much closer to the point of groundbreaking,” said county commissioner Lois Wexler. “We’ve worked on this for so long. It’s time to move forward.”
Some ancillary work and designs are already under way on the runway project, but county officials have not set a date for groundbreaking.
Though the Fort Lauderdale airport is only 20 miles from the larger Miami International Airport, it is a growing facility for domestic traffic that attracts a number of low-cost carriers.
Overall, passenger traffic at the airport increased 4.4% to 21.8 million in 2010.
International traffic was up 13.99% — the busiest year on record, according to the county’s comprehensive annual financial report. The number of domestic travelers increased 5.2% to nearly 19 million.
The airport, a separate enterprise operation owned by Broward County, has $555 million of outstanding general airport revenue bonds and $138 million of passenger facility charge revenue bonds.
The GARBs are rated A by Fitch Ratings, A1 by Moody’s Investors Service and A-plus by Standard & Poor’s. The PFC bonds are rated A-minus, A2 and A, respectively.
Broward has $537.3 million of general obligation bonds outstanding through 2045 rated triple-A by Fitch and Moody’s, and AA-plus by Standard & Poor’s.
In affirming its rating on the airport in July, Standard & Poor’s said the facility has a “generally good air travel demand profile,” a low-cost structure, as well as a diversified carrier mix and revenue base.
Those strengths are offset by additional debt needs for the capital plan, including the runway extension, according to a report by Standard & Poor’s analyst Joseph Pezzimenti.
Fort Lauderdale “benefits from having what we view as a resilient air-travel demand profile,” he said.
In fiscal 2008, enplanements increased 3.9% to a historic peak of 11.6 million passengers. In fiscal 2009, they dropped 9.7% due to the ailing economy. In fiscal 2010, they rose 4.3%, and climbed 8.8% between October 2010 and April 2011.
“The airport’s strong recovery in activity levels and historically good enplanement trends are due, in part, to its good air carrier diversity,” Pezzimenti said. “No passenger airline carrier accounts for more than about 19% of enplaned passengers.”
The top three carriers are Spirit Airlines, Southwest Airlines Co. and Delta Air Lines Inc., which accounted for 19.1%, 16.2% and 15.0%, respectively, of 10.9 million enplanements in fiscal 2010.
The airport’s rebound in enplanement levels is due partly to larger cruise ships sailing out of nearby Port Everglades.
In South Florida last year, the Fort Lauderdale airport had a 35% market share compared to 56% for Miami International.