SAN FRANCISCO - The creation of the San Diego County Regional Airport Authority has already raised the eyebrows of at least one rating agency concerned with ambiguity surrounding the authority's powers and impact on the airport's debt.
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Earlier this week, Gov. Gray Davis signed Assembly Bill 93, which creates the new authority that will eventually assume control of the airport from the San Diego Unified Port District and expand the airport.
Developing a comprehensive land use plan and recommending a plan to either relocate the airport or expand its current location at Lindbergh Field will be the new authority's first priority.
Davis signed the bill "with some reluctance" and expects clean-up legislation in January to address some concerns.
Davis said the new authority should not take over operations of the airport until it decides on an expansion plan, puts the plan before county voters between November 2004 and November 2006, and voters approve the plan.
Under the original bill, the authority would operate the airport in December 2002.
Clean-up legislation would also require the port to fund all authority operations until the airport is transferred, clarify the authority's ability to attain property for an airport, and clarify its ability to receive federal and state grants, the governor said.
Joining Davis as a supporter of the new authority is San Diego Mayor Dick Murphy. They both hope having a single authority in charge of airport expansion would streamline a project that has dragged on for three decades, with at least seven locations having been considered.
"With the approval of AB 93, we are one step closer to a new regional airport," Murphy said.
A larger airport is necessary to accommodate the county's growing needs, proponents said.
The county population is forecast to grow almost 45% by 2030, according to AB 93. The airport currently contributes about 4% to the regional economy, and is expected to create new jobs along with county growth.
The authority would be able to issue tax-exempt revenue bonds and bond anticipation notes, according to the existing legislation. Because of the number and variety of expansion or relocation plans for San Diego International Airport, it is impossible to say how much the project would cost and how much debt may be issued for it.
Standard & Poor's maintains a negative CreditWatch on the airport's outstanding bonds surrounding the creation of the new authority. The airport's $65 million in revenue bonds are rated A-plus by Standard & Poor's. Fitch rates the bonds A-Plus, with stable outlook, while Moody's Investor Service rates the issue A1, also with stable outlook. The port has no other outstanding debt, according to officials.
Standard & Poor's analyst Kurt Forsgren said yesterday that the agency had not "had a chance to review all the changes" Davis had suggested. The new structure will be examined during the next six months in tandem with the agency's study of nationwide airport operations since the Sept. 11 terrorist attacks. A lot of clean-up legislation is necessary to clarify the issues, he said.
AB 93 said the authority will take over all financial obligations secured by revenues and fees generated by airport operations, including bonded debt and reserves. The legal mechanisms to transfer that debt are unclear, Standard & Poor's said.
Having access to alternative revenue sources like port funds or tax levies makes an airport less susceptible to declines in passenger volume or increased security and capital needs in light of the attacks, analysts said.
Splitting the airport from the port district is a credit risk that could weaken the airport's ability to meet other financial obligations, such as duplicating administrative services and staff.
It is also unclear if the new authority will have the necessary power to acquire land on which to build an airport. Siting airports in other parts of the country has proved difficult because local entities, usually cities, may not want to cede land-use decisions to the airport authority, Forsgren said.
