FOR IMMEDIATE RELEASE
December 6, 2012
Contact: Mike Kanarick
802.735.7962
Mayor Miro Weinberger Announces $25 Million Airport Bond Transaction Closing
Eliminates Risk of Fiscal Crisis; Continues to Put City’s Finances in Order
Burlington, VT – Mayor Miro Weinberger today announced that the Burlington International Airport closed this morning on a $24,880,000 Airport revenue refunding bond transaction that involved the refinancing of $12.7 million of existing long-term debt, as well as the repayment of $12 million of bond anticipation notes that required a balloon payment by December 15, 2012.
“I believe this closing is the most significant event to happen since I’ve become mayor," said Weinberger. “This is a major piece of what I was talking about as a candidate when I said my top priority would be to put the City’s finances in order.”
In 2010, the City constructed a $15 million Airport garage expansion project prior to securing commitments for the revenue bond financing approved by the voters in a March 2010 vote. Early in the construction process, the Airport's credit rating was downgraded dramatically by credit rating agencies. The City financed construction primarily through the use of its “cash pool” and, after construction was substantially completed, through the use of bond anticipation notes.
“The construction of the garage without the voter-approved financing in place put the City and the Airport at serious financial risk,” added Weinberger. “From early 2010 until today, the possibility of a true fiscal crisis at the Airport has been a distinct possibility. We have been working for nearly six months towards this closing knowing that, if the deal failed to close, we faced a $12 million balloon payment on garage-related debt this month. By closing this deal today, we have dodged a cannonball and set the Airport on a stable, predictable course.”
In addition to financial stability, the Airport will benefit financially from several other important elements of the transaction. The “all-in” interest rate for the new debt is 4.42 percent, an outstanding rate by historic standards, particularly given the credit rating downgrades the Airport has experienced since 2010. As a result of this rate, the net present value savings on the refunded bond issues is 4.51 percent. The transaction also will reduce the Airport's annual debt service payments from $4.3 million to just under $4 million, improving the Airport's debt service coverage ratio, a key metric by which the financial health of the Airport is judged.
“This is a great deal for Burlington,” said Paul Sisson, Interim Chief Administrative Officer. “Great focus by the Administration over the last six months and an enormous amount of work by our dedicated Airport team and Commission over the last two years made today possible.”
The Commission, CAO’s Office, and Airport staff, led by Interim Director of Aviation Gene Richards, dramatically have improved the Airport’s debt coverage ratio for each of the last two full years by making tough decisions, generating new revenues, and cutting costs. This work and the new Administration’s commitment to fiscal responsibility have begun to repair Burlington’s reputation with credit rating agencies.
“One of the reasons I ran for mayor was to make sure today’s closing happened,” said Weinberger. “I will sleep easier now knowing that the mistakes at the Airport of 2010 have been addressed and stabilized. I offer special thanks to both Paul Sisson and Gene Richards for their leadership.”
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