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HomeMy WebLinkAboutIR 24-1791 INFORMAL REPORT TO CITY COUNCIL MEMBERS No. 24-1791 To the Mayor and Members of the City Council January 9, 2024 Page 1 of 1 x� rn SUBJECT: DALLAS FORT WORTH INTERNATIONAL AIRPORT BOND 1875 FINANCING PACKAGE 2024 Dallas Fort Worth International Airport (DFW) is seeking approval of three new bond ordinances from the Owner Cities of Dallas and Fort Worth for DFW's 2024 debt management plan. With the new 10-year use and lease agreement with the airlines in place, DFW is taking on a significant capital program including the Central Terminal Area Expansion Program and a new Terminal F in the coming years. These financing items are critical to ensure the timely availability of funds for the program. The Airport is seeking authority to: (i) create a tax-exempt extendable commercial paper program, (ii) authorization to issue up to $1.5 billion in new money bonds in 2024, and (iii) authorization to refund any outstanding commercial paper with long-term bonds. 'ri item Munt 'Ary 67t" Supplemental $600 million Creates the addition of an extendable commercial paper Bond Ordinance program(Series 11)which will provide a more cost-effective interim financing tool for tax-exempt eligible projects than the existing taxable commercial paper program (Series 1). The primary feature of this program is it is extendable beyond 90 days (up to 270 days) so it does not require a bank liquidity facility or self-liquidity as a backstop making it a cost effective short-term financing option. The approval is to create the program in an amount not to exceed $600 million in principal and approve associated legal documents. 68t" Supplemental Up to $1.5 This is DFW's annual debt financing request. It provides Bond Ordinance billion for the authorization to issue up to $1.5 billion in new _ money bonds for DFW's capital program. 69t" Supplemental CP Series I - This is the annual request to provide DFW with the ability Bond Ordinances $750 million to refund commercial paper with long-term bonds. The programs approved by the Owner Cities in 2019 (Series CP Series 11 - 1) and 2023 (Series 11) requires the Airport to request this $600 million authorization annually. The Airport Board approved the three Supplemental Bond Ordinances at its December 7, 2023, meeting. The Owner City Approval schedule is below: January 9, 2024— Fort Worth City Council Work Session Briefing (via Informal Report) January 22, 2024— Briefing to the Government Performance and Financial Management Committee of the Dallas City Council January 23, 2024— Fort Worth City Council Agenda Meeting February 14, 2024— Dallas City Council Agenda Meeting For more information, please contact Chris Poinsatte, Executive Vice President and Chief Financial Officer at 972-973-5210 or via email at capoinsatte(a-)dfwairport.com David Cooke City Manager ISSUED BY THE CITY MANAGER FORT WORTH, TEXAS DFW International Airport FY2024 Debt Management Plan City of Fort North City Council Work Session January 9. 2024 vfI=Xrr DFW Overview DFW achieved record passengers, revenues andll s ` net revenues in FY23, all exceeding pre-COVID ~'-4s;�� levels DFW and Airlines signed a new Use Agreement effective October 1 , 2023 _ - • Ten-year term • Included almost $5 billion of preapproved - k . capital projects Moo • Terminal F 15 new gates, $1 .6 billion • Central Terminal Area Redevelopment — 9 new gates, $2.7 billion + • Infrastructure Capital Program — 17 projects, . �. $0.5 billion 1'1�\A/ V YY Terminal F — West Concourse • Skylink Station The Terminal F West Concourse will be comprised of 15 narrow body gates constructed in as a double-loaded, modular concourse. . z �� }•, a�'+t.71i T� it�3�&"i.2s�f;`���1�11`F ""air �. �b� ����111111111IIIIlIIII"RIII lRIIII". �` � �- Central Terminal Area Redevelopment Program DFW will add 9 new gates on 2 piers on Terminals A and C and tear down and reconstruct two-thirds of Terminal C, including a new parking garage. TM GRP VI 1 © 31 NB GATES� . 32 NB GATE x f A � High C Getes COMPLETE U. Terminal A Pier ■ ©Airfield Ramp Efficiencies Terminal C Renovations 'MO a❑.a Team Faelllry F rxo ©Service Delivery Systems Terminal C Garage and Roadways i k APFIELOE F FO natvlsreLe oR reRM1nwLLa PIO Building 9' Electric Central Utility Plant(E-CUP) edi a �a,N,rgLor 4 © ©Terminal C Pier mSomhwestAirfield Safety&Efficiency ' ------ 0 i �I A [ -' ) V V Capital Program and FundingSources DFW's total capital program is $9.2 billion through FY29 with approximately 80% to be funded with debt, of which approximately $6 billion will be new debt over the next five years. Capital Program- Funding Sources($9.213) $2,5 00 $2,0 00 Debt Required* Grants Cash $1,500 $1,000 $500 $0 FY23 FY24 FY25 FY26 FY27 FY28 FY29 Sources of Funds (Millions) FY23 FY24 FY25 FY26 FY27 FY28 FY29 Total Debt Required* $536 $1,585 $2,009 $1,307 $728 $758 $477 $7,400 Grants 85 230 250 167 36 44 47 858 Cash 196 49 153 128 135 133 133 927 Totals $816 $1,864 $2,412 $1,603 $899 $934 $657 $9,186 * Includes previously issued debt of approx $1.48 1'1 X A 1 Source: DFW Finance Department, assumes current Use Agreement terms, excludes PFIC. V F Y V Supplemental Bond Ordinance Summary Supplemental Bond Ordinance • Creates tax-exempt Extendable Commercial Paper (ECP) program • DFW's current commercial paper program is taxable • ECP allows for extendable maturity beyond 90 days and has lower interest rates compared to DFW's taxable commercial paper program • Authorization in an amount not to exceed $600 million in principal and approves the related documents including the form of a dealer agreement and offering memorandum 68th Supplemental Bond Ordinance • Provides for the authorization of new debt in an amount not to exceed $1 .5 billion in 2024 • Sets parameters for bond sales including maximum interest rate allowed by law and final maturity not to exceed 11/1/2054 • Issuance anticipated in late summer-fall of 2024 69th Supplemental Bond Ordinance • Provides for authorization to refund commercial paper s r'1�\A/ V YY DFW Debt Overview $7.4 billion of debt outstanding as of 9/30/23 • $ 1 .63 billion to be retired through FY29 • $ 6.0 billion of new debt planned to be issued through FY29 • $11 .7 billion of debt projected outstanding at end of FY29 Liquidity summary for FY23* • Debt service coverage - 1 .64x* • Days cash on hand — 653* • Sufficient liquidity to pay debt service and OPEX for 20 months with no revenues Debt repayment is solely from airport revenues; cities have no liability for DFW debt * Preliminary FY23 Results Current Bond Ratings: Kroll (AA) Moody's (Al) Fitch (A+) S&P (A+) �v�I A 1 vv Financing Team Financial Advisors - Hilltop Securities r Estrada Hinojosa - - - Bond Counsel - - -- -= ill_ - - _ Loll".-_- =` McCall, Parkhurst & Horton, LLP _- u y �- West and Associates, LLP Disclosure Counsel Bracewell, LLP Hardwick Law Firm, LLC Underwriters' Counsel Kelly Hart & Hallman LLP Escamilla Poneck, LLP r%FX A/ V YY Underwriting Pool Academy Securities* Ramirez & Co* Bank of America Securities Raymond James Barclays RBC Capital Cabrera Capital* Rice Financial* Citigroup Siebert Williams Shank* ,` �► `` Goldman Sachs Stern Brothers* �- n Jefferies Wells Fargo JP Morgan E' Loop Ca *Markets Capital p Morgan Stanley Piper Sandler WML- *MWDVBE qualified firm 1'1F\A/ V YY