CONSOLIDATED RENTAL CAR FACILITY AT TED STEVENS ANCHORAGE INTERNATIONAL AIRPORT An Exciting Tale of PUBLIC-PRIVATE DEVELOPMENT AND INNOVATIVE FINANCING ACI-NA LEGAL ISSUES CONFERENCE April 17, 2008 John Steiner Senior Assistant Attorney General State of Alaska
AIRPORT in DISTRESS: Inefficient use of Airport Land for Rental Car Operations Remote Locations All Problematic Staff and Financial Resources Dedicated to Terminal Project
WHITE KNIGHT: Creative Private Developer On a Quest for Profit In the domain of Airport (and airport counsel) Unafraid of Innovative Financing
Dragons: Competitive car companies to corral and herd Airport leasing and procurement rules to wrestle Financing to figure Rental return rows to relocate
The Quest: How can a private developer herd competitive RACs into a commitment to a consolidated facility and to a payment stream that can support financing without violating anti-trust laws? Why few dare: It may not be possible Path to the Holy Grail: The Airport can Take title to facility as public asset Require all RACs to operate in it Require RACs to collect a CFC to Pay Bonds
Airport Arms and Armor: 1. Establish and annually re-set CFC and FMC per advice of independent rate consultant (no responsibility to determine amount needed to pay debt). 2. Impose conditions for on-airport rent-a-car operations: - Must operate from Facility - Must collect CFC and FMC and remit to Trustee.
Key Seats at the Round Table Developer: Dream, Daring, Diplomacy, Diligence, Design, Drive, Desperation, Dedication, Disaster Dodging: DOING RACs: Competitive Cooperation Airport: Open-Minded Facilitation Development Finance Entity: Conduit Bonding Vehicle Underwriter: Financial Analysis, Feasibility Study, Bond Marketing
Sovereigns, squires and servants: State Legislature (CFC/FMC authority) Municipal Assembly (Not tax CFC/FMCs) Design-Builder Feasibility Consultant Rating Agencies Operations and Maintenance Consultant Special Purpose Entity Facility Operator Bond Trustee Bond Insurer Counsel for RACs Counsel for Developer Counsel for Underwriter (2) Counsel for Trustee Counsel for Bond Insurer Counsel for Airport
Airport Booty: Turn-key private development including: Land Lease (w/ interim rental return relocation) All regulatory approvals All legislative approvals All RAC approvals Placement of financing Complete the design and construction Ongoing Management and Operations Land-use efficiencies and less car-jockey traffic Title to Facility subject to 30-year lease limited to use as consolidated rental car facility subject to state-required terms; guarantee of 15 years of useful life beyond lease
Private Finance Fact & Fantasy Debt issued by Public Development Authority on behalf of Private Developer based solely on revenue from Publicly Imposed CFC collected by Private Concessionaires and Remitted to Private Trustee to pay, with Public Oversight, costs of Public Facility subject to Private Leases to generate Public Revenue. But all without use of airport credit. No airport or government security for the debt. Bondholders rely solely on the revenue of CFC s. Airport never touches CFCs paid directly to bond trustee. Airport responsible to impose CFC, but not determine rate.
Chronology of a Quest Consultant s Facility Siting Report June 1999 Terminal Redevelopment Project groundbreaking August 1999 Customer Facility Charge Legislation Spring 2001 Everything Changes September 11, 2001 New Rental Car Concession Agreement September 2002 Off-Airport Parking operation opens January 2003 Participation Agreement Developer/RACs/ANC Consent September 2004 Land Lease Application September 2004 Memorandum of Understanding Airport/RACs/Developer March 2005 Customer Facility Charge Adoption Order May 2005 Amended Concession Agreement June 2005 Development Agreement Developer/Contractor/RACs/ANC Consent July 2005 35% Design Complete; Stipulated Sum Determined; AK Industrial Devel. & Export Authority Resolution August 2005 Land Lease September 2005 Subleases September 2005 Approval of Indebtedness to be secured by CFC September 2005 Official Statement Bond Closing September 2005 Facility Opening July 2007
8 Keys to Successful Quest 1. Innovative and patient Developer 2. Cooperation of RAC s, Airport and Delivery Team 3. Phased delivery with Go / No Go decisions 4. Interim Funding of the Phased Delivery 5. Independent Development Bond Authority 6. Use of the Third-Party Trustee 7. Use of the Third-Party Cost Consultant 8. Ongoing Operating Entity
Special thanks to: