Sunday, July 22, 2018
Business

Congressional tax bill could make Tampa airport borrowing more expensive

TAMPA — With the congressional tax bill poised to increase its debt costs, Tampa International Airport might go out sooner than planned for some of the financing needed for its planned $2.3 billion expansion project.

That’s because the U.S. House of Representatives’ version of the Republican tax bill would do away with the tax exemption for what are known as "private activity bonds," which are issued by or on behalf of local or state governments for some projects.

Eliminating the tax exemption for those bonds would be expected to increase the interest rates Tampa International Airport would have to pay to borrow money by as much as 1 percent.

If that happens, then the airport’s financial advisors estimate the Hillsborough Aviation Authority would pay an additional $216 million over 30 years to repay bonds needed for part of the second phase of the expansion.

The first phase, costing about $972 million, is expected to be complete in coming months. By 2023, the airport expects to have added a new $323 million rental car facility, a new people mover from the car rental center and economy parking to the main terminal, new concessions inside the main terminal, an 8-story office building, two hotels, a gas station and eventually more airside gates.

So instead of waiting to go to the bond market for phase two financing next October, airport officials said Thursday they’ve sought proposals from finance firms to borrow $211 million by Dec. 31, before the costs go up.

Still, there’s a lot of uncertainty about whether the rule will end up changing.

Lawmakers from the House and Senate have to reconcile differences between their bills in a conference committee. That final version then must be affirmed by a vote in each chamber. In the Senate, the margin is razor thin, so the GOP can’t afford for the conference committee report to alienate any Republican senators.

"They have a short time to accomplish this," airport lobbyist Rick Alcalde told the Aviation Authority board about the tax bill. "The United States Senate has never been known for its quickness and efficiency. So if you’re wise, you consider other options."

After weighing the potential costs, Aviation Authority board members moved ahead Thursday with plans to see what other financing options might be available before the end of the year. Those proposals are due next week, and the aviation authority board could hold a special meeting on Dec. 20 if the airport gets a proposal that officials want to pursue.

State audit gets mixed review

A state auditor general’s report on airport finances and operations drew a range of responses Thursday.

"The findings, I believe, would be characterized as mostly administrative in nature, but every finding is one we take seriously," airport CEO Joe Lopano said. "Of the 12 findings, we have already addressed eight of them."

Airport officials provided 2,000 documents, and the airport’s own audit staff spent 600 hours working with three state auditors who spent about two months on site at the airport.

PREVIOUS COVERAGE: Audit of Tampa airport raises questions about spending and salaries

In a draft shared with the airport and its board, auditors said they found misuse of part of a state transportation grant and raised questions about the awarding and oversight of contracts related to the airport’s expansion, the largest public works project in Tampa history.

Auditors also questioned the justification of the airport’s $3.5 million public arts fund and the rationale for raises, some as high as 10 percent, given to the airport’s top executives.

But auditors did not report that there was "public corruption" at the airport — a phrase that state Sen. Tom Lee, R-Thonotosassa, used, with the qualifier "potential," in April when he demanded a review of the airport’s finances. They also did not conclude that the airport had problems repaying debts, as Lee also had suggested.

Hillsborough County commissioner and authority board member Victor Crist called the audit’s findings "fairly minor," despite "some serious allegations made during a critical time that could have been very hurtful to this airport and the people we serve."

"There was a lot of taxpayer money that went into a witch hunt that has proven that this airport is well-run, well-managed and responsive," Crist said.

Lee could not be immediately reached for comment after the board’s discussion.

The draft audit’s findings included:

• The state erroneously reimbursed the airport for furniture with money from a $194 million Florida Department of Transportation grant reserved for capital improvements. After further review of spending, the airport returned $438,000 in state funds.

• Twice, the airport authority board didn’t award contracts to the bidder whose proposal was scored highest. In both cases, auditors said the board’s reasoning was inconsistent with its rating criteria.

• Airport officials didn’t check if subcontractors were licensed, though they required the lead contractor to hire only licensed subcontractors, which is what happened.

"The audit did find some things that were really good suggestions, and we implemented those," Lopano said. "To the extent that we can improve, we’re all about that."

Contact Richard Danielson at [email protected] or (813) 226-3403. Follow @Danielson_Times

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