"Sacramento Airport Planning New $400 Million Bond-Financed Terminal"

Thursday, September 4, 2003

Sacramento Airport Planning New $400 Million Bond-Financed Terminal
Bond Buyer - The American Banker


SAN FRANCISCO, With airline passenger counts climbing despite an overall
industry decline, Sacramento International Airport is moving forward with
plans for a new passenger terminal, which is likely to cost about $400
million and financed with revenue bonds.

The project will probably break ground in about two years, according to Rob
Leonard, assistant director of the Sacramento County Airport System.

With the time needed for design and environmental approvals, it could be two
years before the airport issues bonds for terminal construction, Leonard
said.

"We may look to do a smaller financing to support some of the design work
and supporting projects prior to that," he said, noting that design costs
are typically 10% of the total for such a project. "At about a $40 million
effort, you're pretty close to having a pretty good-size bond issue," he
said.

The airport now has two terminals, one built in 1998 and the other in 1967,
when the airport opened, Leonard said. The older terminal is functionally
obsolete -- so much so that it was recently used for location filming of a
movie set during Richard Nixon's presidency, Leonard said.

Early plans for the expansion project call for adding eight to 10 gates to
the airport's current 29. The capacity is needed because passenger counts at
Sacramento International continue to rise through the post-Sept. 11 slump in
commercial aviation.

Preliminary numbers from the Federal Aviation Administration show
enplanements at Sacramento in 2002 rose 6.8 % over 2000, even as the the
national count dropped almost 10%.

"It reflects the region; the strong economy, and the growth within the
region," Leonard said. "I'd like to also think it's a tribute to our
marketing efforts to show the airlines what Sacramento offers."

Sacramento County's 2002 population of 1.3 million is up 6.7% from 2000 and
more than 25% from 1990, according to U.S. Census figures.

Airport officials have successfully marketed the airport, encouraging
passengers who live between Sacramento and the Bay Area to use the
Sacramento International Airport because it offers an attractive mix of
destinations and fares, Leonard said.

Since 2001, four new airlines started serving the airport, he added, and
more than 60% of Sacramento's flights are offered by low-fare Southwest
Airlines.

The airport is also working on a proposal to extend one of its two runways
from 8,600 feet to about 11,000 feet, which would allow it to accommodate
service to Europe, Leonard said. The new terminal is a higher priority,
though, he said.

Moody's Investors Service assigns an underlying A1 rating to the outstanding
debt of the Sacramento County Airport System. Fitch Ratings assigns an
underlying A-plus rating, and Standard & Poor's assigns an underlying
A-plus.


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