"County Commission irate over Fort Lauderdale airport loan"

Tuesday, May 15, 2007

County Commission irate over airport loan
By Scott Wyman 
The South Florida Sun-Sentinel 

 
Three years after Fort Lauderdale-Hollywood International Airport borrowed
$247 million for construction, almost half the money remains unspent and
county commissioners are livid that their staff is scrambling to figure out
what to do now. 

The county must spend the $112 million by late 2009 and could face IRS
charges topping $1 million for changing construction plans. Commissioners
accuse the airport of advising them to borrow too much money and then not
following the plans. 
 
The two main projects to be built with the money have not started: the next
phase of realigning airport access roads and adding pedestrian bridges
between the parking garages and the terminals. The airport now wants to use
the money on smaller, less expensive projects, including building new
administrative offices. 

County Mayor Josephus Eggelletion said he became suspicious that the bond
issue had been botched when, during budget discussions this year, airport
officials briefly mentioned reorganizing construction schedules. He demanded
to know how much money remained untouched and why commissioners were not
consulted earlier. 

"My concern is someone other than the Commission has made a decision to
change direction without our approval, and now it's too late to build what
the bonds were intended for," Eggelletion said.

During recent briefings with commissioners, county administrators defended
their handling of airport construction. 

They said they wanted to borrow money in 2004 because of the low interest
rates. They said they did not discover the problems in the initial
construction plans until late last year. 

Airport passenger service charges are paying for the bonds, rather than
property taxes, so the county did not need voter approval to borrow the
money. 

"When we went to market on the bonds, it was at a time when interest rates
were really, really low and the financing team at the time had no reason to
believe the projects wouldn't go forward and wanted to lock in interest
rates for 20 to 30 years that they felt wouldn't last long," Deputy County
Administrator Bertha Henry said.

Henry said county administrators and airport staff began to question the
underpinnings of the bond issue after other construction projects proved
more expensive than planned. When they reviewed plans for the bond money,
they discovered substantial cost increases. 

About $70 million in bond money was set aside for the pedestrian bridges,
but the new estimates are that they will cost $103 million to build. The
cost of the planned roadway changes jumped from $75 million to $109 million.


The county's bond advisers wrote commissioners last week that revising the
construction program was allowed under tax law and not uncommon for airports
to do. Moody's Investors Service recently re-affirmed the airport's
favorable rating knowing that the bond program was being re-evaluated. 

Commissioner John Rodstrom said he doesn't accept the explanations and that
the county borrowed too much. "It shows they just don't have it together,"
he said.

Officials want county commissioners to approve the construction changes
before the end of June. 

Under the proposal being crafted, the pedestrian bridges would be delayed
until the airport's new long-range master plan is complete. The roadway
project would be switched for a simpler $20 million plan that officials say
would address the same issue, making it easier for people to head south when
they leave the parking garages. 

Other projects that would be used with the unspent money include:

$15.2 million to relocate machinery used to screen luggage for explosives;

$5 million to design a new five-gate concourse;

$1.6 million to build new administrative offices;

$12 million to redesign the terminals to handle more passengers;

$4.2 million to replace the flight information monitors;

$10.1 million to improve fire sprinklers in the parking garages;

$4 million to improve the security camera system. 

According to the county's bond advisers, redirecting the money will be less
costly than canceling the bonds. 

They estimated that the county would spend $1.7 million to cancel the 2004
bonds and later issue new bonds. The county would owe the IRS $1 million to
redirect the bond money because the initial plans for the roadways and
pedestrian bridges were tax exempt and many of the new projects are not. 

Commissioners said they have little alternative now but to do that. 

"I'm perplexed how they would have borrowed that much money on projects that
were not solid," Commissioner Lois Wexler said. "This is not pretty, but
it's a better decision to pay the small penalty than not spend what we
borrowed."

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