Airport project under microscope amid uneasy financial outlook – An official says he ‘can’t guarantee’ that financing will be available.
The impending departure of American Airlines, coupled with declining passenger numbers and parking revenues, has forced officials at Bob Hope Airport to put a proposed multi-million dollar transportation center back under the microscope.
At a meeting Tuesday, officials said they may cut between $9 million and $11 million from its estimated $102.5-million price tag – a move that could improve the airport’s financing options for the project. The credit-rating agency Fitch raised concerns late last year about the airport’s financial stability because of its dependence on parking revenues – which have been falling – and its largest carrier, Southwest Airlines.
That American Airlines – responsible for 7.5% of passenger traffic – plans to withdraw from Bob Hope in the coming weeks doesn’t help matters.
If the project is scaled back, it would It will be the second time that has happened. In June, major changes were made after the bids for the project
came in $47 million to $75 million above the originally projected cost of $112 million.
Some members of the Burbank-Glendale-Pasadena Airport Authority expressed reservations about the continued hedging.
“It seems like the water is getting hotter on this project,” said Rafi Manoukian, a Glendale City Councilman who serves on the board.
Even airport officials are getting a little skittish about the airport’s financial picture if it goes after multimillion-dollar financing.
Senior Deputy Executive Director John Hatanaka said he couldn’t guarantee the backing would be there.
“I’m not going to make any prediction that we can get financing for this project right now,” he told authority members.
Fitch has said the airport may lose its AA- rating if it takes on a hefty loan needed for the project.
Part of the agency’s concern is that parking revenues make up about 40% of the airport’s total operating revenues, making the airfield particularly susceptible to falling passenger figures.
Compared to the same-month periods in 2010, parking revenues slid 5.7% in October, 7.1% in November and 6.4% in December.
“That’s a disturbing trend,” Feger said.
Airport officials plan to meet with car rental and airline representatives to make sure they are still behind the transportation center project following the loss of American Airlines and declines in passenger counts.
Major savings on the transit center could be achieved by eliminating the steel included in plans for the three-story building, which would serve as a one-stop hub for rental car, train and bus travelers.
Companies bidding on the original plans will also be given the option to submit alternate plans using concrete, which is less expensive, said Dan Feger, the airport’s executive director.
The airport authority on Tuesday unanimously approved paying Irvine-based gkkworks inc. $500,000 to assist bidders with the dual-bid process.
Making concrete an option has already cut projected costs for a replacement parking structure that’s part of the project. Three bids came in under $9 million – well below the $12.1 million that was budgeted, officials reported.
The main reason for the low bids was that developers could create their own plans for the parking structure – and they used a lot of concrete, said airport spokesman Victor Gill.