In the June 4 print versions of the Burbank Leader and Glendale News-Press, the sub-headline said Fitch “questioned” the Burbank-Glendale-Pasadena Airport Authority’s proposed use of bonds for the transportation center (“Airport gets credit rating warning,” June 4).
That was not a correct statement; Fitch only said the existing bond rating might be lowered should the authority move forward with the planned bonds.
The online version, however, went beyond the pale, stating that Fitch had warned the authority not to use bonds to finance the transit center. This statement is nothing short of outrageous, as it is false and misleading, thus doing great disservice to both the authority and to the Leader’s online readers.
In its release, Fitch indicated it maintained the existing AA- rating for the 2005 bonds. The airport authority is one of 10 airport sponsors, among the more than 130 commercial airports in the U.S., whose bonds are rated in the AA- category, the second-highest rating category, from the three rating agencies.
However, Fitch did put the bonds on “negative watch” because of the airport authority’s intent to issue approximately $90 million in new revenue bonds later this year to help pay for a new transportation center at Bob Hope Airport. Fitch opined that if the authority took on this new debt, a lower bond rating might result due to reduced debt service coverage levels and higher debt burden.
Nowhere in the release did Fitch say the airport authority should not issue the debt. Furthermore, the agency did not say the authority would not be creditworthy as a result of issuing the proposed bonds. In point of fact, Fitch noted that even with the proposed bonds, the authority’s cash reserves to outstanding debt will exceed industry standards.
What the public needs to know is that the airport authority is a responsible public agency and a good steward of public funds. The authority is pursuing this project because it is important to the community and the region to promote alternative modes of transportation if traffic congestion is to be reduced in a meaningful way.
The transit center was designed to be a significant facility, with high visibility, so that the public would see and remember the intermodal connection in a big way and think intermodally when they make travel decisions. It is also important because it allows the airport authority to improve airport safety by relocating the existing rental car facility away from the runways while maintaining a $5-million revenue stream that rental car operations bring to the authority.
The Regional Intermodal Transportation Center is the largest capital project in the history of the Burbank-Glendale-Pasadena Airport Authority. No one said it would be easy, and in response to construction bids that came in above estimates, the airport authority is now undertaking a redesign effort to bring the project into an affordable price range with a plan of finance that earns a strong credit rating at or near the authority’s present level from all three rating agencies.
That can be accomplished, and when it is time to finance the project, the airport authority’s solid financial footing is what will make it possible.
We hope that the Leader and News-Press will take a leadership role in supporting the airport authority in its effort to make a significant improvement to the quality of life in Burbank and the region by helping to reduce traffic congestion.
Editor’s note: Feger is executive director of Bob Hope Airport.