Res 1986-106 - Laserfiche WebLink

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As a general statement, in order to assure the potential bondholder of the security for revenue bonds, it is normal to assume that net revenue will exceed required debt service by a specific coverage factor which generally varies from 30 to 50 percent coverage. The difference between net revenues and debt service can be accumulated for future capital requirements or returned to the City against prior investments of the City. Revenue bonding capacities generally are based on a conservative estimate of an airport's ability to generate net revenues. By renegotiation of rates, fees, and charges with FBO's and other major tenants, additional. revenue may be generated creating the capability of a higher bonding capacity to meet local financial requirements. Such new levels of charges must be commensurate with the business potential and the tenant's ability to pay. The City must also take into consideration the restrictive bond covenants and assurances normally as60Ciated with revenue bond financing as these may effect the return of revenues to the City for capital cost recovery or carrying charges. In other words, the City must balance the desir- ability of revenue bond financing of a relatively small portion of its capital requirements against these restrictive obligations and covenants . Industrial Revenue Bond issues are a means of financing certain faci- lities on airports, and are gaining popularity as a primary and alternate means of developing non-aviation (but aviation related) .L*Venue-producing J:::usinesses at airport locations. However, the com- plexityof the program does require that each specific project be considered on its own merits, and expert council should be sought before Industrial Revenue Bond financing is seriously considered for an improvement. 'lbra1gh the prudent awlication of the financial resources available to the City for its continued development and the ability of management to attain revenues cxmsistent with the airport's growth in potential and opportunities, significant new development can be accomplished. It is obvious that these projections indicate a substantial reliance on obtaining full participation from Federal, state and city S01rCeS. If, for some reason, the participation of one of the major sources cannot be obtained, the City must establish the priority of development consistent with the goals and needs of the airport and the community. 9.8