Airport commission to pursue bond refinancing

story by Marla Cantrell
[email protected]

At Tuesday’s (Sept. 28) The Fort Smith Regional Airport Commission approved a resolution to pursue refinancing the remainder of the 1999 $5.29 million revenue bonds used to build the existing terminal, which are due to mature in 2026.

Dennis Hunt, with Stephens Inc., estimates the move would save the airport approximately $48,000 per year. The outstanding balance is $3.315 million, and at an average interest rate of 6.215%, the final payoff would be $5,246,179.

The airport bonds are the only bonds in about $280 million in bonds outstanding that are legally and economically eligible for refinancing, Hunt recently explained to The City Wire.

Hunt outlined two scenarios. In the first, the proposed bonds would be $3.26 million, at an average interest rate of 3.94%, with a total payoff of $4,457,642, and an approximate net savings of $444,400. The second drops the amount saved to $252,500, with a 5.375 percent average interest rate, and the proposed bonds at $3.11 million. The maturity date would remain Oct. 1, 2026.

Hunt said he believed the savings would be closer to the $440,000 number, but added the lower numbers because the resolution includes a clause requiring the value debt savings to be at least 7.5% of the principal of the 1999 bonds being refunded.

There will be some initial cost.

“Under the Internal Revenue Service code, the maximum amount for a bond that’s subject to AMT is 2 percent,” Hunt said.  “You’re probably going to have cost of issuance closer to 3 percent. We have assumed 3 percent. If that is the case, the commission would have to come up with approximately $33,000.”

This is the first step in a process that should end Dec. 8. There will have to be a public hearing and approval from the Fort Smith board of directors before the bonds are issued.

In other business, the commissioners approved a budget amendment due to increases in certain capital improvement expenditures and additional revenues. Expenses in the amended budget totaled $5,705,605, up from $3,853,940. Revenues increased from $3,826,070 to $5,262,585.

John Parker, airport director said the added costs were mainly due to four new projects:  a corporate taxiway, a lighting and electrical project on the runway, the mandated wildlife assessment project, and a tract of land that was repurchased for $650,000.

The additional revenue was primarily from the sale of land for the right-of-way to the state.

The next meeting for the Fort Smith Regional Airport Commission will be held Oct. 26.