The Port of Seattle Commission voted 4-1 on October 21 to use up to $20 million from Sea-Tac Airport's cash reserves to ensure that construction of the $382 million rental car facility continues, the Seattle Post Intelligencer reports.
With bond markets essentially frozen, the other option would be to shut down construction, putting more than 2,500 people out of work.
General contractor Turner Construction Co. started work on the facility in July, just about the time that the bond market for such projects was tightening up, said Elizabeth Morrison, senior manager of corporate finance for the port.
Early negotiations with potential customers for nearly $400 million in bonds showed that they were going to be asking for unusually high interest rates for several reasons, Morrison said. The bonds already were taxable under federal law, because the parking garage wasn’t to be a public-use facility. And companies that usually insure such bonds were having their own financial problems, so bond insurance was difficult to find.
In addition, the slowing economy made buyers nervous that the $5 daily user fee from car rentals at the airport, which would go to pay off the bonds, might not provide sufficient funds.
Several other airports are in various stages of similar dilemmas, with some of them postponing projects that haven’t yet started, until bonds are more available.