Sacramento airport officials plan $500M bond issue to fund expansion. Who will pay for it?

Sacramento International Airport officials plan to issue about $500 million in municipal bonds next week, a key piece of financing for the yearslong, $1.3 billion expansion effort that airport leadership launched last winter .

Officials have said the projects will build out capacity for the growing number of passengers flying through the region each year. Excluding a prolonged slump during the Great Recession and a two-year dip during the COVID-19 pandemic, Sacramento’s passenger traffic has grown reliably for decades.

“We view this airport — and our airport system — as engines for economic growth in this community,” said Chris Wimsatt, deputy director of finance and administration for the Sacramento County Department of Airports.

The airport secured approval for the bond issue from the county Board of Supervisors earlier this month. The board passed it unanimously on Sept. 10.

The central bank’s announcement this week of a half-point rate cut should help the airport secure more competitive interest rates, Wimsatt said, but the airport will also have the ability to refinance in 10 years.

The bonds, he emphasized, will be repaid mainly through revenues collected for parking, concessions, lease agreements and passenger ticket fees.

“None of these bonds will be repaid with tax proceeds,” Wimsatt said.

The bonds will cover less than half of the overall expansion effort, known as “SMForward,” which has a total budget of around $1.3 billion. The bonds will cover a new, $390 million parking garage for Terminal B, a $15 million exit roadway for Terminal A, and a portion of a $140 million pedestrian walkway, Wimsatt said.

The pedestrian walkway — which will connect Terminal B with Concourse B — will also receive $33 million in funding from the Bipartisan Infrastructure Law, and $38 million from the Transportation Infrastructure Finance and Innovation Act, or TIFIA.

The airport is still in negotiations over the TIFIA loan, but officials hope to close the deal by the end of the year, Wimsatt said. The TIFIA program, which offers relatively low interest rates, and has historically funded surface transportation projects and was only recently broadened to include airport projects after years of advocacy by the industry, Wimsatt said. Sacramento would become the first to use it for a general airport project.

“We’re excited to be first,” Wimsatt said. “We’re hoping this will set a pattern, and create a path that other airports will be able to follow.”