OCTOBER 2018 DULLES CORRIDOR ENTERPRISE REPORT OF THE FINANCIAL ADVISORS

Transcription

1 OCTOBER 2018 DULLES CORRIDOR ENTERPRISE REPORT OF THE FINANCIAL ADVISORS The Airports Authority established the Dulles Corridor Enterprise (DCE) Fund to segregate the financial activity associated with the operation, maintenance and improvement of the (DTR) and construction of the Dulles Corridor Metrorail Project (Rail Project) from the financial operations of the Airports. This report provides an update on the status of capital financing activities and other issues related to the DCE Fund. Action Items No Action Items to Report Informational Items Dulles Corridor Advisory Committee (DCAC) Meeting. The DCAC, which has eight members (two representatives each from the Airports Authority, Fairfax County, Loudoun County, and the Commonwealth of Virginia) met on October 11, The Advisory Committee received updates on the construction and financing of the Rail Project and a presentation from Airports Authority staff that provided an overview of the public comments on the proposed DTR toll rate increase and potential DTR toll collection options. A full report on the public hearings and the input received from the public and the DCAC will be provided to the Joint Dulles Corridor and Finance Committees and the Board in November. Relevant News Items Silver Line Operations and Maintenance Services Contract. On September 18, 2018, the Washington Metropolitan Area Transit Authority (WMATA) issued a request for proposals from private entities to operate and maintain the six new rail stations being constructed as part of Phase 2 of the Rail Project. The scope of work includes maintenance of the rail infrastructure, including the fixed aerial guideway and power distribution system, operation of the maintenance and storage yard facility at Dulles International Airport, and maintenance of certain rail cars assigned to the Silver Line. The deadline for submitting proposals is January 15, 2019, and WMATA expects to award a five-year contract in the spring of WMATA will have the unilateral October 17, 2018

2 right to extend the contract by exercising up to six options of up to five years each and it can expand the scope of the contract to include the rail operation of all Silver Line trains between Ashburn and Largo Town Center. Indiana Toll Road Toll Increase. On September 20, 2018, the Indiana Finance Authority (IFA) amended its 75-year lease agreement with the Indiana Toll Road Concession Company (ITRCC) to allow the private toll operator to increase toll rates for heavy vehicles (with three or more axles) by 35 percent effective October 5, The toll for a five-axle truck that travels the entire 157-mile length of the Indiana Toll Road, for example, will increase from $44.46 to $60.02 with no discount for E-ZPass customers. In exchange for the increase in the maximum toll rate for heavy vehicles, ITRCC will pay the State of Indiana a total of $1 billion over the next three years, with the first payment of $400 million due in October The State will use the $1 billion to fund planned road projects in the counties located along the Indiana Toll Road which will free up Indiana Department of Transportation resources for other investments, including establishing additional international nonstop flights to/from Indianapolis. ITRCC will also invest $50 million in Indiana Toll Road upgrades, including safety, technology and communications initiatives such as a smart truck parking system and expansion of overhead message boards, cameras and variable speed signs. The IFA has five members: the Director of the State Budget Agency, the Treasurer of the State, and three members appointed by the Governor.

3 MONTHLY UPDATE: OUTSTANDING DULLES CORRIDOR ENTERPRISE DEBT SHORT-TERM NOTES AND LOANS Commercial Paper Notes. The aggregate principal amount of Lien Commercial Paper Notes outstanding as of October 1, 2018, was $29,000,000. The Airports Authority can draw an additional $271,000,000 under this program. Program Commercial Paper Series One Authorized Amount Up to $300 Million Letter of Credit Provider Cost Dated Date Expiration Date JP Morgan 58 bps August 11, 2011 April 13, 2020 The following table shows the rolling three-month averages of the variable rates for the Commercial Paper Notes and the Securities Industry and Financial Markets Association (SIFMA) Index on a monthly basis for Variable Interest Rates (3-Month Rolling Average) Monthly CP 1 (JPM) SIFMA Spread September % 1.35% 0.13% August % 1.28% 0.15% July % 1.25% 0.21% June % 1.47% 0.00% May % 1.45% -0.07% April % 1.34% -0.19% March % 1.21% -0.14% February % 1.20% -0.17% January % 1.16% -0.17% Previous Years Variable Interest Rates (12-Month Rolling Average) Calendar Year CP 1 (JPM) SIFMA Spread % 0.84% 0.04% % 0.41% -0.03% % 0.03% 0.04% 1 The SIFMA index is a national rate-based on a composite of approximately 250 issuers of high-grade, seven-day, tax-exempt, variable rate demand obligation issues of $10 million or more.

4 DULLES TOLL ROAD REVENUE BONDS The total amount of outstanding Revenue as of October 1, 2018, including accretion, is $3,072,816, Tables 1 and 2 provide detail on each series of bonds. Table 1: Revenue Amount Outstanding by Series and Credit Ratings Series 3 Dated Date Originally Issued Par Amount Outstanding as of 10/01/2018 Lien Tax Status Moody's Rating S&P Rating Credit Enhancement A 8/12/2009 $ 198,000,000 $ 198,000,000 First 2009B 8/12/ ,056, ,795, C 8/12/ ,234, ,775,000 Convertible A2 A- None Baa1/ A2(Insured) A2 (Insured) BBB+/ AA(Insured) AA (Insured) $188,266,435 Assured Guaranty $158,234,960 Assured Guaranty 2009D 8/12/ ,000, ,000,000 America 2010A 5/27/ ,813,219 94,426, B 5/27/ ,801, ,000,000 Convertible 2010D 5/27/ ,000, ,000,000 Subordinate America Baa2 BBB+ None 2014A 5/14/ ,760, ,760,000 TIFIA Series 8/20/ ,698,840 1,014,058,934 Junior Federal Loan Baa2 A- None $2,680,365,358 $ 3,072,816,575 2 The amount outstanding includes approximately $392 million of net accreted value on outstanding capital appreciation bonds, convertible capital appreciation bonds and the TIFIA loan. Interest on those securities is not paid currently. It accretes from the date of issuance and is compounded semi-annually on each April 1 and October 1 until the applicable maturity date, conversion date or payment commencement date, whereupon interest will be payable semi-annually. 3 Series 2010C was authorized but not issued. 4 insured by Assured Guaranty are rated AA (stable outlook) by S&P and A2 (stable outlook) by Moody s. 5 The Airports Authority can issue up to $1,278 million of TIFIA Series 2014 (excluding capitalized interest) to finance eligible Phase 2 project costs.

5 Table 2: Revenue Interest Rates and Call Provisions Series Outstanding as of 10/01/2018 Lien Tax Status and Structure Principal Amortization Yields 6 Call Provisions A $ 198,000,000 First % to 5.375% October 1, 2019 at Par 2009B 309,795, % to 7.91% Non-Callable 2009C 249,775,000 Convertible % October 1, 2026 at Accreted Value 2009D 400,000,000 America % (4.85% net of full subsidy) at Make-Whole Redemption Price 2010A 94,426, % Non-Callable 2010B 235,000,000 Convertible % October 1, 2028 at Accreted Value 2010D 150,000,000 Subordinate 2014A 421,760,000 America % (5.20% net of full subsidy) at Make-Whole Redemption Price % April 1, 2022 at Par TIFIA Series ,014,058,934 Junior Federal Loan % at Par $ 3,072,816,575 6 The all-in interest cost for the Series 2009, 2010 and 2014A bond issues is percent, percent and percent, respectively, which results in an overall average cost of capital of percent. The potential cost of capital, including, TIFIA will vary depending on when funds are drawn and the timing of future TIFIA payments and prepayments. 7 The Make-Whole Redemption Price is the greater of (i) 100 percent of the principal amount of the to be redeemed and (ii) the sum of the present value of the remaining scheduled payments of principal and interest to the maturity date of the to be redeemed discounted to the date on which the are to be redeemed on a semi-annual basis, assuming a 360-day year consisting of twelve 30- day months, at the adjusted Treasury Rate plus 50 basis points, plus accrued and unpaid interest on the to be redeemed on the redemption date.