Memorandum CITY OF DALLAS

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Memorandum DATE February 1, 2013 CITY OF DALLAS TO Honorable Members of the Budget, Finance & Audit Committee: Jerry A. Allen (Chair), Tennell Atkins (Vice Chair), Monica A.

be briefed by Christopher A. Poinsatte, CFO/Vice President of Airline Business & Technology, on approval of the 49 th supplemental bond ordinance which will provide authority to issue up to $3.

1 Memorandum DATE February 1, 2013 CITY OF DALLAS TO Honorable Members of the Budget, Finance & Audit Committee: Jerry A. Allen (Chair), Tennell Atkins (Vice Chair), Monica A. Alonzo, Scott Griggs, Ann Margolin SUEJECT Dallas/Fort Worth International Airport Approval of the 49 th Supplemental Bond Ordinance On February 4, 2013, the Budget, Finance and Audit Committee will be briefed by Christopher A. Poinsatte, CFO/Vice President of Airline Business & Technology, on approval of the 49 th supplemental bond ordinance which will provide authority to issue up to $3.1 B in bonds. Please contact me if you need additional information. Jeanne Chipperfield Chief Financial Officer Cc: Honorable Mayor and Members of the City Council Mary K. Suhm, City Manager Thomas P. Perkins, Jr., City Attorney Rosa A. Rios, City Secretary Craig D. Kinton, City Auditor Daniel F. Solis, Administrative Judge A.C. Gonzalez, First Assistant City Manager Ryan S. Evans, Assistant City Manager Jill A. Jordan, P.E., Assistant City Manager Forest E. Turner, Assistant City Manager Joey Zapata, Assistant City Manager Frank Librio, Public Information Office Stephanie Cooper, Assistant to the City Manager Jack Ireland, Director, Office of Financial Services Edward Scott, Director, City Controller Dallas, The City That Works: Diverse, Vibrant, and Progressive

2 Dallas/Fort Worth International Airport Approval of the 49th Supplemental Bond Ordinance City of Dallas Budget, Finance and Audit Committee February 4, 2013

3 Requested Action Approval of 49th Supplemental Concurrent Bond Ordinance

4 Background Owner Cities approved the 48th Supplemental Bond Ordinance in March 2012 which provided for: The sale of bonds not to exceed $2.1 billion Ability to issue a series of bonds for up to one year Airport issued six series of bonds totaling approximately $2.1 billion New money - $1.17 billion For Terminal Renewal & Improvement Program (TRIP) and other projects Average yield on bonds - approximately 5% Refundings - $920 million Present value savings - $131 million (14.2%) Future value savings - $166 million (18.0%) REMINDER the Owner Cities have no obligation for the repayment of the bonds principal and interest issued for DFW Airport.

5 Terminal Renewal and Improvement Program (TRIP) Update

6 49th Supplemental Bond Ordinance Provides authority to issue up to $3.1 billion in bonds $2.0 billion - TRIP and other capital projects through 2015 $1.1 billion - Refunding all or portion of the Series 2003A Bonds Expected NPV savings $90 million Expected FV savings $160 million Provides authority to issue bonds For a period of one year In multiple series As AMT, non-amt and/or Taxable Bonds With final maturities not to exceed 2035 for refunding bonds and 2050 for new money bonds.

7 Debt Service Profile The Airlines approved of the increase to fund the TRIP as part of Use Agreement. Latest profile reflects reduced debt service in the early and late years despite additional $1 billion of new capital projects due to lower interest rates. $500 $450 $400 $350 Millions $300 $250 $200 $150 $100 $50 $ Debt Paid 2019 by 2021 Other Sources TRIP Total 2033 Pre-TRIP 2035 Debt 2037 Service Financial 2045 Plan 20 Source FY 2013 Financial Plan

8 Days Cash On Hand Days cash on hand is a measure of DFW s liquidity. DFW plans to keep approximately 1.5 years of available cash on hand to pay operating expenses through FY Source FY 2013 Financial Plan

9 Debt Service Coverage Ratio Coverage measures DFW s ability to pay debt service from cash generated during a year. The chart shows that DFW becomes more financially secure over time. Source FY 2013 Financial Plan

10 Passenger Airline Cost Per Enplanement DFW is the lowest cost airport in its competitive set today and will still be very competitive and affordable in FY 2020 even with debt service increase. DFW ATL SEA MSP DEN SFO DTW IAH BOS LAX MIA ORD EWR JFK Fully Loaded Cost per Enplaned Passenger $18.96 $19.04 $ $21.94 $ $25.33 $25.45 $26.16 $27.42 $ $29.51 $ $0 $10 $20 $30 $40 $50 $60 $70 $80 $90 Source FY 2013 Financial Plan Click to edit Master text styles DFW Second level 2012 Third level Fourth level Fifth level DFW 2020 $ $50.56 Cost on Airport Books Cost on Airlines' Books* Delay and Taxiing Cost** Red text indicates AA Hub/Major Airports Source: 2011 CPEs from ACI Survey. Delay and Taxiing Cost from Ricondo 2012 study. Other estimates from DFW Finance. * Estimated Maintenance and Debt Service cost paid directly by Airlines. Additional direct airline CPE represents an estimate for airline-specific direct costs divided by airline enplanements. ** Excludes gate delays, which are primarily due to airline actions $90.44

11 Summary of Proposed Bonds Sales and Underwriting Teams Bond Series Proposed Sale Date Estimated Amount Purpose (Tax Status) Senior Manager Co-Senior Co-Managers 2013A April 2013 $395 million New Money (AMT) RBC M.R. Beal Morgan Keegan Ramirez 2013B May 2013 $386 million New Money (Non-AMT) Morgan Stanley Cabrera Stifel Loop Capital 2013C June 2013 $390 million New Money (AMT) Jefferies Siebert Barclay Cabrera 2013D July 2013 $50 million AA Training Facility (Taxable) Stifel Barclay Note: Companies listed in red are M/WBE s. Note M/WBE percentage expected to be 34% after sale of bonds. Aspirational goal for the program was 30%.

12 Summary of Proposed Bonds Sales and Underwriting Teams Bond Series Proposed Sale Date Estimated Amount Purpose (Tax Status) Senior Manager Co-Senior Co-Managers 2013E August 2013 $372 million Refunding (Non-AMT) Loop Capital Merrill Lynch Siebert M.R. Beal 2013F Sept 2013 $415 million Refunding (AMT) Citi Group Barclay Jefferies Cabrera 2013G October 2013 $368 million New Money Refunding (Non-AMT) Ramirez Morgan Stanley RBC Stifel 2013H November 2013 $392 million New Money (AMT) JP Morgan Morgan Keegan M. R. Beal Merrill Lynch Note: Companies listed in red are M/WBE s. Note M/WBE percentage expected to be 34% after the sale of bonds. Aspirational goal for the program was 30%.

13 Financing Team Co-Financial Advisors First Southwest Company Estrada Hinojosa & Company, Inc. (M/WBE) Co-Bond Counsel Vinson & Elkins McCall, Parkhurst & Horton Newby Davis (M/WBE) Co-Underwriters Counsel (selected by Underwriters) Kelly, Hart & Hallman Mahomes Bolden Warren (M/WBE)

14 Summary Request approval of $3.1 billion of debt over next year $2.1 billion new money $1.0 billion refundings DFW needs to refurbish its four older terminals that are 35 years old Great time to borrow money given low interest rates Great time to be in construction given the low-cost environment Airlines agreed to increased debt when they signed Use Agreement Even with increased debt, DFW has financial capacity to afford the debt Rated A1/A+/A+ by rating agencies Excellent liquidity and coverage ratios Cost per enplanement will still be very competitive after TRIP

15 Dallas/Fort Worth International Airport Approval of the 49th Supplemental Bond Ordinance City of Dallas Budget, Finance and Audit Committee February 4, 2013

Memorandum. Edward R. Scott City Controller. Jeanne Chipperfield Chief Financial Officer. Corrine Steeger Treasury Manager

Memorandum. Edward R. Scott City Controller. Jeanne Chipperfield Chief Financial Officer. Corrine Steeger Treasury Manager Memorandum DATE August 30, 2012 CITY OF DALLAS TO Honorable Members of the Budget, Finance & Audit Committee: Jerry Allen (Chair), Tennell Atkins (Vice Chair), Monica R. Alonzo, Scott Griggs, Ann Margolin