Kutak Rock Team Serves as Lead Co-Bond Counsel on Largest Midwest Project of First Half of 2019
News | August 27, 2019According to the Bond Buyer, the biggest first-half deal happened in June when The Industrial Development Authority of the City of Kansas City, Missouri issued $886 million airport special obligation bonds. Kutak Rock is proud to have served as lead co-bond counsel to the Authority, which issued a total of $984,745,000 in airport special obligation bonds in 2019 in three series to finance the terminal modernization project at Kansas City International Airport.
The design plan includes construction of a new terminal of over one million square feet to accommodate 39 aircraft gates, new concourses, a TSA-compliant security screening checkpoint, communications infrastructure, new parking facilities and many other improvements.
The financing presented some challenges. The bonds could not be issued as general airport revenue bonds. The airport special obligation bonds are annual appropriation obligations payable from the net revenues of the City’s airport system on a parity with the City’s general airport revenue bonds in any year in which the City has appropriated the funds and satisfied the debt service coverage requirements for the payment.
Kutak Rock’s responsibilities included drafting an amended and restated airport master bond ordinance for the City that established the appropriation obligation structure, which permits such parity payment of senior appropriation obligations and senior general airport revenue bonds. This was necessary because the City did not seek voter authorization for the bonds that will finance the terminal modernization project, and in the absence of voter authorization under the Missouri Constitution, there cannot be an ongoing pledge of airport system net revenues to pay debt service on bonds issued to finance airport improvements.
Kutak Rock, which served as lead co-bond counsel for a 2013 airport bond issue of the City, was selected to serve as lead co-bond counsel through a request for proposal process.
The design plan includes construction of a new terminal of over one million square feet to accommodate 39 aircraft gates, new concourses, a TSA-compliant security screening checkpoint, communications infrastructure, new parking facilities and many other improvements.
The financing presented some challenges. The bonds could not be issued as general airport revenue bonds. The airport special obligation bonds are annual appropriation obligations payable from the net revenues of the City’s airport system on a parity with the City’s general airport revenue bonds in any year in which the City has appropriated the funds and satisfied the debt service coverage requirements for the payment.
Kutak Rock’s responsibilities included drafting an amended and restated airport master bond ordinance for the City that established the appropriation obligation structure, which permits such parity payment of senior appropriation obligations and senior general airport revenue bonds. This was necessary because the City did not seek voter authorization for the bonds that will finance the terminal modernization project, and in the absence of voter authorization under the Missouri Constitution, there cannot be an ongoing pledge of airport system net revenues to pay debt service on bonds issued to finance airport improvements.
Kutak Rock, which served as lead co-bond counsel for a 2013 airport bond issue of the City, was selected to serve as lead co-bond counsel through a request for proposal process.