Frozen bond market vexes Seattle port authority project
Faced with a virtually frozen bond market, Seattle port commissioners Tuesday were to consider two equally unpleasant options to finance a $400 million rental car garage project under construction at Seattle-Tacoma International Airport.
Commissioners must either tap into a general revenue fund for millions of dollars to keep construction on track or shut down construction altogether and in the process idle 2,500 workers.
Construction on the project began in July — coinciding with a tightening bond market for such projects — and the port authority has yet to find a market for the $400 million bond issuance. In addition, the port has had difficulty in finding insurance to back the bonds due to financial problems in the bond insurance sector.
Buyers have become hesitant to invest in such projects and then, only with very high interest rates, port officials said. In addition, because the airport garage will not be a public-use facility, any bonds issued for the project already faced an extra hurdle of sizable federal taxes.
Potential bond buyers contacted by the port authority also were concerned the slowing national economy might undermine the revenue stream of the parking structure, which relies on user fees from rental cars.
Port authority commissioners will consider tapping the airport general fund for up to $20 million to provide funding to continue with construction. The project already receives about $2 million a month from current rental car user fees.
The least favorable option would be to shut down work on the project until the bond market stabilizes, the authority said.
The facility, which will serve 10 Sea-Tac rental car firms, is slated for completion in 2011.