The Sanford Airport Authority should issue a Request for Proposals (RFP) within two weeks to finance its $60 million terminal expansion, despite having yet to receive FAA approval to use Passenger Facility Charges (PFCs) to fund debt service for part of the expansion.
Board directors made the decision Tuesday, and also agreed to execute a contract with Walbridge, Inc. to be general contractor for the project.
The FAA has approved the authority to use PFC funds to pay for a reconfiguration of the airport's domestic and international terminals, increase the size of the security screening area and add more baggage claim space.
However, the federal agency has not approved a main component of the expansion project, namely the addition of four new gates with passenger boarding bridges and skywalk.
The decision before the board Tuesday was whether to move forward at the risk of having to find a new source to fund gate expansion.
"Our growth has been double-digit percentages in recent years, and we're agressively searching for new carriers," said board member Steve Smith. "I think we have to move forward."
Allegiant Airlines, Orlando Sanford International Airport's (OSIA) largest carrier with more than 90 percent of the airport's traffic, has challenged the authority's use of PFCs to fund additional gates.
"It's pretty typical of airlines to object to PFC applications because those charges get added to the cost of the tickets they sell," said board director Frank Ioppolo. "Allegiant is an ultra-low-cost carrier, so they are especially sensitive to any fee that's going to increase ticket prices."
In a memo to the board, Authority President and CEO Diane Crews explained that despite the FAA's decision to not include the new gates in the airport's current PFC application, both the Orlando district office of the FAA and the agency's Southeast regional office agree OSIA needs more gates. In fact, the agency has asked Crews to provide a third-party study showing the need.
"This is a fundamental shift in the way the FAA is processing PFC approvals," Crews told GrowthSpotter in a separate interview. "Even though we have run those numbers as part of our master planning process, the FAA wants further justification. I don't think it's an unreasonable request. The Melbourne airport is going through the same process."
Over the last seven years, passenger traffic at OSIA has grown 164 percent, from 1.2 million passengers in 2010 to 2.9 million passengers in 2017.
Atkins, a global engineering and project management firm, will conduct the study for the authority. Craig Sucich, a division manager for Atkins' aviation services, told the board his firm could provide the research in as soon as two months.
"They (FAA) have emphasized this won't slow the project down," Crews said. "They have assured us they will work closely with us."
To that end, Crews said the RFP for financing the $60 million project will go out within two weeks. Don Moore, the airport authority's CFO, will be the point person, and said traditional bank lenders are being sought.
Separately, the airport authority still has seven commercial parcels ranging from 6.9 to 19.5 acres available for development on the airport's 3,000-acre campus.