Sacramento Airport Embarks on Transformative $1.3 Billion Infrastructure Overhaul

The Sacramento County, California, Airport System is set to launch a major $1.3 billion infrastructure program for Sacramento International Airport, financed through a $478 million revenue bond offering. The project aims to modernize and expand the airport's facilities to accommodate growing passenger traffic and support the region's thriving economy.

Unlocking the Future of Sacramento's Air Travel

Modernizing for Increased Capacity and Convenience

The Sacramento County Airport System's ambitious infrastructure plan, dubbed the "SMForward Project," will transform the airport's operations and passenger experience. Key initiatives include relocating car rental facilities closer to the terminals, adding six to eight new airline gates, constructing a $140 million passenger walkway to supplement the existing people mover, and building a 5,500-space parking garage. These upgrades are designed to enhance efficiency, alleviate congestion, and provide a more seamless travel experience for the airport's growing passenger base.The project's scope is driven by forecasted growth in enplanements, with the total number of passengers expected to increase from 6.6 million in fiscal year 2024 to 7.8 million by fiscal year 2030. By proactively addressing these capacity constraints, the airport aims to stay ahead of the curve and maintain its position as a vital transportation hub for the region.

Diversifying the Local Economy and Attracting Investment

The airport's expansion plans are closely tied to the broader economic development of the Sacramento region. The investor presentation highlights the growing biotech and tech sectors that are diversifying the local economy, positioning the airport as a critical gateway for businesses and talent. While the top employers in the area are still predominantly in government and healthcare, the presence of industry leaders like Intel suggests a shifting landscape.The airport's ability to accommodate increased passenger traffic and support the region's economic growth will be crucial in attracting further investment and fostering continued prosperity. By modernizing its infrastructure, the Sacramento County Airport System is positioning itself as a competitive and attractive destination for both business and leisure travelers.

Navigating the Financing Landscape

To fund the $1.3 billion capital program, the Sacramento County Airport System is employing a multi-faceted financing strategy. The $478 million revenue bond offering, which is the focus of this article, represents the first tranche of debt expected to be issued for the project. Future bond sales are planned for the coming years to complete the financing package.In addition to the revenue bonds, the airport is also tapping into federal grants and low-interest loans, including a $30 million allocation from the federal infrastructure act and a $38 million TIFIA loan. The TIFIA loan, which is the first of its kind for an airport since the program's expansion, will provide a significant boost to the project's financing.To limit the overall debt burden, the airport is strategically leveraging these alternative funding sources, demonstrating a proactive and fiscally responsible approach to financing the much-needed infrastructure upgrades.

Preserving the Tax-Exempt Advantage

As the airport prepares to issue the revenue bonds, Deputy Director of Finance Chris Wimsatt has emphasized the importance of tax-exempt municipal bonds in financing vital airport infrastructure. Wimsatt cautioned that the tax-exempt status of these bonds could come under scrutiny when Congress revisits tax legislation in 2025, urging policymakers to recognize the crucial role they play in enabling such transformative projects.The tax-exempt nature of the bonds is expected to attract high-net-worth investors in California, who are seeking the tax benefits offered by these securities. This demand, coupled with the bonds' lack of exposure to the alternative minimum tax, positions the offering as an attractive investment opportunity in the packed primary calendar.By highlighting the significance of tax-exempt bonds, Wimsatt underscores the airport's commitment to responsible and sustainable financing, ensuring that the Sacramento County Airport System can continue to serve as a vital economic engine for the region.