Bonds

A $2.6 billion terminal renovation at Houston’s George Bush Intercontinental Airport was officially launched Thursday, while a feud over bond financing for the project continues between the city’s mayor and controller. 

Mayor Sylvester Turner joined United Airlines officials at the airport to highlight the Terminal B project, which includes the expansion of 40 gates to accommodate larger aircraft, a new baggage handling system, two major concession hubs, and other improvements. 

“The bigger and more modern terminal will amplify Houston’s reputation as a premiere destination and will cultivate future opportunities for economic development,” the mayor said in a post on the X message board, formerly Twitter.

“The bigger and more modern terminal will amplify Houston’s reputation as a premiere destination and will cultivate future opportunities for economic development,” Mayor Sylvester Turner said.

Bloomberg News

A city council agenda item this week for an initial $150 million appropriation for the project that would be funded with the future issuance of $650 million of bonds was again thwarted by Houston Controller Chris Brown, who declined necessary certification.

In a Nov. 9 memo to the city’s airports director, Brown raised several concerns, including terminal design plans and a feasibility study for the bonds that were both incomplete. 

“Any pledge of taxpayer funds of this magnitude requires an exceptional standard of due diligence,” he wrote.

Both Turner and Brown will leave office in January; voters will pick their replacements in a Dec. 9 runoff.

Houston City Attorney Arturo Michel said late Thursday the administration is working with the controller’s office to try to reach a compromise. 

Brown’s memo also pointed to “potential implications” of two 2021 Texas laws that prohibit governmental contracts with companies that “boycott” or “discriminate” against the fossil fuel or firearm industries. So far, Citigroup and UBS have been banned from underwriting state and local government bonds in the state under the laws.

In October, Texas Attorney General Ken Paxton launched a crackdown on compliance with the laws and placed Bank of America, Barclays, JP Morgan Chase, Morgan Stanley, RBC Capital Markets, and Wells Fargo under review.

Brown told The Bond Buyer last month that he worries more major investment banks will be banned at the same time the city could be selling more than $2 billion of bonds for the terminal project, noting that decreased competition potentially increases issuance costs.

Chris Brown, Houston's controller
“Any pledge of taxpayer funds of this magnitude requires an exceptional standard of due diligence,” said Houston Controller Chris Brown.

Keira Hand

The city council on Nov. 15 approved a memorandum of understanding with United Airlines, which would finance $1.9 billion of the project with special facility revenue bonds. The action came despite Brown’s concerns the current administration would be saddling the next administration, which takes office in January, with an additional $2.6 billion of debt. Both Brown and Turner were term-limited from running again.

Turner lashed out at Brown when the controller first blocked the appropriation for the project on Nov. 9. 

“There is no reason for the controller to be holding on this item and jeopardizing this major project at United,” he said. “There’s no reason other than for it to be political and not another accomplishment under this mayor’s watch.” 

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