Public Debt On TSE: Lining Up Lenders for Landing

Oct 16, 2013

Credit Tom Hudson

The federal government may be partially shut down and flirting with an unprecedented debt default but the Broward County Aviation Department had no trouble borrowing $450 million this month.

The agency issued its second of three rounds of bonds backed by revenue generated at the Ft. Lauderdale-Hollywood International Airport.

The money is to expand the airport by adding a second runway, improving its international terminal, building a new concourse and modernizing its luggage handling system.

Broward County Aviation CFO Doug Wolfe stands in front of a date ariel photograph of Ft. Lauderdale-Hollywood International Airport. The $2.3 billion expansion project is building a new south runway in addition to a terminal, concourse and other improvements.
Credit Tom Hudson

More than half of the $2.3 billion price tag will be paid for with borrowed money. The airport has sold municipal bonds backed by the business generated at the airport. Broward County Chief Financial Officer Doug Wolfe said that means Broward County taxpayers are not directly paying for the loans.

RELATED: The Sunshine Economy: Public Debt

Instead, it will be every flier who begins or ends a flight at the airport who will pick up the tab. Wolfe admits that means plenty of South Floridians will pay the lenders back through the airfares airlines charge for tickets, passing along their costs of doing business at the airport.

Part of the cost of that cup of coffee or magazine we buy at the airport while waiting for a flight also will go toward the loans as the airport looks for ways to increase the money it collects from concessions.

This is the western edge of what is scheduled to be the south runway at Ft. Lauderdale-Hollywood Int'l Airport. Paving is due to begin this month.
Credit Tom Hudson

The airport's strategy of borrowing money is part of the multi-trillion dollar public debt market. These are IOU's issued by public agencies and governments.

On this week's Sunshine Economy, we looked at the state of public debt in South Florida, including this month's bond sale by the airport to continue its expansion project.