Project Details

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Results Chart for Delivery Method and Financing

Delivery Method

DBOM Partially Public Finance
# of Projects: 1
100% of the Results

Background informationProject Created: April 12, 2013

Project Name: Luis Muñoz Marin International Airport
Year in Operation: 2012
Sector: Transportation
Subsector: Airport
Status: In Operation
Type: Substantial Alteration of Existing Facility
Description: The Luis Muñoz Marin International Airport (LMM) is the busiest airport in the Caribbean and has the largest air cargo operation in Puerto Rico. In the summer of 2012 a Lease Agreement was executed between the Puerto Rico Ports Authority (PRPA) (the owner) and Aerostar (the selected private operator) to run the airport for 40 years. LMM becomes the first major airport in the US to be run by a private operator under the FAA’s Pilot Privatization Program. The PRPA will receive a $615 million upfront payment, $1.4 billion over the 40-year life of the lease in capital improvements, and an estimated $552 million in revenue sharing over the life of the lease. Given the significant importance of the airport locally and internationally, a substantial alteration and investment in the deteriorating infrastructure of the airport, as well as the need for world class O&M, were identified and a P3 process received the consensus to proceed.
Delivery Method as described in the country where it's located: Privatization
Is the project still active: Yes
Comments: The PRPA has leased the Airport to Aerostar for 40 years. Under this lease, Aerostar will take possession of the property, manage, develop, and operate the Airport. During the 40 year concession, Aerostar is expected to spend $1.4 billion in capital improvements, with $240 in capital projects during the first three years. Aerostar will use its own funds in addition to Passegner Facility Charges, Airport Improvement Program (AIP) entitlements, and discretionary funds.

Project Locations

Address: Luis Muñoz Marin International Airport
City: Carolina
State:
Country: Puerto Rico, Commonwealth of

Souces of Project Support (Non-monetary)

Checkbox Checked Access to Land: Under the agreement, PRPA will retain ownership of the land. The lease provides the operator with access to the existing airport site.
Checkbox Checked Revenue Stream (Cash Flow) Created Through Initial Commitment of Public Sponsor(s): Equipment Personal Property and Funds Transfer -- At the start of the term of the concession, all equipment and personal property used in the operation of the Airport and acquired with airport revenue and federal financial assistance will be transferred to the concessionaire.
Checkbox Checked Revenue Stream (Cash Flow) Protected Through Long Term Commitment(s) of Public Sponsor(s): The PRPA will receive an upfront payment of $615 million, followed by $2.5M per year for the first 5 years, 5% of of gross airport revenues during the next 25 years, and 10% in the last 10 years.
Checkbox Checked Environmental Clearance: Existing airport.

Souces of Project Support (Monetary)

Checkbox Checked

From Public (Government) Sources to Producers

Arrow Right
Checkbox Checked

Credit Enhancements: The PRPA stands behind the concessionaire in the event obligations initially assumed by the PRPA (and now taken over by the concessionaire) are unmet, for example in the event of a default of the Lease. The concessionaire assumes and agrees to be bound by each FAA Agreement, including Passenger Facility Charge (PFC) applications, Records of Decision, and assurances previously made by the PRPA.

Checkbox Checked

From Private Capital Markets Directly to Producers as Debt: The concession will finance the upfront $615 million "Leasehold Fee" by borrowing $350 million in the debt market (investment grade bonds) and by investing $265 million of its own equity. The balance of any additional funds needed during the concession term is expected to come from ongoing revenues associated with the operation of the airport.

Checkbox Checked

From Producers as Equity: $265 million of its own equity

Project Delivery & Finance Method

Project Delivery:
All Public Finance. Public Sponsor contracts for initial design, and separately contracts for initial construction. Public Owner operates and maintains the resulting facility.
Is there an independant checking engineer? No
Project Finance Method: All or Partially By Public Sponsor

Procurement Approach

Project Component
Qualifications
Based Selection
Request for
Qualifications
Request for
Proposals
Invitation
for Bids
Unsolicited
Proposals

Term for Key Components & Forms of Contract

Project Component
Years
Quarters
Combined Term: Initial Design, Construction, O&M Period
40
0
Forms
Description
Other
Negotiated, but parameters largely established in RFP process. 

Project Value (If and As Known)

Date of Estimated Project Value: February 1, 2013
Project Value
Hard Cost
Hard & Soft Costs
Construction
$1-5 Billion US
(none)
Operations & Maintenance
$500 Million - 2 Billion US
(none)
Total
$2-10 Billion US
(none)

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