Who’s Paying for PIT’s New Terminal?

It’s typically among the first questions people ask when they hear about the new terminal project at Pittsburgh International Airport.

“This sounds great. How much of my property taxes are going to the project?”

Well, none – or any other local taxes, for that matter.

“It’s one of the biggest misconceptions about airport financing,” said Allegheny County Airport Authority CFO Dale Cottrill. Paying for the Terminal Modernization Project, or TMP, comes from airport revenues, including airline fees, parking and rental fees, passenger facility charges, terminal concessions revenues, and natural gas revenue.

In other words, Cottrill said, “the people who pay for the airport are the people who use the airport.”

No local tax dollars. And most of the construction will be funded through long-term bonds. Airport officials plan to go to the bond market in the fall to sell 20- or 30-year bonds, essentially borrowing money and then paying off that debt as part of its yearly operating budget.

And because the airport is planning retire the last of its debt on the current terminal later this year, PIT will have the capacity to take on new debt without spiking costs to the airlines.

Currently the budget does not include federal grants for the project, Cottrill said, although the authority is aggressively pursuing them. The only state money in the airport’s annual operating budget is an allotment of gaming revenue – roughly $12 million annually.

The budget for the new terminal project was estimated at $1.1 billion in 2017. Airport officials said they expect a more accurate and increased budget estimate once design reaches 30 percent of completion this summer.

The project has the backing of airlines that use the airport. In fact, representatives from Southwest and American – the two largest carriers at PIT – attended the initial press conference in 2017.

Commercial service domestic airports like PIT are “closed systems,” said Sheri Ernico, an aviation consultant with Leigh Fisher, which has worked closely with Pittsburgh International Airport for several years.

“Local taxpayers do not currently, and will not in the future, pay for airport operations or capital improvements,” Fisher said. “And under federal law, airport fees and charges can only be spent on the airport, not for other municipal purposes such as schools, sewer, roads or police.”

She added, “Airport bonds are not guaranteed, secured or funded by the taxpayers.”

That means the airport can’t spent its money on a light rail train, for example, that would take travelers to the airport from Downtown Pittsburgh except for the portions physically located on airport property and used solely by airport passengers.

“By federal law, the airport can’t pay for the T to be extended to the airport,” Cottrill said. “While we support the idea and are leaving a right-of-way for a train station in the new terminal plans, airport revenue must stay at the airport.”

For more on Pittsburgh International Airport’s Terminal Modernization Program, visit pittransformed.com.