A $35 million aircraft maintenance facility is coming to CVG thanks to bonds approved last week.
A resolution was approved by the Boone County Fiscal Court on Jan. 31 that supports the issuance of tax-exempt special facility revenue bonds for a new project at the airport. The motion passed 4-0.
AFCO Real Estate Group is issuing the bonds that will finance a new maintenance, repair and overhaul hangar facility on airport property.
The facility will focus specifically on things like cargo and freight facilities.
The new project is described as “a long-term leasehold interest in a tract of land containing an airport facility” on the CVG grounds.
The facility contains around 106,000 square feet of hangar, shop and office space as well as approximately 83,500 square feet of aircraft parking.
The federal tax code requires a local government elected body to serve in this role, hence the reasoning for it being brought to the fiscal court’s attention.
This form of project financing is permitted in the federal tax code for public entities to enable private companies to invest in publicly owned property. Local government concurrence where the project is located is required under the tax code.
“As it’s clearly stated in the notice and will be in bond documents, the county would assume no responsibility for the payment of the bonds, we’re not pledging our full faith in credit to back any of this and our role is very, very limited,” said Boone County Administrator Jeff Earlywine. “In this instance, it’s just publicly acknowledging the project and affirming that it is a credible project and has a benefit to the airport and the community.”
Neither the county nor the airport assumes any responsibility for repaying the bonds; the 25-year bond will be funded entirely by a AFCO Facilities, private company, which is making annual lease payments to use the new facility.
Alexander Scarola, whose firm Greenberg Traurig, represents AFCO Facilities, reiterated the county “is not obligated on these bonds. A borrower is the sole entity that’s obligated to repay them,” he said. “Really the sole purpose of this is to satisfy the requirements of the Internal Revenue Code for host jurisdiction approval.”
When members of the public were able to ask questions, one member noted that the property is owned by Kenton County Airport Board.
“So, I’m curious, would this be something that Kenton County would issue the bonds for?” he asked. “I’m curious why Boone County is issuing the bonds?”
Scarola stated that “the issuer of the bonds is the Public Finance Authority for Boone County. It actually does not issue the bonds, the Public Finance Authority issues the bonds, lends the money to the borrower, the borrower repays the bonds.”
The reason under the Internal Revenue Code that Boone County approves this project is because the project itself is located in Boone County, regardless of the fact of the ownership.
It does not limit Boone County’s ability to incur debt for an airport project or any other project in the future. Boone County’s bond rating will have no effect on this project because it is a special facilities project.
“Is this basically just a finance vehicle and our action is simply just to check the square?” asked Boone County Commissioner Chet Hand.
“Yes,” stated Scarola.