With work well underway, the Missoula County Airport Authority on Tuesday selected First Security Bank to serve as the lender for Phase 1 construction of the airport’s new passenger terminal.
The board will decide next month what that $35 million financing package looks like and how it will be disbursed over the next three years as the project advances.
“It’s a pretty big deal, not only for the airport, but for the bank and this community,” said Bryan Flaig, vice president of commercial loans for First Security Bank in Missoula. “It’s a great project and it’s one we’re really happy to be involved with.”
The airport received eight proposals from local and national lending institutions interested in financing the project’s first phase, which includes five new jet gates, the main terminal, security and most of the airport’s essential operations.
With advice from BakerTilly, local advisers and Ben Johnson, the airport’s bond counsel, First Security emerged as the preferred lender. The decision was based on a number of factors, including the cost of issuance, prepayment options, and the ability to draw from the account over time without incurring interest for the larger sum.
“We know there’s another phase in this project just a few years down the road,” said Flaig. “If there was a need or desire to refinance the obligation to do some of those phases, this gives you the opportunity to do that. We tried to make a proposal that’s fairly straightforward.”
In its application, First Security proposed a fixed rate for the tax-exempt portion of the debt to eliminate rate volatility. The proposal also includes options for both 25- and 30-year financing.
A draw-down provision and no prepayment penalty after 2022 also gives the airport ways to address the uncertain timing of projects, costs and when grants arrive. The airport will craft and adopt the final package next month.
“It boiled down very succinctly and methodically, and we were able to make a decision,” said Larry Anderson, a member of the airport authority’s board. “It was a very good process to go through, and very educational as well.”
Now years in the making, the terminal project is well in progress, with excavation now complete and the ground pilings in. The older portion of the airport will remain in operation throughout construction.
However, that portion of the building will be razed when the new terminal opens to make way for Phase 2. The end goal will create roughly eight jet bridges spread over two wings with room for expansion.
A new access road is also under construction and the parking lot will be reconfigured. The resolution approved on Tuesday places the cost of the entire project at around $67 million.
Airport Director Cris Jensen was pleased with the board’s acceptance of First Security Bank. The lender has also played an integral role in the airport’s push to expand carriers and destinations.
“Through our air service initiatives that we’ve had, they’ve been active in that process,” said Jensen. “It’s great to see a solid proposal from them. They’ve been great partners well before any of this conversation came up.”