LOVE FIELD MODERNIZATION PROGRAM (LFMP) April 29, 2015
DALLAS AIRPORT SYSTEM Three Facilities Dallas Love Field Dallas Executive Airport Downtown Vertiport $90 million City of Dallas Department Operated by the Department of Aviation as a financially self-sufficient Enterprise Fund 2
LOCATION 3.7 miles north-northwest of downtown Dallas Approximately a 15 minute drive from downtown Dallas 3
LEMMON AVENUE TERMINAL Built in 1953 as a Work Projects Administration project 4
CEDAR SPRINGS TERMINAL Opened to airline service on January 20, 1958 Considered the most modern airport of its time All airlines operated at DAL until DFW opened in 1974 5
WRIGHT AMENDMENT M C I S TL ELP ABQ L B B A M A M A F O K C D A L T U L L IT JAN BHM S A T AUS H O U IIA H M S Y Passed in 1979 to protect DFW Airport Could only fly within Texas and four neighboring states Updates to Amendment in 1997 and 2005 added states 6
WRIGHT AMENDMENT REFORM ACT OF 2006 Based on local 5-Party Agreement (FPA) City of Dallas, City of Ft Worth, American Airlines, Southwest Airlines, DFW International Airport Required City & Southwest Airlines to collaborate on the modernization of DAL Terms Flight restrictions phased out over 8 years, fully repealed in 2014 No international flights No marketing of Love Field and no efforts to bring commercial service to any airport other than DFW Love Field gates reduced from 32 to 20 7 Southwest: 16 gates American: 2 gates Continental: 2 gates
TEXAS LAW Chapter 431 Texas Transportation Corporation Act Authorizes a city to create a local government corporation (LGC) to "aid and act on behalf of one or more local governments to accomplish any governmental purpose of those local governments." TEX. TRANS CODE 431.101(a). Subchapter D has been used by some local governments as an innovative and flexible tool to create non-profit corporations to aid in the procurement of goods and services or the construction of public works projects using alternative procurement and delivery methods. An LGC is legally permitted to avoid restrictive procurement provisions because it is exempted from many of the restrictive statutory requirements presently applicable to the local government that creates it. For example, an LGC is exempt from the competitive bidding provisions that apply to cities and counties.
9 CITY COUNCIL ACTIONS Approved by City Council - June 25, 2008 Approved Terminal Design Concept Approved the TARPS (Terminal Area Redevelopment Program Study)as the Master Plan for the LFMP Created a Local Government Corporation - LFAMC Established the Scope of the LFMP Established the Preliminary Budget for the LFMP Approved an agreement to reimburse SWA for LFMP related expenses incurred in advance of bond issuance (Inducement Agreement) Authorized Negotiations Airport Use & Lease Agreement (U&LA) Program Development Agreement (PDA) Ground Lease for Cargo Facilities
LOCAL GOVERNMENT CORPORTATION (LGC) Love Field Modernization Program Financial Structure Management and Contracting Planning and Design Construction and Phasing Public Awareness Art Program and Amenities MWDBE Program 10
11 FUNDING STRATEGY Maximize federal grants PFC to match grants and supplement debt service requirements Aviation Capital Fund supported by revenues from airline rates & charges Finance remaining program cost with Special Facility Bonds Agreements Special Facilities Agreement Revenue Credit Agreement Trust Indenture Guaranty
12 SPECIAL FACILITIES AGREEMENT Parties City LFAMC Southwest Southwest agrees to: Construct Facilities in accordance with Program Development Agreement Make Facilities Payments to Trustee to fund 100% of net debt service after applying available PFC revenues throughout term of bond City agrees to: Authorize bond issue on Southwest credit Own and operate facilities LFAMC issues the bonds
REVENUE CREDIT AGREEMENT Parties City Southwest Provides for transfer from Aviation Fund to Southwest Debt service paid by others through rent payments Other Aviation Fund revenues applied to debt service as defined in Use & Lease Agreement approved by Council Provides for transfer to Trustee Grant and PFC funds applied to LFMP construction PFC funds authorized for debt service 13
14 TRUST INDENTURE Parties LFAMC Trustee Addresses the: Transfer of bond proceeds to Trustee Payment of LFMP contractors Debt service payments received Payment of bondholders
15 OVERVIEW LOCAL GOVERNMENT CORPORATION City Council authorization & oversight LGC Special Facilities Lease SWA (financing lease) Revenue Credit Agreement Transfer of AIP grants > Trust Indenture < Transfer Bond proceeds < Pay debt service net of PFCs <Credit for debt service component of terminal rent and negotiated portion of concession revenues LFMP Contractors <Trustee payments to contractors (per requisition process in PDA) Trustee <Transfer PFCs to pay portion of debt service City / Aviation Dept <AIP grants FAA Debt service payments Concession revenues Concession Agreements Terminal rent, landing fees Use and Lease Agreements Bondholders Concession Operators Other Airport Revenues All DAL Airlines
16 BOND ISSUANCE Special Facility Bonds Two Series 2010: Approximately $350 Million 2012: Approximately $150 Million
PROCUREMENT AND CONTRACTING Program Development Agreement (PDA) Allowed Southwest to have a bigger role in the modernization City retains full ownership of all airport facilities Assigned Southwest as Agent for City to negotiate and manage contracts Maintains legal and funding parameters Majority of Design, Construction and Program Management 17
PROCUREMENT AND CONTRACTING Program Development Agreement (PDA) Establishes Program Management Team (PMT) Defines retention of design and engineering services PMT is ultimately responsible for procuring: Environmental Geo-Technical Surveying Design Preconstruction and Construction Management @ Risk Procurement of other services may be negotiated or competitively bid Construction Manager @ Risk will hard bid all scopes of work. 18
PROCUREMENT AND CONTRACTING Program Development Agreement (PDA) allows for Southwest to procure utilizing either a public advertisement process or a closed process utilizing pre-qualified contractors. Negotiates price, terms, and conditions Form Construction Contracts for LFMP PDA allows for various project delivery methodologies Construction Manager @ Risk for Terminal/Concourse Complex work Stipulated sum contract for non-terminal, and Unit price contract for projects eligible for AIP Funding 19
20 PROGRAM DELIVERY TEAM Joint Program Management Team (PMT) City of Dallas Staff, Southwest Airlines staff, Consultants Professionals with expertise in airline and airport infrastructure development Directly influence phasing / manage expectations Understanding of key issues affecting each is absolutely essential Lead Teams Design Team: Corgan Associates Construction Manager: Hensel Phelps Construction Company Steering Committee: Final Decision-makers Director of Aviation and Southwest VP of Properties Set budget and Maintain Schedule - October 2014
DESIGN AND CONSTRUCTION TEAM Corgan was engaged in 2006 to look at schematic options to reconfigure or design a new terminal at Love Field on SWA s behalf while the Wright Repeal discussions were going on. Their engagement in this early work and knowledge of the program made them indispensable for program design. Dallas Aviation and SWA mutually agreed to contract with Corgan for the design of the new program. Southwest holds all contracts. Hensel Phelps was selected through a collaborative process that Dallas Aviation, SWA and the PMT all participated in. The program issued an RFI to identify interested construction companies in the project. We short listed and then requested RFPs from a smaller group companies. Eventually selected Hensel Phelps based on their response, project management team, experience and approach to our program.
23 LFMP SCOPE Facilities 20 new gates and associated Apron and Fuel system New Concourse and connector stem New Ticketing Wing Renovated Lobby and security checkpoint New Inline screening and Baggage Handling System New Baggage Claim Area Landside Improvements (Terminal Roads) Schedule: 2008-2015 Funding / Planning / Design / Construction Open October 13, 2014 Apron and RON completion 2015 Budget: $519 Million
30 ORIGINAL LFMP GOALS Passenger Experience Customer friendly - Keep the passenger and journey in mind Customer service Maintain minimum IATA LOS C Convenient Maintain the level of service that Love Field is known for Ease of way finding Provide an intuitive clarity to the passenger path of travel Improve departures processing Provide for clear and efficient processing Calming journey The facility should relieve stress, not create it Charm of the current identity Remind passengers of the unique history of Love Field
25 ORIGINAL LFMP GOALS Operational Efficiency Maintainability Ease of maintenance for an airline and airport perspective Concessions - Allow for efficiency in concessions operation Code and life safety Address long-standing and life-safety concerns Sense of Place Downtown Dallas Design should reinforce the airport s position as the front door to Downtown History of Love Field Design should respect the long history of Love Field and maintain key features Sustainable Design Publicly visible expressions- Design should include demonstrable expression of environmentally friendly design Energy and water performance
FOCUS GROUPS Led by PMT Multiple Areas Airside, Landside, Ground Transportation, Art, Concessions, FF&E, Amenities Stakeholders Users, owners, designers, constructors Collaborative effort Integrated into overall design and mitigated any conflict issues 26
27 PLANNING CHALLENGES MOVEMENT AND WAYFINDING (ADDITIONAL DETAILS IN APPENDIX A) 1958 Original Diagram 2014 Redevelopment 1974 Multiple Additions
28 NEW TERMINAL FOOTPRINT
TERMINAL AREA - 2008 29
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CONSTRUCTION COORDINATION Construction Manager Hensel Phelps All construction bid LFMP - Program Interface Consultants and Contractors Tenants (Airlines, Concessionaires, RAC s, DOA) Agencies (TSA, FAA) Public Multiple Construction Phases and Openings 32 Multiple Tenant Relocations - Interim and final Major roadway reconstruction Ticket Hall: November 2012 Phase 1 (12 gates and Concessions): April 2013 Bag Claim Hall: September 2014 Phase 2 (8 gates and OAL relocation): October 2014 Office Tower: March 2015 Final Apron and Demo: Summer 2015
33 OPERATIONAL IMPACTS Operational adjustments with construction Roadways Regular Airfield operations LFMP Projects: Concourse and Apron Other Airfield projects: Taxiways, Runways Security Challenges Maintaining an operational airport during construction Contractors
TERMINAL FACILITIES Regular Terminal activities Facilities Maintenance Safety Systems are vulnerable LFMP Interface Facility Impact Requests (FIR) Communication Schedules Challenges Turn over responsibility of equipment 34
EXPECTATIONS AND APPROACH 35 Maintain budget and schedule Completed on-time and under budget! Maintain operations and provide good passenger experience Team approach City, Southwest, All Stakeholders Anticipate problems, issues, questions We like it the way it is Convenient, easy, quick Communication and information Maintain flexibility Make it fun!
44 LFMP SUCCESS STORY: BUILD GREAT TEAMS Success due to strong airline-airport partnership and team Day-to-Day: Program Management Team Decision-Makers: Steering Committee Take advantage of organizational experience and expertise Southwest: Experience, Airline operations, adaptability, urgency, built for speed City: Experience, Airport operations, concessions, City of Dallas process Both parties act like owners and have a single visionary purpose Organization Carefully assess strengths and weaknesses Seek balance (and compromise!) Delivery method (CM@Risk)
MWDBE PROGRAM 37
PROGRAM CHALLENGES Impact considerations Potential increased activity Roads and Traffic Surrounding development Economic risk Infrastructure needs Owner input 38
39 Thank you! Lana.furra@dallascityhall.com