COUNTY OF ORANGE, CALIFORNIA
REQUEST FOR PROPOSALS
FOR JOHN WAYNE AIRPORT CAPITAL IMPROVEMENT PROGRAM GENERAL
AIRPORT REVENUE BONDS AND PFC (PASSENGER FACILITY CHARGE) -
Responses are due no later than October 14, 2008 at 4:00 PM (PDT). See below for
submittal instructions. Please limit your proposal, including cover letter, to fifteen (15)
The County of Orange, California (County) is requesting proposals from its approved panel
of airport underwriting firms for proposed new financing(s) required to partially fund the
Improvement Program of John Wayne Airport (Airport). The Improvement Program is
permitted under an amendment to the 1985 Settlement Agreement between the County, the
City of Newport Beach, and two citizens groups. The County may utilize a variety of
financing alternatives to execute this program, including general airport revenue bonds, PFC-
backed bonds, and short-term debt. The new financings may include tax-exempt and taxable
components, and may be issued in multiple series during a multi-year period. All financings
are subject to separate approval by the Public Financing Advisory Committee and the Board
B. Summary of Intent:
The purpose of this request is to solicit proposals for underwriter services for the County’s
proposed issuance and sale of municipal securities proposed for the Improvement Program or
alternate forms of financing. The successful proposer(s) must be prepared to perform
underwriter services by February 1, 2008 or subsequent date that the County may determine
at its sole discretion.
C. Background Information:
John Wayne Airport is owned and operated as a department of the County of Orange. The
five-member Orange County Board of Supervisors oversees the management of the County
government. The Airport is accounted for as a self-supporting enterprise fund. The Airport
is under the direction of the Airport Director, who is appointed by the County Executive
Officer. A five-member Airport Commission, appointed by the County Board of Supervisors,
acts in an advisory capacity to the Board on airport and air transportation matters.
John Wayne Airport is the only commercial service airport in Orange County, California. It
is located approximately 35 miles south of Los Angeles, between the cities of Costa Mesa,
Irvine, Newport Beach, and Santa Ana. The service area includes 3 million people within the
34 cities and unincorporated areas of Orange County. Operating primarily as an origination
and destination facility for the traveling public, the airport served approximately 9.6 million
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passengers during the 2007-08 fiscal year. General aviation aircraft at the airport are served
by three fixed-based operators, which provide fuel, supplies, aircraft maintenance, flying
instruction, and other related services.
The County issued Airport Revenue Bonds to finance construction of the existing terminal
and related facility improvements pursuant to a Bond Indenture, adopted in 1987, as
amended and supplemented in 1993, 1996, and 2003 for the issuance of additional bonds.
Each bond issue sold after 1987 was a refunding bond issue. The currently outstanding
bonds, secured by a pledge of a first lien on Net Revenues (Revenues minus Current
Expenses) of the Airport, were issued for $183,730,000. The bonds have a current
outstanding balance of $80,210,000.
In 2002, the 1985 Settlement Agreement was amended to allow the County to increase
passenger capacity at the Airport and to build new facilities to accommodate additional
passengers, while maintaining an environmentally sensitive operation. The Improvement
Program includes construction of a new multi-level terminal building with six new
commercial passenger gates, six new security checkpoints, baggage screening capacity
enhancements, additional parking structures, new commuter facilities, and a utilities
In 2003, the County retained financial consultant John F. Brown Company to assess the
financial feasibility of undertaking the Improvement Program. In July 2005, the consultant
completed the Improvement Program Financial Analysis and Preliminary Financial Plan
report, wherein it concluded that the program was financially feasible and provided its
analysis of various financing alternatives for the County’s consideration. A preferred
financing program was approved by the County Board of Supervisors in December 2005.
Presently, the County is implementing the Improvement Program, which includes numerous
capital projects totaling approximately $559 million. The program calls for substantial
construction in four stages over a five-year period. In Stage 1, construction will start on a
new south “remain overnight” (RON) aircraft parking area. Stage 2 will include the removal
of the existing B1 Parking Structure (SouthWest) and the completion of the South RON
aircraft parking area. In Stage 3, construction will start on a new terminal (Terminal C), new
commuter/regional facilities, and a replacement parking structure. Stage 4 will include the
completion of the new terminal, as well as relocation of operations to the new permanent
Concurrent with the Improvement Program, the Airport anticipates undertaking
approximately $93 million in ancillary capital projects, for a total capital program totaling
$652 million. Funding for the capital program will be provided from various sources,
including the following: (i) Airport cash; (ii) FAA Airport Improvement Program (AIP)
grants; (iii) Transportation Security Administration (TSA) grants; (iv) general airport revenue
bonds secured by Net Revenues (Revenues minus Current Expenses) of the Airport and short
term lines of credit; and (v) Passenger Facility Charges (PFCs), some of which will be used
to secure PFC-backed bonds. Total financing in (iv) and (v) is expected to be between $300
million and $330 million.
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Since 1987, all of the County’s airport revenue bonds have been rated investment grade.
Current ratings assigned to outstanding airport revenue refunding bonds are Aa3, A+ and
AA- from Moody’s Investors Service, Standard and Poor’s and Fitch Ratings, respectively.
John Wayne Airport’s 2006-07 audited financial statements are available upon request.
D. Proposal Response:
The County has independently selected Sidley Austin LLP as bond counsel and disclosure
counsel, and Frasca & Associates, L.L.C. as financial advisor, to serve on the financing team
for the proposed bond issuance. The goal of this RFP is to select an underwriter or firms
having the ability to meet the airport’s needs and appropriately structure and distribute the
County’s airport financing.
In responding to the RFP, the following points must be addressed:
1. Please describe your firm’s experience in underwriting airport revenue bonds and PFC-
backed bonds. Provide a list of such airport transactions for which your firm has served
as Senior Underwriter or Co-Underwriter since January 1, 2003. In tabular form, list the
sales date, issuing authority and airport, bond size, purpose, role of firm, ratings and/or
insurance received, type of sale (negotiated or competitive) and any unique
characteristics of the transaction.
2. Please list the name(s) of key staff members who will be assigned to work on this project
and include brief professional biographies including relevant airport experience.
3. Please comment on the pricing of long term fixed rate and short term variable rate airport
credits in the municipal market under current market conditions. Provide your views on
the current penalty for bonds subject to the AMT. In addition, comment on the
marketability of the long term fixed rate bonds based on John Wayne Airport’s current
bond ratings in light of general market conditions, as they may be impacted by events in
the airline industry.
4. Given current interest rates, please discuss your firm’s proposed financing structure in
detail, assuming a thirty-year term including a twenty-seven year amortization period.
Identify the risks associated with your proposed structure and suggest methods to
mitigate these risks. Comment on the economics and utility of bond insurance based on
the outstanding ratings of John Wayne Airport. In addition, discuss issues surrounding
credit/liquidity enhancement for variable rate bonds.
5. Please outline your marketing plan, and discuss the expected distribution of the bonds
between retail and institutional buyers. Describe your firm’s distribution capacities to the
sectors to which the bonds will be marketed.
6. Please provide a scale detailing coupons, yields and prices for a proposed long term fixed
rate bond issue, with and without insurance, based on market conditions at the close of
business on September 16, 2008. Provide your assumptions regarding the price of
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7. Please provide your proposal for underwriting compensation (Gross Spread) for both a
fixed-rate and a variable rate bond issue. Break down each component (including
8. Please indicate the firm and contact person you would choose as underwriter’s counsel.
Provide the expected cost for their services, which should be included in the expense
component of the Gross Spread.
9. Describe the capital base of your firm. Provide a copy of your firm’s most recent focus
report and any other recent data that attests to your firm’s financial strength and stability
over the course of the last 6 months.
10. Provide the name(s) of the person(s) who could best respond to any questions regarding
your proposal, including telephone, fax number and email address.
E. Selection Procedure:
Proposals will be evaluated based on the criteria identified in Section F of this Request
for Proposals. The evaluation panel may make a recommendation based solely on its
review of written proposals or, at its discretion, invite top ranking firms to an interview
before submitting its recommendation.
F. Selection Criteria:
Scoring Criteria Weighted Value
1. Experience and Qualifications (25)
• Demonstrated prior experience with projects of similar
scope and complexity
2. Key Personnel and Resources (25)
• Demonstrated competence and experience of firm’s
personnel responsible for performing work and providing
• Commitment to make staff available for the project
3. Approach/Understanding of Project (25)
• Understanding of the project scope of work and the
• Proposed approach for providing required services and
achieving project completion
4. Compensation (25)
• Competitiveness of compensation proposal
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G. Time Schedule:
1. Issue Request for Proposal September 23, 2008
2. Proposal Due Date October 14, 2008
3. Public Finance Advisory Committee (PFAC) November 6, 2008
4. Board of Supervisors Contract Award November 18, 2008
The above dates, with the exception of the Proposal Due Date, are subject to change and for
planning purposes only.
Based on the number of proposals received, the County reserves the right to request oral
presentations from submitting firms. If such presentations are conducted, they will be
scheduled during the week beginning October 27, 2008.
H. Proposal Submittal
Five (5) hard (paper) copies and two (2) electronic copies in a commonly used format
(Microsoft Word and/or Excel on CD-ROM preferred) of your proposal must be received by
4:00 (PDT) on October 14, 2008 at the following location:
John Wayne Airport
3160 Airway Avenue
Costa Mesa, CA 92626-4608
Attn: Steve Siemion
If there are any questions, please contact Thomas Beckett at (714) 834-5969 or
email@example.com, or contact Steve Siemion at (949) 252-6072 or
Your response must be received no later than 4:00 PM (PDT) on October 14, 2008. Please
limit your proposal, including cover letter, to fifteen (15) pages. It is the sole responsibility of
the proposer to meet the submission deadline. The County will in no way be responsible for
delays caused by delivery services or by any other occurrence. Further, the County will not
provide reimbursements for costs of proposal preparation.
Questions regarding this Request for Proposals should be directed to Thomas Beckett at (714)
834-5969 or firstname.lastname@example.org; or to Steve Siemion, Interim Finance Manager,
Finance and Administration at (949) 252-6072 or email@example.com.
The County may reject any and all proposals received in response to this Request for Proposals.
Further, the County reserves the right to waive any and all deficiencies in any proposal and to
negotiate a contract, including standard County contract requirements, with the selected firm(s).
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