The Port Authority of New York and New Jersey last week gave the green light to a “restructured” PPP worth $3.9 billion to build a new terminal on the north side of JFK Airport.
JFK Millennium Partners, a consortium comprising Vantage Airports, American Triple I and RXR Realty, was selected by JetBlue to build the 1.2 million sq ft terminal. Under the original timeline, construction should have begun this year.
However, as noted in a statement by New York governor Andrew Cuomo’s office – issued prior to his resignation yesterday – the fully privately-financed deal had been “restructured” after the original agreement “had been threatened by the impact of the covid-19”.
A source close to the deal said the original deal had been “completely restructured”, adding: “It’s very significantly different in terms of the revenue share with the Port Authority. In terms of the dynamics of the revenue share, the ways the Port Authority shares in the upside, those are different to what was being proposed 18 months ago. The risk share and risk allocation is about the same.”
The source also said this level of restructuring is being seen in other transport PPPs in the US as municipalities look to adapt to the realities imposed by the pandemic. According to the statement from Cuomo’s office, passenger volumes at JFK Airport were down 98 percent at the height of the pandemic and have recently returned to being 25-30 percent down from pre-pandemic levels.
While projects such as the JFK terminal would previously have been financed with about 70 percent of debt, the source said the restructuring would likely mean significantly more equity will have to be injected, at least at the beginning, before a potential refinancing later down the line.
“This historic private investment will not only fortify New York’s reputation as our nation’s front door to the world, but also sets an example for how this country can tackle bold infrastructure projects that will jump-start our economy with thousands of good-paying jobs even amid profound challenges like the pandemic,” Cuomo said in a statement.
Construction of the new terminal is scheduled to begin in mid-2022 and the first new gates are planned to open in 2025, Vantage Airports said in a statement.