By Rich Bockmann
An arm of the New York City Economic Development Corp. Tuesday approved the sale of close to $200 million in tax-exempt bonds to help JetBlue build an expansion to its Terminal 5 at John F. Kennedy International Airport.
The New York City Industrial Development Agency’s board of directors voted 11-1-0 to approve the sale of $194 million in private activity bonds the Long Island City-based airline will use to finance the terminal’s 150,000-square-foot addition, which will serve as the new gateway for its international arrivals.
The IDA calculated that the $6 million in tax revenue the city will forego from the sale of the bonds will be offset by about $250 million in taxes generated by the facility over the next 25 years.
The total project cost was placed at around $240 million, with $140 million set aside for construction costs and the remainder going to soft costs and fees. The development agency estimated the interest rate would be between 6.5 percent and 7.5 percent for the 30-year term of the bonds.
JetBlue projects it will add 396 new, full-time employees starting at $25,000 a year with benefits by the time the addition is up and running in early 2015 and 67 part-time employees.
Missing from the application was the number of contracted workers at the airport, which raised concern with IDA board member Kevin Doyle, the executive vice president of the service workers’ union 32BJ-SEIU..
“There are, however, the conditions of thousands of contracted employees who are making at or close to the minimum wage with no benefits,” he said. “Those conditions should be examined as well as part of the presentation to get an accurate picture.”
Doyle abstained from voting.
In 2008, JetBlue’s Terminal 5 was the first at JFK to be designed and built after Sept. 11, 2001. The 635,000-square-foot facility features 26 gates spread out through three concourses and with 20 security lanes, it was the largest checkpoint in a U.S. airline terminal.
In October, the airline broke ground on what it calls T5i, a 150,000-square-foot addition where the former Terminal 6 sat that will include dedicated gates for JetBlue’s international arrivals as well as a new customs and immigration checkpoint.
International flights currently arrive at Terminal 4.
JetBlue received similar tax-exempt financing through the IDA in 2003 for demolition of JFK’s old Building 179 and the construction of the airline’s 100,000-square-foot Hangar 81.
When the company was considering moving its headquarters from Forest Hills to Florida in 2009, the EDC put together a package of incentives, including $7 million in tax exemptions through the IDA to renovate what would become JetBlue’s Long Island City headquarters.
The deal also included branding rights with the “I Love NY” campaign and officially named JetBlue as “New York’s Hometown Airline.”
Reach reporter Rich Bockmann by e-mail at email@example.com or by phone at 718-260-4574.