The plan to expand Terminal B at George Bush Intercontinental Airport hit a delay at a Nov. 8 Houston City Council meeting as Houston City Controller Chris Brown declined to approve an agreement between the city and United Airlines, leading to the postponement of a council vote.
The item could return to the council for discussion at a Nov. 15 meeting.
The details
The agenda item would allocate $150 million from the city’s airport system construction toward the nearly $2.6 billion project. The project aims to modernize and expand Terminal B, which was announced in May during a Houston City Council Economic Development Committee meeting.
Under the agreement, the city would allocate $624 million in total in three tranches.
Brown said he declined to approve the agreement due to various concerns outlined in a Nov. 9 memorandum his office sent to Mario Diaz, director of the Houston Airport System.
The main concern, according to the memorandum, is the lack of clarity on the financial terms and design plans for the Terminal B redevelopment project.
Brown said his concerns include:
- The project is only partially designed, which Brown said makes it challenging for the city to accurately estimate costs.
- The feasibility study for the $650 million city bond issuance required by the memorandum of agreement has not been completed, which Brown said is needed to assess the city's capacity to issue the planned debt.
- The resolution that details the financing for the $1.9 billion in special facility revenue bonds has not been completed for review.
- United has a B credit rating, which Brown said indicates potential financial risks.
- Brown said not enough analysis has been done on what might happen if United defaults and gates need to be leased again, which he said shows a lack of risk assessment.
- Brown said the agreement will burden the next administration with an extra $2.6 billion in debt within two months of taking office, which he said causes worries about the financial strain on future administrations.
At the Nov. 8 council meeting, Houston Mayor Sylvester Turner said he was not informed why Brown was holding the item up prior to the meeting, suggesting the move was political. The said the project was ready to move forward and was too important to hold up, adding that United could decide to build the project in another city.
“His job is to certify if the dollars are there,” Turner said. “The dollars are there. There is no reason for the controller to be holding on this item and jeopardizing this major project at United.”
In a statement, United officials thanked Turner for his support of the project and said they remained eager to move the project forward.
“United Airlines is committed to providing the best travel experience to our customers and that includes investing in the $2.5B redevelopment of our Houston hub," officials said in a statement. "We are eager for the Houston City Council to approve their portion of this project, so we can deliver on the numerous benefits to our customers and employees."
What else?
Brown told Community Impact that there has been a lack of coordination with other city departments, the Houston Airport System and United, expressing concern about the approval request for a substantial amount of debt without prior discussions.
However, since the item was held up, Brown said there has been an increase in response from other departments.
What they’re saying?
“We'll get our questions answered and hopefully be able to sign off on [Terminal B], but it'll get communicated to the public.” Brown said, “Those that follow the council meeting will see at some point the item passes.”
What’s next?
The Houston City Council will meet again Nov. 15 to potentially further discuss the Terminal B redevelopment project.
