Mark Gale, Director of Aviation, presented with Finance Director Priscilla Diaz and Budget Manager Noelia Orozco. The workshop covered the Terminal 5 program update, the negotiated airline lease and use agreement (LUA) and terminal building lease agreement (TBLA), and the FY27 aviation budget.
Always a pleasure to be with you, and uh we'll go through our budget presentation with me at the table today is uh our director of finance, Priscilla Diaz, uh, and our budget manager. Uh I think most of you know uh Noelia Orozco. Um the numbers get really hard, I'll just look at these guys and they can get us through on the numbers side of the house. So we ready to go? Let's see where this goes. So, Commissioners, this this presentation is uh slightly different than uh maybe what we've done in the past because there's a couple of really key issues that we need to talk uh about today. Um your agenda and table of contents. Uh we've broke this up into three different pieces. The first piece is to come back to the Terminal Five program to give you a little bit of background and update on where we are with Terminal Five and the work we've been doing since we met with you uh last August at the budget workshop and the things that we still needed to complete in order to move forward with the program. The second piece is uh really we're gonna spend some time to talk about the airline lease and use agreement and the terminal building lease agreement. They are companion documents. This is the culmination of the negotiation with the airlines that we're bringing back to you. We think we've landed in a really good spot in order to move the airport forward. Uh and we'll go through the elements of the deal. And then that leads into the FY27 aviation budget. We line it up this way because Terminal Five and the additional cost for Terminal Five is going to be actually part of the approved projects for the uh airline lease and use agreement, uh, that they will support the increases in the cost. And then ultimately the FY27 budget is geared off of the elements or the articles that are inside the agreements. So we have to take it in that order in order for it to make sense. So with that, we'll just jump right in. So Terminal 5. Just to bring everybody back uh to the program structure for Terminal 5, how it's put together. Uh Broward County Aviation Department has general program oversight. We retain the rights for the design. Um, but we've uh contracted, if you will, in a sense, with JetBlue to actually oversee the program, call it a uh a program uh developer, if you will. Uh they have the implementation responsibilities. We execute that through the existing terminal building lease agreement. And then after that, JetBlue contracts uh with uh four different entities here. Uh Parsons uh doing the program management. Gensler was the design team, Hunt Moss is the contractor, and Keith uh will be providing the inspection services. Uh the funds obviously come uh from the airport, and they funnel through JetBlue handles the contracts, and then JetBlue submits for reimbursement into uh into the county. So in 2021, the Terminal 5 program definition uh document was completed, defining the preferred concept layout, uh, the activity levels, the design considerations, and the preliminary cost estimate of 36 million. The project budget increase to 404 million, increased uh was uh driven primarily by modifications, construction definition, utility infrastructures that was previously unidentified, unforeseen circumstances. Our signatory airlines agreed to cover the majority of the cost via what we refer to as a majority in interest vote or an MII vote. As you may recall, airlines under our existing agreements have voting rights on our capital project, anything over $150,000, they get to vote on because the debt service is covered through our rates and charges. We'll talk a little bit about that, how that is going to change in the new agreement. In 2024, at the 60 percent design level, it resulted in a project increase to $654 million. That increase again driven by further program definition, advancement of the design, global economic impacts, including escalating cost of materials and services. Additional contingency funds were incorporated, increasing the total estimated project cost to $699 million. That was still based on the 60% design. The signatory airlines again agreed to cover the cost via an MI vote in June of last year. That is what we brought to you in August when we presented. We said this is where we are right now, but we're still working through the design. And our next steps were to complete the T5 design to $100 percent. JetBlue and Hunt Moss were to produce the final guaranteed maximum price, or what we refer to as the FGMP for review and approval, and then assemble and submit conformed design drawings for final permitting. So where are we? Hunt Moss began pricing and bidding with the trades and subcontractors and JetBlue received the proposed final GMP on April 27, 2026. JetBlue and BCAD commenced industry review of the construction packages and pricing. After extensive reviews and analysis and industry benchmarking, JetBlue finalized the negotiations with Hunt Moss on June 9th, which resulted in an FGMP of $702,338,000 for construction and an overall program cost of $829 million. Factors contributing to the overall cost increase. Costs are based on $100 percent design plans rather than actual bids, or excuse me, rather than uh 60% design levels, continued industry cost escalation and inflation.