SampP Global Ratings
RatingsDirectreg
San Francisco City and County Airport Commission San Francisco International Airport Airport Joint Criteria Primary Credit Analyst Paul J Dyson San Francisco (1) 415-371-5079 pauldysonspglobalcom
Secondary Contact Andrew Bredeson Centennial 303-721-4825 andrewbredesonspglobalcom
Table Of Contents
Rationale
Outlook
Specific Capital Improvement Projects
Bond Provisions
WWWSTANDARDANDPOORSCOMRATINGSDIRECT OCTOBER 5 2017
1926721 I 300097537
1
San Francisco City and County Airport Commission San Francisco International Airport Airport Joint Criteria Credit Profile
US$346385 mil 2nd series rev bnds (San Francisco Intl Arpt) ser 2017 A due 05012047
Long Term Rating A+Stable New
US$234675 mil 2nd series rev bnds (San Francisco Intl Arpt) ser 2017B due 05012047
Long Term Rating A+Stable New
US$15097 mil 2nd series rev rfdg bnds (San Francisco Intl Arpt) ser 2017D due 05012026
Long Term Rating A+Stable middot New
US$126135 mil 2nd series rev bnds (San Francisco Intl Arpt) ser 2018A due 05012024
Long Term Rating A+Stable New
US$46175 mil 2nd series rev bnds (San Francisco Intl Arpt) ser 2017C due 05012027
Long Term Rating A+Stable New
Rationale
SampP Global Ratings assigned its A+ long-term rating to San Francisco City and County Airport Commissions $346
million series 2017A (AMT) $235 million series 2017B (Non-AMT government purpose) $46 million series 2017C
(taxable) second series revenue bonds We also assigned our A+ long-term rating to the commissions $151 million
series 2017D (AMT) and $126 million series 2018A (AMT) second series revenue refunding bonds In addition SampP
Global Ratings affirmed its A+ long-term rating and underlying rating (SPUR) on the commissions other parity debt
outstanding Finally we affirmed our AA+A-1 +and AA+A-1 dual ratings on various other bonds outstanding
reflecting the application of our joint criteria assuming low correlation All bonds were issued for the San Francisco
International Airport (SFO) The outlook is stable
The commission will use bond proceeds to finance a portion (about $290 million) of costs to complete various projects
repay $300 million in commercial paper (CP) notes issued to finance capital projects refund about $310 million in
various bonds outstanding and fund termination payments ($139 million) for swaps associated with various refunded
bonds
The ratings reflect our view of the airports
bull Deep and diverse service area economy consisting of 88 million residents with strong income and education levels
middot a large and diverse employment base healthy tourism trends and strong job growth in recent years
bull Very strong enplanement trends that we expect will continue albeit at a slower pace
bull Growing high-yield origin and destination (OampD) market and strong market position with minimal competition for
international passengers in the Bay Area
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San Francisco City and County Airport Commission San Francisco International Airport Airport Joint Criteria
bull Large international hub designation with historically strong international traffic growth and capacity for expanded service
bull Good liquidity position with $376 million or 293 days of operational cash on hand as of unaudited fiscal 2017
bull Adequate-to-good debt service coverage (DSC) around 1 lx to 12x when excluding transfers from the contingency account and
bull Strong management team that we believe has been successful in controlling costs expanding and diversifying air
carrier service and maintaining strong financial metrics
Partly offsetting the above strengths in our view are the airports
bull Increasing leverage and significant additional capital needs most of which will be financed by additional bond proceeds
bull Current and projected high cost structure and
bull Risks related to concentration in its primary carrier United Airlines although SFO is an important hub to United and the airline has been making considerable investments at the airport
The bonds are secured by the net revenue of the airport Of total debt outstanding 10 is variable rate (synthetic
fixed) with 90 traditional fixed-rate debt Subsequent to the issuance of the aforementioned bonds the synthetic fixed
portion is projected to decline to just 6 of total pro forma debt The airport has $461 million of letter-of-credit
(LOC)-supported variable-rate debt all hedged by six interest rate swaps (mark-to-market $69 million unfavorable as
of Aug 31 2017) three of which will be terminated with $139 million in bond proceeds The swaps in our view pose
low contingent liquidity risk to the airport given the rating differential between the underlying rating on airports
revenue bonds and the rating triggers that would prompt the airport to make a swap termination payment if the swap
valuation at the time of the termination is not in the airports favor SFO has a $500 million CP program (subordinate
lien) that is backed by four irrevocable direct-pay LOCs Repayment of CP notes is a subordinate obligation to the
bonds As of Aug 31 2017 $330 million in CP was outstanding
The airport located 14 miles south of downtown San Francisco in an unincorporated area of San Mateo County
occupies approximately 2383 acres on a 5171-acre site (The remaining acreage is undeveloped tidelands) The
existing domestic passenger terminal complex totals 27 million square feet and the international terminal totals 25
million The airport has 91 operational gates and four runways and 13840 public (nonemployee) parking spaces The
airport is owned and operated as an enterprise department by the City and County of San Francisco A five-member
airport commission the members of which are appointed by the mayor to four-year terms governs the airport
SFO continues to record impressive enplanement growth rates especially considering the airports significant size and
activity levels Total enplanements increased a strong 49 to a record 269 million for unaudited fiscal 2017 on the
heels of 67 growth in audited fiscal 2016 Growth rates in fiscals years 2013 to 2015 were likewise good at 40
32 and 45 sequentially The compound annual growth rate for enplanements has been 46 during the past five
fiscal years The commission along with input from its consultant is forecasting enplanement growth of 27 for fiscal
2018 20 for fiscal 2019 17 for fiscal 2020 and 16 annually for 2021 to 2023 for a compound annual growth
rate (CAGR) of 19 for 2017 to 2023 We believe the forecast is conservative and achievable given recent trends and
the airports strong market position Likewise we view the financial forecast as reasonable given that it is based on the
enplanement forecast SFOs actual enplanement CAGR of 46 since 2013 has easily exceeded the CAGR forecast of
WWWSTANDARDANDPOORSCOMRATINGSDIRECT OCTOBER 5 2017 3
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San Francisco City and County Airport Commission San Francisco International Airport Airport Joint Criteria
18 in 2013 International enplanement growth has been even more impressive growing an average of 68 since
2012 with a forecast CAGR of 26 during 2017 to 2023
According to Airports Council International SFO was the seventh-most-active airport in the US for total passengers
served in 2016 and of the largest 10 airports was first in enplanement growth (42) over the 12-month period ended
Feb 28 2017 SFO is also the fourth-largest OampD airport in the US with 80 OampD traffic The large hub airport is
also one of the principal gateways for the Pacific traffic in the US SFO has the highest share of OampD traffic of any
connecting large hub airport We consider this large percentage of OampD traffic to be stable SFO was the
second-fastest-growing US international gateway in fiscal 2016
We believe that the large wealthy service area (almost 9 million people) with strong employment trends and a deep
and diverse economy has historically provided a robust traffic base and the area serves as a popular tourist and
convention destination The San Francisco Bay Area is the fifth-most-populous combined statistical area (CSA) in the
US and had a very low 40 unemployment rate as of June 2017 below that of the state ( 4 7) and US (44) Per
capita effective buying income (EBI) for San Francisco County is 85 above the national average with that of the San
Francisco CSA 50 above The San Francisco CSA led the 10 largest CSAs for per capita EBI for 2015 per capita EBI
growth from 2010 to 2015 employment growth from 2010 to 2016 and median home prices in 2017 Leading
industries in the regional economy include high tech social media health care biotechnology finance foreign trade
and higher education Tourism is also a major driver of the economy with 252 million visitors for San Francisco alone
in 2016 driving the hotel occupancy rate up to 88
In fiscal 2017 52 passenger and six cargo-only airlines served the airport United and United Express accounted for
what we consider a concentrated 44 of total enplanements in fiscal 2017 (and 24 of operating revenue in fiscal
2016) with Virgin America accounting for 93 and American Airlines (including US Airways) accounting for 82
Overall the leading 10 airlines accounted for 86 of enplanements in fiscal 2017 In terms of international
enplanements United represented 310 in fiscal 2017 with Air Canada second at 76 Domestic traffic has shown
impressive growth in our opinion particularly in the past five years Management attributes this growth primarily to
the introduction of service in fiscal 2007 by three low-cost carriers (LCCs)--Southwest Airlines JetBlue and Virgin
America--that grew to 19 of the market in fiscal 2016 from 6 in fiscal 2007 SFO provided nonstop service to 84
domestic and 49 international destinations in fiscal 2017 both figures having steadily grown over the years A total of
33 new average daily flights were added in 2017 alone including five international flights United Airlines commitment
to SFO is very strong with continued long-term investments being made and SFO gaining the largest share of Uniteds
international capacity growth since 2010
In terms of competition SFO is the second-largest international gateway on the West Coast and has a very strong
competitive position in the San Francisco Bay Area versus Oakland International Airport (OAK) and San Jose
International (SJC) not only for domestic traffic (enplanement and deplanements) but even more so for international
The domestic market share for the airport was 64 for fiscal 2017 and 91 for international traffic or 69 overall
SFOs market share has remained strong and relatively steady although it has dipped slightly since fiscal 2014 when it
was near 71 given relatively stronger traffic growth at OAK and SJC
The airline use-and-lease agreements between the airport and 44 signatory airlines took effect July 1 2011 The term
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San Francisco City and County Airport Commission San Francisco International Airport Afrport joint Criteria
is 10 years and the agreements include a residual cost rate-setting methodology airline review of capital projects
common-use facilities in the international terminal and annual service payments to the city The international terminal
is joint use but the domestic terminals are a mixture of preferential joint and common use--not exclusive
use-allowing airport management to optimize gate utilization We consider the use-and-lease agreements credit
neutral
The airports capital improvement plan (CIP) approved on Sept 5 2017 is very sizable and a credit risk but we also
recognize the need to add gates and to expand and modernize terminal space to meet growing demand Given the
projects importance to the airport and the airlines and given its size the commission is increasingly focusing on risk
mitigation and avoidance of cost overruns The airports often experiences gate constraints during peak periods with
passenger traffic up 46 over the past 10 years In addition to meeting growth needs the CIP aims to address safety
and security improve information technology infrastructure improve the customer experience and maintain the
airports strong competitive position The CIP includes $62 billion in spending over the next 10 years (fiscal years
2018 to 2027) The CIP was recently broken down further into two components the Ascent Program--Phase I and the
fiscal 2018 Infrastructure Projects Plan The Ascent Program--Phase I consists of projects from the fiscal 2017 capital
plan plus a new $739 million contingency reserve to cover unanticipated project needs The Infrastructure Project Plan
includes projects that address newly identified needs Capital needs have grown considerable recently in fiscal 2016
the airports 10-year CIP (fiscal years 2016 through 2025) totaled $45 billion Subsequent phases of the Ascent
Program are likely to be derived from the commissions Airport Development Plan (ADP) now complete and under
environmental review
Including $12 billion in prior years spending the overall CIP totals $74 billion The forecast indicates that
approximately $65 billion in new airport revenue bonds (including the series 2017 bonds) will be issued through 2022
to fund $5 5 billion or 73 of the CIP with prior funding covering $12 billion or 16 The remaining 12 will be
covered by grants future rev~nue bonds beyond 2022 and other sources such as hotel bonds and special facility
bonds Annual borrowing will range from $11 billion to $19 billion We take a negative view of the significant debt
that the airport will need to issue to finance the capital plan We will monitor the effects that these projects may have
on the airports financial metrics We do consider the airports proven record of delivering large capital projects on
time and on budget to be a mitigating factor
Financial performa~ce has been very consistent over the past several years as a result of conservative planning and
forecasting prudent expenditure management and strong activity levels at the airport DSC as calculated in the
indenture (including rolling coverage and pledged passenger facility charge or PFC revenue) was an estimated 137x
in unaudited fiscal 2017 down slightly from 144x in audited fiscal 2016 Pledged PFC revenue designed to pay debt
service in unaudited fiscal 2017 totaled $234 million Excluding the transfer from the contingency account coverage
was 120x in audited fiscal 2016 and 114x in unaudited fiscal 2017 and is forecast to decline to 109x in fiscal 2023
DSC at these levels it is not a significant credit risk in our view given the residual airline agreements We view
managements financial forecast and its assumptions as reasonable largely given our similar view on managements
traffic forecast
Audited 2016 unrestricted cash and investments totaled $412 million equal to 339 days operations which we consider
WWWSTANDARDANDPOORSCOMRATINGSDIRECT OCTOBER 5 2017 5
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San Francisco City and County Airport Commission San Francisco International Airport Airport Joint Criteria
good Estimates for fiscal 2017 indicate a decline to $376 million in unrestricted cash or 293 days of operations
Management reports that overall cash balances will increase in fiscal 2018 as a result of a $28 million addition to its
contingency fund Liquidity is supplemented by CP capacity estimated at $4 70 million once the aforementioned bonds
are issued
The airport has a high cost structure in our opinion The cost per enplanement (CPE) was estimated at $1646 in fiscal
2017 down slightly from $1652 in audited fiscal 2016 Managements projections indicate the CPE will rise to $2642
in fiscal 2023 While we consider this rate to be high we understand that this is an average rate for all carriers at the
airport and that based on the facility used (eg the international terminal or a domestic terminal) the rate is higher or
lower This is important when considering the effect of the cost on certain airlines service decisions In addition
strong nonairline revenue growth in recent years has helped to contain CPE non-airline revenue has almost doubled
since 2007 We also believe that actual CPE figures will likely be lower than forecast because in our view
enplanement levels will likely exceed conservatively forecast figures Management also continues to control costs and
make the airport more competitive by increasing concession revenue (especially as planned for Terminal 1) and
attracting new carriers and service The airports debt per enplanement is also high in our view at $179 as of fiscal
2016 With the net effect of the planned issuance of an additional $65 billion and some principal amortization
management forecasts debt per enplanement for fiscal 2023 at $325 which we consider very high
Outlook
The stable outlook reflects our anticipation that United Airlines will continue to operate a major hub at SFO passenger
demand will remain stable and liquidity will remain good The prudent implementation of a capital plan that maintains
managements estimates of additional debt will also be an important rating factor in our opinion
Upside scenario
Given our view of SFOs significant additional debt needs and current debt profile we do not expect to raise the ratings
during the next two years
Downside scenario
We could lower the rating if enplanements decline materially reducing the airports ability to manage rising debt or if
the airports DSC significantly declines on a sustained basis
Specific Capital Improvement Projects
Significant projects in the Ascent Program--Phase I of the CIP include the renovation of Terminal 1 at a projected cost
of $23 billiqn the renovation and reconfiguration of the eastern and western side of Terminal 3 ($10 billion) and the
International Terminal Refresh project to improve the terminal operational efficiencies ($272 million) The commission
is also constructing a multistory office block for its own administrative uses and other tenants and a project dedicated
to increasing customer experience and concession revenue opportunities Major groundside projects include a new
airport-owned hotel and hotel AirTrain station to be funded by $278 million in hotel bonds and $260 million in hotel
special facility bonds The hotel is slated to open in summer 2019 An additional $202 million project includes an
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San Francisco City and County Airport Commission San Francisco International Airport Airport joint Criteria
extension of the AirTrain system to connect to the existing and new long-term parking garages and the new long-term
parking garage itself ($161 million) The balance of projects includes projects geared toward safety and security
technology utility and energy efficiency projects and taxiway improvements Major projects in the Infrastructure
Projects Plan include net jet fuel storage tanks ($52 million) and various airfield improvements
Bond Provisions
The bonds are secured by the airports net revenue and are issued under the 1991 resolution We consider the bond
provisions credit neutral Net revenue includes that which the commission earns from operating the airport in
accordance with generally accepted accounting principles but explicitly excludes special facility revenue and PFCs
unless specifically pledged The airport has $48 billion in parity debt outstanding
The 1991 resolution allows for the establishment of a contingency account that can be used for debt service
operations and maintenance and certain other airport costs The commission is not obligated to replenish this account
in the event funds are withdrawn The balance in this account as of June 30 2017 was $95 million (equal to about 22
of maximum annual debt service or MADS) The commission plans to increase the balance of the contingency fund by
$1285 million in future years from proceeds of the 2017 bonds as well as from future bonds Funds in this account are
deposited as of the last business day of each fiscal year and can be applied to satisfy the coverage requirement under
the rate covenant
The rate covenant requires net revenue in each year to be at least sufficient to pay debt service and all required annual
service payments to the city In addition together with any transfer from the contingency account net revenue must
equal at least 125x debt service on the 1991 resolution bonds This contingency account transfer effectively allows for
rolling coverage on the bonds In years in which amounts owed after debt service decrease relative to the size of debt
service actual coverage from current-year rates and charges can fall and be offset by the contingency fund The size of
the transfer is limited to 25 of MADS for purposes of calculating the additional bonds test (ABT) While the
contingency account may be used to meet the rate covenant we expect (and management projects) that generating
revenue will equal at least lx debt service from rates and charges without the use of the contingency account If the
contingency fund were to be drawn down for any reason the commission has the authority to set rates and charges to
125x debt service and continue to do so until the contingency fund is rebuilt if ever
The ABT requires that projected net revenue will meet the rate covenant for the proposed debt or that historical
revenue with the transfer will cover outstanding and proposed debt by 125x This test as with nearly all other tests for
airports in the US allows for the use of projected revenue which in essence means some demonstration of
compliance of the 125x multiple by an airport consultant
In terms of the debt service reserve funds the 1991 master resolution established the original reserve account which
provides additional security for all bonds outstanding under the 1991 master resolution except for issues 36A 36B
36C and the series 2009C 2010A and 2010D bonds The reserve requirement for the original reserve account is
MADS The series 2009C and 20 lOD bonds are secured by a separate 2009 reserve account Issue 36A 36B 36C and
the 201 OA bonds do not have a reserve account but are secured by LOCs The proposed series 2017 A and 2017B
WWWSTANDARDANDPOORSCOMRATINGSDIRECT OCTOBER 5 2017 7
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San Francisco City and County Airport Commission San Francisco International Airport Airport Joint Criteria
bonds will also be secured by the original reserve account but the proposed series 2017C 2017D and 2018A bonds
are contemplated to be secured by a new 2017 reserve account with the reserve requirement at the least of 10 of
par MADS or 125 of average annual debt service
Ratings Detail (As Of October 5 2017)
San Francisco City amp Coty Arpt Comm California
San Francisco Intl Arpt California
San Francisco City amp Cnty Arpt Comm (San Francisco International Airport) (wrap of insured) (FGIC amp AGM) (SEC MKT)
Unenhanced Rating A+(SPUR)Stable Affirmed
San Francisco City amp Cnty Arpt Comm (San Francisco Intl Arpt) arpt rev rfdg bnds rmktd
Long Term Rating A+Stable Affirmed
San Francisco City amp Cnty Arpt Comm (San Francisco Intl Arpt) AIRPORTS
Long Term Rating A+Stable Affirmed
San Francisco City amp Cnty Arpt Comm (San Francisco Intl Arpt) JOINTCRIT
Long Term Rating AA+ I A-1 Affirmed
Unenhanced Rating A+(SPUR)Stable Affirmed
San Francisco City amp County Airport Commission (San Francisco International Airport)
Long Term Rating A+Stable Affirmed
San Francisco City amp County Airport Commission (San Francisco International Airport) VRDB
Long Term Rating AA+ I A-1 + Affirmed
Unenhanced Rating A+(SPUR)Stable Affirmed
San Francisco City amp County Airport Commission (San Francisco International Airport) VRDB
Long Term Rating AA+ I A-1 Affirmed
Unenhanced Rating A+(SPUR)Stable Affirmed
San Francisco City amp County Airport Commission (San Francisco International Airport) VRDB
Long Term Rating AA+ I A-1 Affirmed
Unenhanced Rating A+(SPUR)Stable Affirmed
San Francisco City amp County Airport Commission (San Francisco International Airport) VRDB (ASSURED GTY)
Long Term Rating AANRStable Affirmed
Unenhanced Rating A+(SPUR)Stable Affirmed
San Francisco City amp County Airport Commission (San Francisco International Airport) VRDB (ASSURED GTY)
Long Term Rating AANRStable Affirmed
Unenhanced Rating A+(SPUR)Stable Affirmed
San Francisco City amp County Airport Commission (San Francisco International Airport) VRDB 368
Long Term Rating AA+ I A-1 Affirmed
Unenhanced Rating A+(SPUR)Stable Affirmed
San Francisco City amp County Airport Commission (San Francisco International Airport) (ASSURED GTY)
Unenhanced Rating A+(SPUR)Stable Affirmed
San Francisco City amp County Airport Commission (San Francisco International Airport)
Unenhanced Rating A+(SPUR)Stable Affirmed
Many issues are enhanced by bond insurance
WWW STANDARDANDPOORSCOMRATINGS DIRECT OCTOBER 5 2017 8
1925121 I 300091ss1
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WWW STANDARDANDPOORSCOMRATINGSDIRECT OCTOBER 5 201 7 9
1925121 I 300097587
San Francisco City and County Airport Commission San Francisco International Airport Airport Joint Criteria Credit Profile
US$346385 mil 2nd series rev bnds (San Francisco Intl Arpt) ser 2017 A due 05012047
Long Term Rating A+Stable New
US$234675 mil 2nd series rev bnds (San Francisco Intl Arpt) ser 2017B due 05012047
Long Term Rating A+Stable New
US$15097 mil 2nd series rev rfdg bnds (San Francisco Intl Arpt) ser 2017D due 05012026
Long Term Rating A+Stable middot New
US$126135 mil 2nd series rev bnds (San Francisco Intl Arpt) ser 2018A due 05012024
Long Term Rating A+Stable New
US$46175 mil 2nd series rev bnds (San Francisco Intl Arpt) ser 2017C due 05012027
Long Term Rating A+Stable New
Rationale
SampP Global Ratings assigned its A+ long-term rating to San Francisco City and County Airport Commissions $346
million series 2017A (AMT) $235 million series 2017B (Non-AMT government purpose) $46 million series 2017C
(taxable) second series revenue bonds We also assigned our A+ long-term rating to the commissions $151 million
series 2017D (AMT) and $126 million series 2018A (AMT) second series revenue refunding bonds In addition SampP
Global Ratings affirmed its A+ long-term rating and underlying rating (SPUR) on the commissions other parity debt
outstanding Finally we affirmed our AA+A-1 +and AA+A-1 dual ratings on various other bonds outstanding
reflecting the application of our joint criteria assuming low correlation All bonds were issued for the San Francisco
International Airport (SFO) The outlook is stable
The commission will use bond proceeds to finance a portion (about $290 million) of costs to complete various projects
repay $300 million in commercial paper (CP) notes issued to finance capital projects refund about $310 million in
various bonds outstanding and fund termination payments ($139 million) for swaps associated with various refunded
bonds
The ratings reflect our view of the airports
bull Deep and diverse service area economy consisting of 88 million residents with strong income and education levels
middot a large and diverse employment base healthy tourism trends and strong job growth in recent years
bull Very strong enplanement trends that we expect will continue albeit at a slower pace
bull Growing high-yield origin and destination (OampD) market and strong market position with minimal competition for
international passengers in the Bay Area
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San Francisco City and County Airport Commission San Francisco International Airport Airport Joint Criteria
bull Large international hub designation with historically strong international traffic growth and capacity for expanded service
bull Good liquidity position with $376 million or 293 days of operational cash on hand as of unaudited fiscal 2017
bull Adequate-to-good debt service coverage (DSC) around 1 lx to 12x when excluding transfers from the contingency account and
bull Strong management team that we believe has been successful in controlling costs expanding and diversifying air
carrier service and maintaining strong financial metrics
Partly offsetting the above strengths in our view are the airports
bull Increasing leverage and significant additional capital needs most of which will be financed by additional bond proceeds
bull Current and projected high cost structure and
bull Risks related to concentration in its primary carrier United Airlines although SFO is an important hub to United and the airline has been making considerable investments at the airport
The bonds are secured by the net revenue of the airport Of total debt outstanding 10 is variable rate (synthetic
fixed) with 90 traditional fixed-rate debt Subsequent to the issuance of the aforementioned bonds the synthetic fixed
portion is projected to decline to just 6 of total pro forma debt The airport has $461 million of letter-of-credit
(LOC)-supported variable-rate debt all hedged by six interest rate swaps (mark-to-market $69 million unfavorable as
of Aug 31 2017) three of which will be terminated with $139 million in bond proceeds The swaps in our view pose
low contingent liquidity risk to the airport given the rating differential between the underlying rating on airports
revenue bonds and the rating triggers that would prompt the airport to make a swap termination payment if the swap
valuation at the time of the termination is not in the airports favor SFO has a $500 million CP program (subordinate
lien) that is backed by four irrevocable direct-pay LOCs Repayment of CP notes is a subordinate obligation to the
bonds As of Aug 31 2017 $330 million in CP was outstanding
The airport located 14 miles south of downtown San Francisco in an unincorporated area of San Mateo County
occupies approximately 2383 acres on a 5171-acre site (The remaining acreage is undeveloped tidelands) The
existing domestic passenger terminal complex totals 27 million square feet and the international terminal totals 25
million The airport has 91 operational gates and four runways and 13840 public (nonemployee) parking spaces The
airport is owned and operated as an enterprise department by the City and County of San Francisco A five-member
airport commission the members of which are appointed by the mayor to four-year terms governs the airport
SFO continues to record impressive enplanement growth rates especially considering the airports significant size and
activity levels Total enplanements increased a strong 49 to a record 269 million for unaudited fiscal 2017 on the
heels of 67 growth in audited fiscal 2016 Growth rates in fiscals years 2013 to 2015 were likewise good at 40
32 and 45 sequentially The compound annual growth rate for enplanements has been 46 during the past five
fiscal years The commission along with input from its consultant is forecasting enplanement growth of 27 for fiscal
2018 20 for fiscal 2019 17 for fiscal 2020 and 16 annually for 2021 to 2023 for a compound annual growth
rate (CAGR) of 19 for 2017 to 2023 We believe the forecast is conservative and achievable given recent trends and
the airports strong market position Likewise we view the financial forecast as reasonable given that it is based on the
enplanement forecast SFOs actual enplanement CAGR of 46 since 2013 has easily exceeded the CAGR forecast of
WWWSTANDARDANDPOORSCOMRATINGSDIRECT OCTOBER 5 2017 3
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San Francisco City and County Airport Commission San Francisco International Airport Airport Joint Criteria
18 in 2013 International enplanement growth has been even more impressive growing an average of 68 since
2012 with a forecast CAGR of 26 during 2017 to 2023
According to Airports Council International SFO was the seventh-most-active airport in the US for total passengers
served in 2016 and of the largest 10 airports was first in enplanement growth (42) over the 12-month period ended
Feb 28 2017 SFO is also the fourth-largest OampD airport in the US with 80 OampD traffic The large hub airport is
also one of the principal gateways for the Pacific traffic in the US SFO has the highest share of OampD traffic of any
connecting large hub airport We consider this large percentage of OampD traffic to be stable SFO was the
second-fastest-growing US international gateway in fiscal 2016
We believe that the large wealthy service area (almost 9 million people) with strong employment trends and a deep
and diverse economy has historically provided a robust traffic base and the area serves as a popular tourist and
convention destination The San Francisco Bay Area is the fifth-most-populous combined statistical area (CSA) in the
US and had a very low 40 unemployment rate as of June 2017 below that of the state ( 4 7) and US (44) Per
capita effective buying income (EBI) for San Francisco County is 85 above the national average with that of the San
Francisco CSA 50 above The San Francisco CSA led the 10 largest CSAs for per capita EBI for 2015 per capita EBI
growth from 2010 to 2015 employment growth from 2010 to 2016 and median home prices in 2017 Leading
industries in the regional economy include high tech social media health care biotechnology finance foreign trade
and higher education Tourism is also a major driver of the economy with 252 million visitors for San Francisco alone
in 2016 driving the hotel occupancy rate up to 88
In fiscal 2017 52 passenger and six cargo-only airlines served the airport United and United Express accounted for
what we consider a concentrated 44 of total enplanements in fiscal 2017 (and 24 of operating revenue in fiscal
2016) with Virgin America accounting for 93 and American Airlines (including US Airways) accounting for 82
Overall the leading 10 airlines accounted for 86 of enplanements in fiscal 2017 In terms of international
enplanements United represented 310 in fiscal 2017 with Air Canada second at 76 Domestic traffic has shown
impressive growth in our opinion particularly in the past five years Management attributes this growth primarily to
the introduction of service in fiscal 2007 by three low-cost carriers (LCCs)--Southwest Airlines JetBlue and Virgin
America--that grew to 19 of the market in fiscal 2016 from 6 in fiscal 2007 SFO provided nonstop service to 84
domestic and 49 international destinations in fiscal 2017 both figures having steadily grown over the years A total of
33 new average daily flights were added in 2017 alone including five international flights United Airlines commitment
to SFO is very strong with continued long-term investments being made and SFO gaining the largest share of Uniteds
international capacity growth since 2010
In terms of competition SFO is the second-largest international gateway on the West Coast and has a very strong
competitive position in the San Francisco Bay Area versus Oakland International Airport (OAK) and San Jose
International (SJC) not only for domestic traffic (enplanement and deplanements) but even more so for international
The domestic market share for the airport was 64 for fiscal 2017 and 91 for international traffic or 69 overall
SFOs market share has remained strong and relatively steady although it has dipped slightly since fiscal 2014 when it
was near 71 given relatively stronger traffic growth at OAK and SJC
The airline use-and-lease agreements between the airport and 44 signatory airlines took effect July 1 2011 The term
WWWSTANDARDANDPOORSCOMRATINGSDIRECT OCTOBER 5 2017 4
1925121 I 300097587
San Francisco City and County Airport Commission San Francisco International Airport Afrport joint Criteria
is 10 years and the agreements include a residual cost rate-setting methodology airline review of capital projects
common-use facilities in the international terminal and annual service payments to the city The international terminal
is joint use but the domestic terminals are a mixture of preferential joint and common use--not exclusive
use-allowing airport management to optimize gate utilization We consider the use-and-lease agreements credit
neutral
The airports capital improvement plan (CIP) approved on Sept 5 2017 is very sizable and a credit risk but we also
recognize the need to add gates and to expand and modernize terminal space to meet growing demand Given the
projects importance to the airport and the airlines and given its size the commission is increasingly focusing on risk
mitigation and avoidance of cost overruns The airports often experiences gate constraints during peak periods with
passenger traffic up 46 over the past 10 years In addition to meeting growth needs the CIP aims to address safety
and security improve information technology infrastructure improve the customer experience and maintain the
airports strong competitive position The CIP includes $62 billion in spending over the next 10 years (fiscal years
2018 to 2027) The CIP was recently broken down further into two components the Ascent Program--Phase I and the
fiscal 2018 Infrastructure Projects Plan The Ascent Program--Phase I consists of projects from the fiscal 2017 capital
plan plus a new $739 million contingency reserve to cover unanticipated project needs The Infrastructure Project Plan
includes projects that address newly identified needs Capital needs have grown considerable recently in fiscal 2016
the airports 10-year CIP (fiscal years 2016 through 2025) totaled $45 billion Subsequent phases of the Ascent
Program are likely to be derived from the commissions Airport Development Plan (ADP) now complete and under
environmental review
Including $12 billion in prior years spending the overall CIP totals $74 billion The forecast indicates that
approximately $65 billion in new airport revenue bonds (including the series 2017 bonds) will be issued through 2022
to fund $5 5 billion or 73 of the CIP with prior funding covering $12 billion or 16 The remaining 12 will be
covered by grants future rev~nue bonds beyond 2022 and other sources such as hotel bonds and special facility
bonds Annual borrowing will range from $11 billion to $19 billion We take a negative view of the significant debt
that the airport will need to issue to finance the capital plan We will monitor the effects that these projects may have
on the airports financial metrics We do consider the airports proven record of delivering large capital projects on
time and on budget to be a mitigating factor
Financial performa~ce has been very consistent over the past several years as a result of conservative planning and
forecasting prudent expenditure management and strong activity levels at the airport DSC as calculated in the
indenture (including rolling coverage and pledged passenger facility charge or PFC revenue) was an estimated 137x
in unaudited fiscal 2017 down slightly from 144x in audited fiscal 2016 Pledged PFC revenue designed to pay debt
service in unaudited fiscal 2017 totaled $234 million Excluding the transfer from the contingency account coverage
was 120x in audited fiscal 2016 and 114x in unaudited fiscal 2017 and is forecast to decline to 109x in fiscal 2023
DSC at these levels it is not a significant credit risk in our view given the residual airline agreements We view
managements financial forecast and its assumptions as reasonable largely given our similar view on managements
traffic forecast
Audited 2016 unrestricted cash and investments totaled $412 million equal to 339 days operations which we consider
WWWSTANDARDANDPOORSCOMRATINGSDIRECT OCTOBER 5 2017 5
1926721 I 300097587
San Francisco City and County Airport Commission San Francisco International Airport Airport Joint Criteria
good Estimates for fiscal 2017 indicate a decline to $376 million in unrestricted cash or 293 days of operations
Management reports that overall cash balances will increase in fiscal 2018 as a result of a $28 million addition to its
contingency fund Liquidity is supplemented by CP capacity estimated at $4 70 million once the aforementioned bonds
are issued
The airport has a high cost structure in our opinion The cost per enplanement (CPE) was estimated at $1646 in fiscal
2017 down slightly from $1652 in audited fiscal 2016 Managements projections indicate the CPE will rise to $2642
in fiscal 2023 While we consider this rate to be high we understand that this is an average rate for all carriers at the
airport and that based on the facility used (eg the international terminal or a domestic terminal) the rate is higher or
lower This is important when considering the effect of the cost on certain airlines service decisions In addition
strong nonairline revenue growth in recent years has helped to contain CPE non-airline revenue has almost doubled
since 2007 We also believe that actual CPE figures will likely be lower than forecast because in our view
enplanement levels will likely exceed conservatively forecast figures Management also continues to control costs and
make the airport more competitive by increasing concession revenue (especially as planned for Terminal 1) and
attracting new carriers and service The airports debt per enplanement is also high in our view at $179 as of fiscal
2016 With the net effect of the planned issuance of an additional $65 billion and some principal amortization
management forecasts debt per enplanement for fiscal 2023 at $325 which we consider very high
Outlook
The stable outlook reflects our anticipation that United Airlines will continue to operate a major hub at SFO passenger
demand will remain stable and liquidity will remain good The prudent implementation of a capital plan that maintains
managements estimates of additional debt will also be an important rating factor in our opinion
Upside scenario
Given our view of SFOs significant additional debt needs and current debt profile we do not expect to raise the ratings
during the next two years
Downside scenario
We could lower the rating if enplanements decline materially reducing the airports ability to manage rising debt or if
the airports DSC significantly declines on a sustained basis
Specific Capital Improvement Projects
Significant projects in the Ascent Program--Phase I of the CIP include the renovation of Terminal 1 at a projected cost
of $23 billiqn the renovation and reconfiguration of the eastern and western side of Terminal 3 ($10 billion) and the
International Terminal Refresh project to improve the terminal operational efficiencies ($272 million) The commission
is also constructing a multistory office block for its own administrative uses and other tenants and a project dedicated
to increasing customer experience and concession revenue opportunities Major groundside projects include a new
airport-owned hotel and hotel AirTrain station to be funded by $278 million in hotel bonds and $260 million in hotel
special facility bonds The hotel is slated to open in summer 2019 An additional $202 million project includes an
WWWSTANDARDANDPOORSCOMRATINGSDIRECT OCTOBER 5 2017 6
1926721 I 300097587
San Francisco City and County Airport Commission San Francisco International Airport Airport joint Criteria
extension of the AirTrain system to connect to the existing and new long-term parking garages and the new long-term
parking garage itself ($161 million) The balance of projects includes projects geared toward safety and security
technology utility and energy efficiency projects and taxiway improvements Major projects in the Infrastructure
Projects Plan include net jet fuel storage tanks ($52 million) and various airfield improvements
Bond Provisions
The bonds are secured by the airports net revenue and are issued under the 1991 resolution We consider the bond
provisions credit neutral Net revenue includes that which the commission earns from operating the airport in
accordance with generally accepted accounting principles but explicitly excludes special facility revenue and PFCs
unless specifically pledged The airport has $48 billion in parity debt outstanding
The 1991 resolution allows for the establishment of a contingency account that can be used for debt service
operations and maintenance and certain other airport costs The commission is not obligated to replenish this account
in the event funds are withdrawn The balance in this account as of June 30 2017 was $95 million (equal to about 22
of maximum annual debt service or MADS) The commission plans to increase the balance of the contingency fund by
$1285 million in future years from proceeds of the 2017 bonds as well as from future bonds Funds in this account are
deposited as of the last business day of each fiscal year and can be applied to satisfy the coverage requirement under
the rate covenant
The rate covenant requires net revenue in each year to be at least sufficient to pay debt service and all required annual
service payments to the city In addition together with any transfer from the contingency account net revenue must
equal at least 125x debt service on the 1991 resolution bonds This contingency account transfer effectively allows for
rolling coverage on the bonds In years in which amounts owed after debt service decrease relative to the size of debt
service actual coverage from current-year rates and charges can fall and be offset by the contingency fund The size of
the transfer is limited to 25 of MADS for purposes of calculating the additional bonds test (ABT) While the
contingency account may be used to meet the rate covenant we expect (and management projects) that generating
revenue will equal at least lx debt service from rates and charges without the use of the contingency account If the
contingency fund were to be drawn down for any reason the commission has the authority to set rates and charges to
125x debt service and continue to do so until the contingency fund is rebuilt if ever
The ABT requires that projected net revenue will meet the rate covenant for the proposed debt or that historical
revenue with the transfer will cover outstanding and proposed debt by 125x This test as with nearly all other tests for
airports in the US allows for the use of projected revenue which in essence means some demonstration of
compliance of the 125x multiple by an airport consultant
In terms of the debt service reserve funds the 1991 master resolution established the original reserve account which
provides additional security for all bonds outstanding under the 1991 master resolution except for issues 36A 36B
36C and the series 2009C 2010A and 2010D bonds The reserve requirement for the original reserve account is
MADS The series 2009C and 20 lOD bonds are secured by a separate 2009 reserve account Issue 36A 36B 36C and
the 201 OA bonds do not have a reserve account but are secured by LOCs The proposed series 2017 A and 2017B
WWWSTANDARDANDPOORSCOMRATINGSDIRECT OCTOBER 5 2017 7
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San Francisco City and County Airport Commission San Francisco International Airport Airport Joint Criteria
bonds will also be secured by the original reserve account but the proposed series 2017C 2017D and 2018A bonds
are contemplated to be secured by a new 2017 reserve account with the reserve requirement at the least of 10 of
par MADS or 125 of average annual debt service
Ratings Detail (As Of October 5 2017)
San Francisco City amp Coty Arpt Comm California
San Francisco Intl Arpt California
San Francisco City amp Cnty Arpt Comm (San Francisco International Airport) (wrap of insured) (FGIC amp AGM) (SEC MKT)
Unenhanced Rating A+(SPUR)Stable Affirmed
San Francisco City amp Cnty Arpt Comm (San Francisco Intl Arpt) arpt rev rfdg bnds rmktd
Long Term Rating A+Stable Affirmed
San Francisco City amp Cnty Arpt Comm (San Francisco Intl Arpt) AIRPORTS
Long Term Rating A+Stable Affirmed
San Francisco City amp Cnty Arpt Comm (San Francisco Intl Arpt) JOINTCRIT
Long Term Rating AA+ I A-1 Affirmed
Unenhanced Rating A+(SPUR)Stable Affirmed
San Francisco City amp County Airport Commission (San Francisco International Airport)
Long Term Rating A+Stable Affirmed
San Francisco City amp County Airport Commission (San Francisco International Airport) VRDB
Long Term Rating AA+ I A-1 + Affirmed
Unenhanced Rating A+(SPUR)Stable Affirmed
San Francisco City amp County Airport Commission (San Francisco International Airport) VRDB
Long Term Rating AA+ I A-1 Affirmed
Unenhanced Rating A+(SPUR)Stable Affirmed
San Francisco City amp County Airport Commission (San Francisco International Airport) VRDB
Long Term Rating AA+ I A-1 Affirmed
Unenhanced Rating A+(SPUR)Stable Affirmed
San Francisco City amp County Airport Commission (San Francisco International Airport) VRDB (ASSURED GTY)
Long Term Rating AANRStable Affirmed
Unenhanced Rating A+(SPUR)Stable Affirmed
San Francisco City amp County Airport Commission (San Francisco International Airport) VRDB (ASSURED GTY)
Long Term Rating AANRStable Affirmed
Unenhanced Rating A+(SPUR)Stable Affirmed
San Francisco City amp County Airport Commission (San Francisco International Airport) VRDB 368
Long Term Rating AA+ I A-1 Affirmed
Unenhanced Rating A+(SPUR)Stable Affirmed
San Francisco City amp County Airport Commission (San Francisco International Airport) (ASSURED GTY)
Unenhanced Rating A+(SPUR)Stable Affirmed
San Francisco City amp County Airport Commission (San Francisco International Airport)
Unenhanced Rating A+(SPUR)Stable Affirmed
Many issues are enhanced by bond insurance
WWW STANDARDANDPOORSCOMRATINGS DIRECT OCTOBER 5 2017 8
1925121 I 300091ss1
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WWW STANDARDANDPOORSCOMRATINGSDIRECT OCTOBER 5 201 7 9
1925121 I 300097587
San Francisco City and County Airport Commission San Francisco International Airport Airport Joint Criteria
bull Large international hub designation with historically strong international traffic growth and capacity for expanded service
bull Good liquidity position with $376 million or 293 days of operational cash on hand as of unaudited fiscal 2017
bull Adequate-to-good debt service coverage (DSC) around 1 lx to 12x when excluding transfers from the contingency account and
bull Strong management team that we believe has been successful in controlling costs expanding and diversifying air
carrier service and maintaining strong financial metrics
Partly offsetting the above strengths in our view are the airports
bull Increasing leverage and significant additional capital needs most of which will be financed by additional bond proceeds
bull Current and projected high cost structure and
bull Risks related to concentration in its primary carrier United Airlines although SFO is an important hub to United and the airline has been making considerable investments at the airport
The bonds are secured by the net revenue of the airport Of total debt outstanding 10 is variable rate (synthetic
fixed) with 90 traditional fixed-rate debt Subsequent to the issuance of the aforementioned bonds the synthetic fixed
portion is projected to decline to just 6 of total pro forma debt The airport has $461 million of letter-of-credit
(LOC)-supported variable-rate debt all hedged by six interest rate swaps (mark-to-market $69 million unfavorable as
of Aug 31 2017) three of which will be terminated with $139 million in bond proceeds The swaps in our view pose
low contingent liquidity risk to the airport given the rating differential between the underlying rating on airports
revenue bonds and the rating triggers that would prompt the airport to make a swap termination payment if the swap
valuation at the time of the termination is not in the airports favor SFO has a $500 million CP program (subordinate
lien) that is backed by four irrevocable direct-pay LOCs Repayment of CP notes is a subordinate obligation to the
bonds As of Aug 31 2017 $330 million in CP was outstanding
The airport located 14 miles south of downtown San Francisco in an unincorporated area of San Mateo County
occupies approximately 2383 acres on a 5171-acre site (The remaining acreage is undeveloped tidelands) The
existing domestic passenger terminal complex totals 27 million square feet and the international terminal totals 25
million The airport has 91 operational gates and four runways and 13840 public (nonemployee) parking spaces The
airport is owned and operated as an enterprise department by the City and County of San Francisco A five-member
airport commission the members of which are appointed by the mayor to four-year terms governs the airport
SFO continues to record impressive enplanement growth rates especially considering the airports significant size and
activity levels Total enplanements increased a strong 49 to a record 269 million for unaudited fiscal 2017 on the
heels of 67 growth in audited fiscal 2016 Growth rates in fiscals years 2013 to 2015 were likewise good at 40
32 and 45 sequentially The compound annual growth rate for enplanements has been 46 during the past five
fiscal years The commission along with input from its consultant is forecasting enplanement growth of 27 for fiscal
2018 20 for fiscal 2019 17 for fiscal 2020 and 16 annually for 2021 to 2023 for a compound annual growth
rate (CAGR) of 19 for 2017 to 2023 We believe the forecast is conservative and achievable given recent trends and
the airports strong market position Likewise we view the financial forecast as reasonable given that it is based on the
enplanement forecast SFOs actual enplanement CAGR of 46 since 2013 has easily exceeded the CAGR forecast of
WWWSTANDARDANDPOORSCOMRATINGSDIRECT OCTOBER 5 2017 3
1925121 I 300097587
San Francisco City and County Airport Commission San Francisco International Airport Airport Joint Criteria
18 in 2013 International enplanement growth has been even more impressive growing an average of 68 since
2012 with a forecast CAGR of 26 during 2017 to 2023
According to Airports Council International SFO was the seventh-most-active airport in the US for total passengers
served in 2016 and of the largest 10 airports was first in enplanement growth (42) over the 12-month period ended
Feb 28 2017 SFO is also the fourth-largest OampD airport in the US with 80 OampD traffic The large hub airport is
also one of the principal gateways for the Pacific traffic in the US SFO has the highest share of OampD traffic of any
connecting large hub airport We consider this large percentage of OampD traffic to be stable SFO was the
second-fastest-growing US international gateway in fiscal 2016
We believe that the large wealthy service area (almost 9 million people) with strong employment trends and a deep
and diverse economy has historically provided a robust traffic base and the area serves as a popular tourist and
convention destination The San Francisco Bay Area is the fifth-most-populous combined statistical area (CSA) in the
US and had a very low 40 unemployment rate as of June 2017 below that of the state ( 4 7) and US (44) Per
capita effective buying income (EBI) for San Francisco County is 85 above the national average with that of the San
Francisco CSA 50 above The San Francisco CSA led the 10 largest CSAs for per capita EBI for 2015 per capita EBI
growth from 2010 to 2015 employment growth from 2010 to 2016 and median home prices in 2017 Leading
industries in the regional economy include high tech social media health care biotechnology finance foreign trade
and higher education Tourism is also a major driver of the economy with 252 million visitors for San Francisco alone
in 2016 driving the hotel occupancy rate up to 88
In fiscal 2017 52 passenger and six cargo-only airlines served the airport United and United Express accounted for
what we consider a concentrated 44 of total enplanements in fiscal 2017 (and 24 of operating revenue in fiscal
2016) with Virgin America accounting for 93 and American Airlines (including US Airways) accounting for 82
Overall the leading 10 airlines accounted for 86 of enplanements in fiscal 2017 In terms of international
enplanements United represented 310 in fiscal 2017 with Air Canada second at 76 Domestic traffic has shown
impressive growth in our opinion particularly in the past five years Management attributes this growth primarily to
the introduction of service in fiscal 2007 by three low-cost carriers (LCCs)--Southwest Airlines JetBlue and Virgin
America--that grew to 19 of the market in fiscal 2016 from 6 in fiscal 2007 SFO provided nonstop service to 84
domestic and 49 international destinations in fiscal 2017 both figures having steadily grown over the years A total of
33 new average daily flights were added in 2017 alone including five international flights United Airlines commitment
to SFO is very strong with continued long-term investments being made and SFO gaining the largest share of Uniteds
international capacity growth since 2010
In terms of competition SFO is the second-largest international gateway on the West Coast and has a very strong
competitive position in the San Francisco Bay Area versus Oakland International Airport (OAK) and San Jose
International (SJC) not only for domestic traffic (enplanement and deplanements) but even more so for international
The domestic market share for the airport was 64 for fiscal 2017 and 91 for international traffic or 69 overall
SFOs market share has remained strong and relatively steady although it has dipped slightly since fiscal 2014 when it
was near 71 given relatively stronger traffic growth at OAK and SJC
The airline use-and-lease agreements between the airport and 44 signatory airlines took effect July 1 2011 The term
WWWSTANDARDANDPOORSCOMRATINGSDIRECT OCTOBER 5 2017 4
1925121 I 300097587
San Francisco City and County Airport Commission San Francisco International Airport Afrport joint Criteria
is 10 years and the agreements include a residual cost rate-setting methodology airline review of capital projects
common-use facilities in the international terminal and annual service payments to the city The international terminal
is joint use but the domestic terminals are a mixture of preferential joint and common use--not exclusive
use-allowing airport management to optimize gate utilization We consider the use-and-lease agreements credit
neutral
The airports capital improvement plan (CIP) approved on Sept 5 2017 is very sizable and a credit risk but we also
recognize the need to add gates and to expand and modernize terminal space to meet growing demand Given the
projects importance to the airport and the airlines and given its size the commission is increasingly focusing on risk
mitigation and avoidance of cost overruns The airports often experiences gate constraints during peak periods with
passenger traffic up 46 over the past 10 years In addition to meeting growth needs the CIP aims to address safety
and security improve information technology infrastructure improve the customer experience and maintain the
airports strong competitive position The CIP includes $62 billion in spending over the next 10 years (fiscal years
2018 to 2027) The CIP was recently broken down further into two components the Ascent Program--Phase I and the
fiscal 2018 Infrastructure Projects Plan The Ascent Program--Phase I consists of projects from the fiscal 2017 capital
plan plus a new $739 million contingency reserve to cover unanticipated project needs The Infrastructure Project Plan
includes projects that address newly identified needs Capital needs have grown considerable recently in fiscal 2016
the airports 10-year CIP (fiscal years 2016 through 2025) totaled $45 billion Subsequent phases of the Ascent
Program are likely to be derived from the commissions Airport Development Plan (ADP) now complete and under
environmental review
Including $12 billion in prior years spending the overall CIP totals $74 billion The forecast indicates that
approximately $65 billion in new airport revenue bonds (including the series 2017 bonds) will be issued through 2022
to fund $5 5 billion or 73 of the CIP with prior funding covering $12 billion or 16 The remaining 12 will be
covered by grants future rev~nue bonds beyond 2022 and other sources such as hotel bonds and special facility
bonds Annual borrowing will range from $11 billion to $19 billion We take a negative view of the significant debt
that the airport will need to issue to finance the capital plan We will monitor the effects that these projects may have
on the airports financial metrics We do consider the airports proven record of delivering large capital projects on
time and on budget to be a mitigating factor
Financial performa~ce has been very consistent over the past several years as a result of conservative planning and
forecasting prudent expenditure management and strong activity levels at the airport DSC as calculated in the
indenture (including rolling coverage and pledged passenger facility charge or PFC revenue) was an estimated 137x
in unaudited fiscal 2017 down slightly from 144x in audited fiscal 2016 Pledged PFC revenue designed to pay debt
service in unaudited fiscal 2017 totaled $234 million Excluding the transfer from the contingency account coverage
was 120x in audited fiscal 2016 and 114x in unaudited fiscal 2017 and is forecast to decline to 109x in fiscal 2023
DSC at these levels it is not a significant credit risk in our view given the residual airline agreements We view
managements financial forecast and its assumptions as reasonable largely given our similar view on managements
traffic forecast
Audited 2016 unrestricted cash and investments totaled $412 million equal to 339 days operations which we consider
WWWSTANDARDANDPOORSCOMRATINGSDIRECT OCTOBER 5 2017 5
1926721 I 300097587
San Francisco City and County Airport Commission San Francisco International Airport Airport Joint Criteria
good Estimates for fiscal 2017 indicate a decline to $376 million in unrestricted cash or 293 days of operations
Management reports that overall cash balances will increase in fiscal 2018 as a result of a $28 million addition to its
contingency fund Liquidity is supplemented by CP capacity estimated at $4 70 million once the aforementioned bonds
are issued
The airport has a high cost structure in our opinion The cost per enplanement (CPE) was estimated at $1646 in fiscal
2017 down slightly from $1652 in audited fiscal 2016 Managements projections indicate the CPE will rise to $2642
in fiscal 2023 While we consider this rate to be high we understand that this is an average rate for all carriers at the
airport and that based on the facility used (eg the international terminal or a domestic terminal) the rate is higher or
lower This is important when considering the effect of the cost on certain airlines service decisions In addition
strong nonairline revenue growth in recent years has helped to contain CPE non-airline revenue has almost doubled
since 2007 We also believe that actual CPE figures will likely be lower than forecast because in our view
enplanement levels will likely exceed conservatively forecast figures Management also continues to control costs and
make the airport more competitive by increasing concession revenue (especially as planned for Terminal 1) and
attracting new carriers and service The airports debt per enplanement is also high in our view at $179 as of fiscal
2016 With the net effect of the planned issuance of an additional $65 billion and some principal amortization
management forecasts debt per enplanement for fiscal 2023 at $325 which we consider very high
Outlook
The stable outlook reflects our anticipation that United Airlines will continue to operate a major hub at SFO passenger
demand will remain stable and liquidity will remain good The prudent implementation of a capital plan that maintains
managements estimates of additional debt will also be an important rating factor in our opinion
Upside scenario
Given our view of SFOs significant additional debt needs and current debt profile we do not expect to raise the ratings
during the next two years
Downside scenario
We could lower the rating if enplanements decline materially reducing the airports ability to manage rising debt or if
the airports DSC significantly declines on a sustained basis
Specific Capital Improvement Projects
Significant projects in the Ascent Program--Phase I of the CIP include the renovation of Terminal 1 at a projected cost
of $23 billiqn the renovation and reconfiguration of the eastern and western side of Terminal 3 ($10 billion) and the
International Terminal Refresh project to improve the terminal operational efficiencies ($272 million) The commission
is also constructing a multistory office block for its own administrative uses and other tenants and a project dedicated
to increasing customer experience and concession revenue opportunities Major groundside projects include a new
airport-owned hotel and hotel AirTrain station to be funded by $278 million in hotel bonds and $260 million in hotel
special facility bonds The hotel is slated to open in summer 2019 An additional $202 million project includes an
WWWSTANDARDANDPOORSCOMRATINGSDIRECT OCTOBER 5 2017 6
1926721 I 300097587
San Francisco City and County Airport Commission San Francisco International Airport Airport joint Criteria
extension of the AirTrain system to connect to the existing and new long-term parking garages and the new long-term
parking garage itself ($161 million) The balance of projects includes projects geared toward safety and security
technology utility and energy efficiency projects and taxiway improvements Major projects in the Infrastructure
Projects Plan include net jet fuel storage tanks ($52 million) and various airfield improvements
Bond Provisions
The bonds are secured by the airports net revenue and are issued under the 1991 resolution We consider the bond
provisions credit neutral Net revenue includes that which the commission earns from operating the airport in
accordance with generally accepted accounting principles but explicitly excludes special facility revenue and PFCs
unless specifically pledged The airport has $48 billion in parity debt outstanding
The 1991 resolution allows for the establishment of a contingency account that can be used for debt service
operations and maintenance and certain other airport costs The commission is not obligated to replenish this account
in the event funds are withdrawn The balance in this account as of June 30 2017 was $95 million (equal to about 22
of maximum annual debt service or MADS) The commission plans to increase the balance of the contingency fund by
$1285 million in future years from proceeds of the 2017 bonds as well as from future bonds Funds in this account are
deposited as of the last business day of each fiscal year and can be applied to satisfy the coverage requirement under
the rate covenant
The rate covenant requires net revenue in each year to be at least sufficient to pay debt service and all required annual
service payments to the city In addition together with any transfer from the contingency account net revenue must
equal at least 125x debt service on the 1991 resolution bonds This contingency account transfer effectively allows for
rolling coverage on the bonds In years in which amounts owed after debt service decrease relative to the size of debt
service actual coverage from current-year rates and charges can fall and be offset by the contingency fund The size of
the transfer is limited to 25 of MADS for purposes of calculating the additional bonds test (ABT) While the
contingency account may be used to meet the rate covenant we expect (and management projects) that generating
revenue will equal at least lx debt service from rates and charges without the use of the contingency account If the
contingency fund were to be drawn down for any reason the commission has the authority to set rates and charges to
125x debt service and continue to do so until the contingency fund is rebuilt if ever
The ABT requires that projected net revenue will meet the rate covenant for the proposed debt or that historical
revenue with the transfer will cover outstanding and proposed debt by 125x This test as with nearly all other tests for
airports in the US allows for the use of projected revenue which in essence means some demonstration of
compliance of the 125x multiple by an airport consultant
In terms of the debt service reserve funds the 1991 master resolution established the original reserve account which
provides additional security for all bonds outstanding under the 1991 master resolution except for issues 36A 36B
36C and the series 2009C 2010A and 2010D bonds The reserve requirement for the original reserve account is
MADS The series 2009C and 20 lOD bonds are secured by a separate 2009 reserve account Issue 36A 36B 36C and
the 201 OA bonds do not have a reserve account but are secured by LOCs The proposed series 2017 A and 2017B
WWWSTANDARDANDPOORSCOMRATINGSDIRECT OCTOBER 5 2017 7
192672 1 I 300097587
San Francisco City and County Airport Commission San Francisco International Airport Airport Joint Criteria
bonds will also be secured by the original reserve account but the proposed series 2017C 2017D and 2018A bonds
are contemplated to be secured by a new 2017 reserve account with the reserve requirement at the least of 10 of
par MADS or 125 of average annual debt service
Ratings Detail (As Of October 5 2017)
San Francisco City amp Coty Arpt Comm California
San Francisco Intl Arpt California
San Francisco City amp Cnty Arpt Comm (San Francisco International Airport) (wrap of insured) (FGIC amp AGM) (SEC MKT)
Unenhanced Rating A+(SPUR)Stable Affirmed
San Francisco City amp Cnty Arpt Comm (San Francisco Intl Arpt) arpt rev rfdg bnds rmktd
Long Term Rating A+Stable Affirmed
San Francisco City amp Cnty Arpt Comm (San Francisco Intl Arpt) AIRPORTS
Long Term Rating A+Stable Affirmed
San Francisco City amp Cnty Arpt Comm (San Francisco Intl Arpt) JOINTCRIT
Long Term Rating AA+ I A-1 Affirmed
Unenhanced Rating A+(SPUR)Stable Affirmed
San Francisco City amp County Airport Commission (San Francisco International Airport)
Long Term Rating A+Stable Affirmed
San Francisco City amp County Airport Commission (San Francisco International Airport) VRDB
Long Term Rating AA+ I A-1 + Affirmed
Unenhanced Rating A+(SPUR)Stable Affirmed
San Francisco City amp County Airport Commission (San Francisco International Airport) VRDB
Long Term Rating AA+ I A-1 Affirmed
Unenhanced Rating A+(SPUR)Stable Affirmed
San Francisco City amp County Airport Commission (San Francisco International Airport) VRDB
Long Term Rating AA+ I A-1 Affirmed
Unenhanced Rating A+(SPUR)Stable Affirmed
San Francisco City amp County Airport Commission (San Francisco International Airport) VRDB (ASSURED GTY)
Long Term Rating AANRStable Affirmed
Unenhanced Rating A+(SPUR)Stable Affirmed
San Francisco City amp County Airport Commission (San Francisco International Airport) VRDB (ASSURED GTY)
Long Term Rating AANRStable Affirmed
Unenhanced Rating A+(SPUR)Stable Affirmed
San Francisco City amp County Airport Commission (San Francisco International Airport) VRDB 368
Long Term Rating AA+ I A-1 Affirmed
Unenhanced Rating A+(SPUR)Stable Affirmed
San Francisco City amp County Airport Commission (San Francisco International Airport) (ASSURED GTY)
Unenhanced Rating A+(SPUR)Stable Affirmed
San Francisco City amp County Airport Commission (San Francisco International Airport)
Unenhanced Rating A+(SPUR)Stable Affirmed
Many issues are enhanced by bond insurance
WWW STANDARDANDPOORSCOMRATINGS DIRECT OCTOBER 5 2017 8
1925121 I 300091ss1
Copyrightcopy 2017 by Standard amp Poors Financial Services LLC All rights reserved
No content (including ratings credit-related analyses and data valuations model software or other application or output therefrom) or any part thereof (Content) may be modified reverse engineered reproduced or distributed in any form by any means or stored in a database or retrieval system without the prior written permission of Standard amp Poors Financial Services LLC or its affiliates (collectively SampP) The Content shall not be used for any unlawful or unauthorized purposes SampP and any third-party providers as well as their directors officers shareholders employees or agents (collectively SampP Parties) do not guarantee the accuracy completeness timeliness or availability of the Content SampP Parties are not responsible for any errors or omissions (negligent or otherwise) regardless of the cause for the results obtained from the use of the Content or for the security or maintenance of any data input by the user The Content is provided on an as is basis SampP PARTIES DISCLAIM ANY AND ALL EXPRESS OR IMPLIED WARRANTIES INCLUDING BUT NOT LIMITED TO ANY WARRANTIES OF MERCHANTABILITY OR FITNESS FOR A PARTICULAR PURPOSE OR USE FREEDOM FROM BUGS SOFTWARE ERRORS OR DEFECTS THAT THE CONTENTS FUNCTIONING WILL BE UNINTERRUPTED OR THAT THE CONTENT WILL OPERATE WITH ANY SOFTWARE OR HARDWARE CONFIGURATION In no event shall SampP Parties be liable to any party for any direct indirect incidental exemplary compensatory punitive special or consequential damages costs expenses legal fees or losses (including without limitation lost income or Jost profits and opportunity costs or losses caused by negligence) in connection with any use of the Content even if advised of the possibility of such damages
Credit-related and other analyses including ratings and statements in the Content are statements of opinion as of the date they are expressed and not statements of fact SampPs opinions analyses and rating acknowledgment decisions (described below) are not recommendations to purchase hold or sell any securities or to make any investment decisions and do not address the suitability of any security SampP assumes no obligation to update the Content following publication in any form or format The Content should not be relied on and is not a substitute for the skill judgment and experience of the user its management employees advisors andor clients when making investment and other business decisions SampP does not act as a fiduciary or an investment advisor except where registered as such While SampP has obtained information from sources it believes to be reliable SampP does not perform an audit and undertakes no duty of due diligence or independent verification of any information it receives
To the extent that regulatory authorities allow a rating agency to acknowledge in one jurisdiction a rating issued in another jurisdiction for certain regulatory purposes SampP reserves the right to assign withdraw or suspend such acknowledgement at any time and in its sole discretion SampP Parties disclaim any duty whatsoever arising out of the assignment withdrawal or suspension of an acknowledgment as well as any liability for any damage alleged to have been suffered on account thereof
SampP keeps certain activities of its business units separate from each other in order to preserve the independence and objectivity of their respective activities As a result certain business units of SampP may have information that is not available to other SampP business units SampP has established policies and procedures to maintain the confidentiality of certain nonpublic information received in connection with each analytical process
SampP may receive compensation for its ratings and certain analyses normally from issuers or underwriters of securities or from obligors SampP reserves the right to disseminate its opinions and analyses SampPs public ratings and analyses are made available on its Web sites wwwstandardandpoorscom (free of charge) and wwwratingsdirectcom and wwwglobalcreditportalcom (subscription) and wwwspcapitaliqcom (subscription) and may be distributed through other means including via SampP publications and third-party redistributors Additional information about our ratings fees is available at wwwstandardandpoorscomusratingsfees
STANDARD amp POORS SampP and RATINGSDIRECT are registered trademarks of Standard amp Poors Financial Services LLC
WWW STANDARDANDPOORSCOMRATINGSDIRECT OCTOBER 5 201 7 9
1925121 I 300097587
San Francisco City and County Airport Commission San Francisco International Airport Airport Joint Criteria
18 in 2013 International enplanement growth has been even more impressive growing an average of 68 since
2012 with a forecast CAGR of 26 during 2017 to 2023
According to Airports Council International SFO was the seventh-most-active airport in the US for total passengers
served in 2016 and of the largest 10 airports was first in enplanement growth (42) over the 12-month period ended
Feb 28 2017 SFO is also the fourth-largest OampD airport in the US with 80 OampD traffic The large hub airport is
also one of the principal gateways for the Pacific traffic in the US SFO has the highest share of OampD traffic of any
connecting large hub airport We consider this large percentage of OampD traffic to be stable SFO was the
second-fastest-growing US international gateway in fiscal 2016
We believe that the large wealthy service area (almost 9 million people) with strong employment trends and a deep
and diverse economy has historically provided a robust traffic base and the area serves as a popular tourist and
convention destination The San Francisco Bay Area is the fifth-most-populous combined statistical area (CSA) in the
US and had a very low 40 unemployment rate as of June 2017 below that of the state ( 4 7) and US (44) Per
capita effective buying income (EBI) for San Francisco County is 85 above the national average with that of the San
Francisco CSA 50 above The San Francisco CSA led the 10 largest CSAs for per capita EBI for 2015 per capita EBI
growth from 2010 to 2015 employment growth from 2010 to 2016 and median home prices in 2017 Leading
industries in the regional economy include high tech social media health care biotechnology finance foreign trade
and higher education Tourism is also a major driver of the economy with 252 million visitors for San Francisco alone
in 2016 driving the hotel occupancy rate up to 88
In fiscal 2017 52 passenger and six cargo-only airlines served the airport United and United Express accounted for
what we consider a concentrated 44 of total enplanements in fiscal 2017 (and 24 of operating revenue in fiscal
2016) with Virgin America accounting for 93 and American Airlines (including US Airways) accounting for 82
Overall the leading 10 airlines accounted for 86 of enplanements in fiscal 2017 In terms of international
enplanements United represented 310 in fiscal 2017 with Air Canada second at 76 Domestic traffic has shown
impressive growth in our opinion particularly in the past five years Management attributes this growth primarily to
the introduction of service in fiscal 2007 by three low-cost carriers (LCCs)--Southwest Airlines JetBlue and Virgin
America--that grew to 19 of the market in fiscal 2016 from 6 in fiscal 2007 SFO provided nonstop service to 84
domestic and 49 international destinations in fiscal 2017 both figures having steadily grown over the years A total of
33 new average daily flights were added in 2017 alone including five international flights United Airlines commitment
to SFO is very strong with continued long-term investments being made and SFO gaining the largest share of Uniteds
international capacity growth since 2010
In terms of competition SFO is the second-largest international gateway on the West Coast and has a very strong
competitive position in the San Francisco Bay Area versus Oakland International Airport (OAK) and San Jose
International (SJC) not only for domestic traffic (enplanement and deplanements) but even more so for international
The domestic market share for the airport was 64 for fiscal 2017 and 91 for international traffic or 69 overall
SFOs market share has remained strong and relatively steady although it has dipped slightly since fiscal 2014 when it
was near 71 given relatively stronger traffic growth at OAK and SJC
The airline use-and-lease agreements between the airport and 44 signatory airlines took effect July 1 2011 The term
WWWSTANDARDANDPOORSCOMRATINGSDIRECT OCTOBER 5 2017 4
1925121 I 300097587
San Francisco City and County Airport Commission San Francisco International Airport Afrport joint Criteria
is 10 years and the agreements include a residual cost rate-setting methodology airline review of capital projects
common-use facilities in the international terminal and annual service payments to the city The international terminal
is joint use but the domestic terminals are a mixture of preferential joint and common use--not exclusive
use-allowing airport management to optimize gate utilization We consider the use-and-lease agreements credit
neutral
The airports capital improvement plan (CIP) approved on Sept 5 2017 is very sizable and a credit risk but we also
recognize the need to add gates and to expand and modernize terminal space to meet growing demand Given the
projects importance to the airport and the airlines and given its size the commission is increasingly focusing on risk
mitigation and avoidance of cost overruns The airports often experiences gate constraints during peak periods with
passenger traffic up 46 over the past 10 years In addition to meeting growth needs the CIP aims to address safety
and security improve information technology infrastructure improve the customer experience and maintain the
airports strong competitive position The CIP includes $62 billion in spending over the next 10 years (fiscal years
2018 to 2027) The CIP was recently broken down further into two components the Ascent Program--Phase I and the
fiscal 2018 Infrastructure Projects Plan The Ascent Program--Phase I consists of projects from the fiscal 2017 capital
plan plus a new $739 million contingency reserve to cover unanticipated project needs The Infrastructure Project Plan
includes projects that address newly identified needs Capital needs have grown considerable recently in fiscal 2016
the airports 10-year CIP (fiscal years 2016 through 2025) totaled $45 billion Subsequent phases of the Ascent
Program are likely to be derived from the commissions Airport Development Plan (ADP) now complete and under
environmental review
Including $12 billion in prior years spending the overall CIP totals $74 billion The forecast indicates that
approximately $65 billion in new airport revenue bonds (including the series 2017 bonds) will be issued through 2022
to fund $5 5 billion or 73 of the CIP with prior funding covering $12 billion or 16 The remaining 12 will be
covered by grants future rev~nue bonds beyond 2022 and other sources such as hotel bonds and special facility
bonds Annual borrowing will range from $11 billion to $19 billion We take a negative view of the significant debt
that the airport will need to issue to finance the capital plan We will monitor the effects that these projects may have
on the airports financial metrics We do consider the airports proven record of delivering large capital projects on
time and on budget to be a mitigating factor
Financial performa~ce has been very consistent over the past several years as a result of conservative planning and
forecasting prudent expenditure management and strong activity levels at the airport DSC as calculated in the
indenture (including rolling coverage and pledged passenger facility charge or PFC revenue) was an estimated 137x
in unaudited fiscal 2017 down slightly from 144x in audited fiscal 2016 Pledged PFC revenue designed to pay debt
service in unaudited fiscal 2017 totaled $234 million Excluding the transfer from the contingency account coverage
was 120x in audited fiscal 2016 and 114x in unaudited fiscal 2017 and is forecast to decline to 109x in fiscal 2023
DSC at these levels it is not a significant credit risk in our view given the residual airline agreements We view
managements financial forecast and its assumptions as reasonable largely given our similar view on managements
traffic forecast
Audited 2016 unrestricted cash and investments totaled $412 million equal to 339 days operations which we consider
WWWSTANDARDANDPOORSCOMRATINGSDIRECT OCTOBER 5 2017 5
1926721 I 300097587
San Francisco City and County Airport Commission San Francisco International Airport Airport Joint Criteria
good Estimates for fiscal 2017 indicate a decline to $376 million in unrestricted cash or 293 days of operations
Management reports that overall cash balances will increase in fiscal 2018 as a result of a $28 million addition to its
contingency fund Liquidity is supplemented by CP capacity estimated at $4 70 million once the aforementioned bonds
are issued
The airport has a high cost structure in our opinion The cost per enplanement (CPE) was estimated at $1646 in fiscal
2017 down slightly from $1652 in audited fiscal 2016 Managements projections indicate the CPE will rise to $2642
in fiscal 2023 While we consider this rate to be high we understand that this is an average rate for all carriers at the
airport and that based on the facility used (eg the international terminal or a domestic terminal) the rate is higher or
lower This is important when considering the effect of the cost on certain airlines service decisions In addition
strong nonairline revenue growth in recent years has helped to contain CPE non-airline revenue has almost doubled
since 2007 We also believe that actual CPE figures will likely be lower than forecast because in our view
enplanement levels will likely exceed conservatively forecast figures Management also continues to control costs and
make the airport more competitive by increasing concession revenue (especially as planned for Terminal 1) and
attracting new carriers and service The airports debt per enplanement is also high in our view at $179 as of fiscal
2016 With the net effect of the planned issuance of an additional $65 billion and some principal amortization
management forecasts debt per enplanement for fiscal 2023 at $325 which we consider very high
Outlook
The stable outlook reflects our anticipation that United Airlines will continue to operate a major hub at SFO passenger
demand will remain stable and liquidity will remain good The prudent implementation of a capital plan that maintains
managements estimates of additional debt will also be an important rating factor in our opinion
Upside scenario
Given our view of SFOs significant additional debt needs and current debt profile we do not expect to raise the ratings
during the next two years
Downside scenario
We could lower the rating if enplanements decline materially reducing the airports ability to manage rising debt or if
the airports DSC significantly declines on a sustained basis
Specific Capital Improvement Projects
Significant projects in the Ascent Program--Phase I of the CIP include the renovation of Terminal 1 at a projected cost
of $23 billiqn the renovation and reconfiguration of the eastern and western side of Terminal 3 ($10 billion) and the
International Terminal Refresh project to improve the terminal operational efficiencies ($272 million) The commission
is also constructing a multistory office block for its own administrative uses and other tenants and a project dedicated
to increasing customer experience and concession revenue opportunities Major groundside projects include a new
airport-owned hotel and hotel AirTrain station to be funded by $278 million in hotel bonds and $260 million in hotel
special facility bonds The hotel is slated to open in summer 2019 An additional $202 million project includes an
WWWSTANDARDANDPOORSCOMRATINGSDIRECT OCTOBER 5 2017 6
1926721 I 300097587
San Francisco City and County Airport Commission San Francisco International Airport Airport joint Criteria
extension of the AirTrain system to connect to the existing and new long-term parking garages and the new long-term
parking garage itself ($161 million) The balance of projects includes projects geared toward safety and security
technology utility and energy efficiency projects and taxiway improvements Major projects in the Infrastructure
Projects Plan include net jet fuel storage tanks ($52 million) and various airfield improvements
Bond Provisions
The bonds are secured by the airports net revenue and are issued under the 1991 resolution We consider the bond
provisions credit neutral Net revenue includes that which the commission earns from operating the airport in
accordance with generally accepted accounting principles but explicitly excludes special facility revenue and PFCs
unless specifically pledged The airport has $48 billion in parity debt outstanding
The 1991 resolution allows for the establishment of a contingency account that can be used for debt service
operations and maintenance and certain other airport costs The commission is not obligated to replenish this account
in the event funds are withdrawn The balance in this account as of June 30 2017 was $95 million (equal to about 22
of maximum annual debt service or MADS) The commission plans to increase the balance of the contingency fund by
$1285 million in future years from proceeds of the 2017 bonds as well as from future bonds Funds in this account are
deposited as of the last business day of each fiscal year and can be applied to satisfy the coverage requirement under
the rate covenant
The rate covenant requires net revenue in each year to be at least sufficient to pay debt service and all required annual
service payments to the city In addition together with any transfer from the contingency account net revenue must
equal at least 125x debt service on the 1991 resolution bonds This contingency account transfer effectively allows for
rolling coverage on the bonds In years in which amounts owed after debt service decrease relative to the size of debt
service actual coverage from current-year rates and charges can fall and be offset by the contingency fund The size of
the transfer is limited to 25 of MADS for purposes of calculating the additional bonds test (ABT) While the
contingency account may be used to meet the rate covenant we expect (and management projects) that generating
revenue will equal at least lx debt service from rates and charges without the use of the contingency account If the
contingency fund were to be drawn down for any reason the commission has the authority to set rates and charges to
125x debt service and continue to do so until the contingency fund is rebuilt if ever
The ABT requires that projected net revenue will meet the rate covenant for the proposed debt or that historical
revenue with the transfer will cover outstanding and proposed debt by 125x This test as with nearly all other tests for
airports in the US allows for the use of projected revenue which in essence means some demonstration of
compliance of the 125x multiple by an airport consultant
In terms of the debt service reserve funds the 1991 master resolution established the original reserve account which
provides additional security for all bonds outstanding under the 1991 master resolution except for issues 36A 36B
36C and the series 2009C 2010A and 2010D bonds The reserve requirement for the original reserve account is
MADS The series 2009C and 20 lOD bonds are secured by a separate 2009 reserve account Issue 36A 36B 36C and
the 201 OA bonds do not have a reserve account but are secured by LOCs The proposed series 2017 A and 2017B
WWWSTANDARDANDPOORSCOMRATINGSDIRECT OCTOBER 5 2017 7
192672 1 I 300097587
San Francisco City and County Airport Commission San Francisco International Airport Airport Joint Criteria
bonds will also be secured by the original reserve account but the proposed series 2017C 2017D and 2018A bonds
are contemplated to be secured by a new 2017 reserve account with the reserve requirement at the least of 10 of
par MADS or 125 of average annual debt service
Ratings Detail (As Of October 5 2017)
San Francisco City amp Coty Arpt Comm California
San Francisco Intl Arpt California
San Francisco City amp Cnty Arpt Comm (San Francisco International Airport) (wrap of insured) (FGIC amp AGM) (SEC MKT)
Unenhanced Rating A+(SPUR)Stable Affirmed
San Francisco City amp Cnty Arpt Comm (San Francisco Intl Arpt) arpt rev rfdg bnds rmktd
Long Term Rating A+Stable Affirmed
San Francisco City amp Cnty Arpt Comm (San Francisco Intl Arpt) AIRPORTS
Long Term Rating A+Stable Affirmed
San Francisco City amp Cnty Arpt Comm (San Francisco Intl Arpt) JOINTCRIT
Long Term Rating AA+ I A-1 Affirmed
Unenhanced Rating A+(SPUR)Stable Affirmed
San Francisco City amp County Airport Commission (San Francisco International Airport)
Long Term Rating A+Stable Affirmed
San Francisco City amp County Airport Commission (San Francisco International Airport) VRDB
Long Term Rating AA+ I A-1 + Affirmed
Unenhanced Rating A+(SPUR)Stable Affirmed
San Francisco City amp County Airport Commission (San Francisco International Airport) VRDB
Long Term Rating AA+ I A-1 Affirmed
Unenhanced Rating A+(SPUR)Stable Affirmed
San Francisco City amp County Airport Commission (San Francisco International Airport) VRDB
Long Term Rating AA+ I A-1 Affirmed
Unenhanced Rating A+(SPUR)Stable Affirmed
San Francisco City amp County Airport Commission (San Francisco International Airport) VRDB (ASSURED GTY)
Long Term Rating AANRStable Affirmed
Unenhanced Rating A+(SPUR)Stable Affirmed
San Francisco City amp County Airport Commission (San Francisco International Airport) VRDB (ASSURED GTY)
Long Term Rating AANRStable Affirmed
Unenhanced Rating A+(SPUR)Stable Affirmed
San Francisco City amp County Airport Commission (San Francisco International Airport) VRDB 368
Long Term Rating AA+ I A-1 Affirmed
Unenhanced Rating A+(SPUR)Stable Affirmed
San Francisco City amp County Airport Commission (San Francisco International Airport) (ASSURED GTY)
Unenhanced Rating A+(SPUR)Stable Affirmed
San Francisco City amp County Airport Commission (San Francisco International Airport)
Unenhanced Rating A+(SPUR)Stable Affirmed
Many issues are enhanced by bond insurance
WWW STANDARDANDPOORSCOMRATINGS DIRECT OCTOBER 5 2017 8
1925121 I 300091ss1
Copyrightcopy 2017 by Standard amp Poors Financial Services LLC All rights reserved
No content (including ratings credit-related analyses and data valuations model software or other application or output therefrom) or any part thereof (Content) may be modified reverse engineered reproduced or distributed in any form by any means or stored in a database or retrieval system without the prior written permission of Standard amp Poors Financial Services LLC or its affiliates (collectively SampP) The Content shall not be used for any unlawful or unauthorized purposes SampP and any third-party providers as well as their directors officers shareholders employees or agents (collectively SampP Parties) do not guarantee the accuracy completeness timeliness or availability of the Content SampP Parties are not responsible for any errors or omissions (negligent or otherwise) regardless of the cause for the results obtained from the use of the Content or for the security or maintenance of any data input by the user The Content is provided on an as is basis SampP PARTIES DISCLAIM ANY AND ALL EXPRESS OR IMPLIED WARRANTIES INCLUDING BUT NOT LIMITED TO ANY WARRANTIES OF MERCHANTABILITY OR FITNESS FOR A PARTICULAR PURPOSE OR USE FREEDOM FROM BUGS SOFTWARE ERRORS OR DEFECTS THAT THE CONTENTS FUNCTIONING WILL BE UNINTERRUPTED OR THAT THE CONTENT WILL OPERATE WITH ANY SOFTWARE OR HARDWARE CONFIGURATION In no event shall SampP Parties be liable to any party for any direct indirect incidental exemplary compensatory punitive special or consequential damages costs expenses legal fees or losses (including without limitation lost income or Jost profits and opportunity costs or losses caused by negligence) in connection with any use of the Content even if advised of the possibility of such damages
Credit-related and other analyses including ratings and statements in the Content are statements of opinion as of the date they are expressed and not statements of fact SampPs opinions analyses and rating acknowledgment decisions (described below) are not recommendations to purchase hold or sell any securities or to make any investment decisions and do not address the suitability of any security SampP assumes no obligation to update the Content following publication in any form or format The Content should not be relied on and is not a substitute for the skill judgment and experience of the user its management employees advisors andor clients when making investment and other business decisions SampP does not act as a fiduciary or an investment advisor except where registered as such While SampP has obtained information from sources it believes to be reliable SampP does not perform an audit and undertakes no duty of due diligence or independent verification of any information it receives
To the extent that regulatory authorities allow a rating agency to acknowledge in one jurisdiction a rating issued in another jurisdiction for certain regulatory purposes SampP reserves the right to assign withdraw or suspend such acknowledgement at any time and in its sole discretion SampP Parties disclaim any duty whatsoever arising out of the assignment withdrawal or suspension of an acknowledgment as well as any liability for any damage alleged to have been suffered on account thereof
SampP keeps certain activities of its business units separate from each other in order to preserve the independence and objectivity of their respective activities As a result certain business units of SampP may have information that is not available to other SampP business units SampP has established policies and procedures to maintain the confidentiality of certain nonpublic information received in connection with each analytical process
SampP may receive compensation for its ratings and certain analyses normally from issuers or underwriters of securities or from obligors SampP reserves the right to disseminate its opinions and analyses SampPs public ratings and analyses are made available on its Web sites wwwstandardandpoorscom (free of charge) and wwwratingsdirectcom and wwwglobalcreditportalcom (subscription) and wwwspcapitaliqcom (subscription) and may be distributed through other means including via SampP publications and third-party redistributors Additional information about our ratings fees is available at wwwstandardandpoorscomusratingsfees
STANDARD amp POORS SampP and RATINGSDIRECT are registered trademarks of Standard amp Poors Financial Services LLC
WWW STANDARDANDPOORSCOMRATINGSDIRECT OCTOBER 5 201 7 9
1925121 I 300097587
San Francisco City and County Airport Commission San Francisco International Airport Afrport joint Criteria
is 10 years and the agreements include a residual cost rate-setting methodology airline review of capital projects
common-use facilities in the international terminal and annual service payments to the city The international terminal
is joint use but the domestic terminals are a mixture of preferential joint and common use--not exclusive
use-allowing airport management to optimize gate utilization We consider the use-and-lease agreements credit
neutral
The airports capital improvement plan (CIP) approved on Sept 5 2017 is very sizable and a credit risk but we also
recognize the need to add gates and to expand and modernize terminal space to meet growing demand Given the
projects importance to the airport and the airlines and given its size the commission is increasingly focusing on risk
mitigation and avoidance of cost overruns The airports often experiences gate constraints during peak periods with
passenger traffic up 46 over the past 10 years In addition to meeting growth needs the CIP aims to address safety
and security improve information technology infrastructure improve the customer experience and maintain the
airports strong competitive position The CIP includes $62 billion in spending over the next 10 years (fiscal years
2018 to 2027) The CIP was recently broken down further into two components the Ascent Program--Phase I and the
fiscal 2018 Infrastructure Projects Plan The Ascent Program--Phase I consists of projects from the fiscal 2017 capital
plan plus a new $739 million contingency reserve to cover unanticipated project needs The Infrastructure Project Plan
includes projects that address newly identified needs Capital needs have grown considerable recently in fiscal 2016
the airports 10-year CIP (fiscal years 2016 through 2025) totaled $45 billion Subsequent phases of the Ascent
Program are likely to be derived from the commissions Airport Development Plan (ADP) now complete and under
environmental review
Including $12 billion in prior years spending the overall CIP totals $74 billion The forecast indicates that
approximately $65 billion in new airport revenue bonds (including the series 2017 bonds) will be issued through 2022
to fund $5 5 billion or 73 of the CIP with prior funding covering $12 billion or 16 The remaining 12 will be
covered by grants future rev~nue bonds beyond 2022 and other sources such as hotel bonds and special facility
bonds Annual borrowing will range from $11 billion to $19 billion We take a negative view of the significant debt
that the airport will need to issue to finance the capital plan We will monitor the effects that these projects may have
on the airports financial metrics We do consider the airports proven record of delivering large capital projects on
time and on budget to be a mitigating factor
Financial performa~ce has been very consistent over the past several years as a result of conservative planning and
forecasting prudent expenditure management and strong activity levels at the airport DSC as calculated in the
indenture (including rolling coverage and pledged passenger facility charge or PFC revenue) was an estimated 137x
in unaudited fiscal 2017 down slightly from 144x in audited fiscal 2016 Pledged PFC revenue designed to pay debt
service in unaudited fiscal 2017 totaled $234 million Excluding the transfer from the contingency account coverage
was 120x in audited fiscal 2016 and 114x in unaudited fiscal 2017 and is forecast to decline to 109x in fiscal 2023
DSC at these levels it is not a significant credit risk in our view given the residual airline agreements We view
managements financial forecast and its assumptions as reasonable largely given our similar view on managements
traffic forecast
Audited 2016 unrestricted cash and investments totaled $412 million equal to 339 days operations which we consider
WWWSTANDARDANDPOORSCOMRATINGSDIRECT OCTOBER 5 2017 5
1926721 I 300097587
San Francisco City and County Airport Commission San Francisco International Airport Airport Joint Criteria
good Estimates for fiscal 2017 indicate a decline to $376 million in unrestricted cash or 293 days of operations
Management reports that overall cash balances will increase in fiscal 2018 as a result of a $28 million addition to its
contingency fund Liquidity is supplemented by CP capacity estimated at $4 70 million once the aforementioned bonds
are issued
The airport has a high cost structure in our opinion The cost per enplanement (CPE) was estimated at $1646 in fiscal
2017 down slightly from $1652 in audited fiscal 2016 Managements projections indicate the CPE will rise to $2642
in fiscal 2023 While we consider this rate to be high we understand that this is an average rate for all carriers at the
airport and that based on the facility used (eg the international terminal or a domestic terminal) the rate is higher or
lower This is important when considering the effect of the cost on certain airlines service decisions In addition
strong nonairline revenue growth in recent years has helped to contain CPE non-airline revenue has almost doubled
since 2007 We also believe that actual CPE figures will likely be lower than forecast because in our view
enplanement levels will likely exceed conservatively forecast figures Management also continues to control costs and
make the airport more competitive by increasing concession revenue (especially as planned for Terminal 1) and
attracting new carriers and service The airports debt per enplanement is also high in our view at $179 as of fiscal
2016 With the net effect of the planned issuance of an additional $65 billion and some principal amortization
management forecasts debt per enplanement for fiscal 2023 at $325 which we consider very high
Outlook
The stable outlook reflects our anticipation that United Airlines will continue to operate a major hub at SFO passenger
demand will remain stable and liquidity will remain good The prudent implementation of a capital plan that maintains
managements estimates of additional debt will also be an important rating factor in our opinion
Upside scenario
Given our view of SFOs significant additional debt needs and current debt profile we do not expect to raise the ratings
during the next two years
Downside scenario
We could lower the rating if enplanements decline materially reducing the airports ability to manage rising debt or if
the airports DSC significantly declines on a sustained basis
Specific Capital Improvement Projects
Significant projects in the Ascent Program--Phase I of the CIP include the renovation of Terminal 1 at a projected cost
of $23 billiqn the renovation and reconfiguration of the eastern and western side of Terminal 3 ($10 billion) and the
International Terminal Refresh project to improve the terminal operational efficiencies ($272 million) The commission
is also constructing a multistory office block for its own administrative uses and other tenants and a project dedicated
to increasing customer experience and concession revenue opportunities Major groundside projects include a new
airport-owned hotel and hotel AirTrain station to be funded by $278 million in hotel bonds and $260 million in hotel
special facility bonds The hotel is slated to open in summer 2019 An additional $202 million project includes an
WWWSTANDARDANDPOORSCOMRATINGSDIRECT OCTOBER 5 2017 6
1926721 I 300097587
San Francisco City and County Airport Commission San Francisco International Airport Airport joint Criteria
extension of the AirTrain system to connect to the existing and new long-term parking garages and the new long-term
parking garage itself ($161 million) The balance of projects includes projects geared toward safety and security
technology utility and energy efficiency projects and taxiway improvements Major projects in the Infrastructure
Projects Plan include net jet fuel storage tanks ($52 million) and various airfield improvements
Bond Provisions
The bonds are secured by the airports net revenue and are issued under the 1991 resolution We consider the bond
provisions credit neutral Net revenue includes that which the commission earns from operating the airport in
accordance with generally accepted accounting principles but explicitly excludes special facility revenue and PFCs
unless specifically pledged The airport has $48 billion in parity debt outstanding
The 1991 resolution allows for the establishment of a contingency account that can be used for debt service
operations and maintenance and certain other airport costs The commission is not obligated to replenish this account
in the event funds are withdrawn The balance in this account as of June 30 2017 was $95 million (equal to about 22
of maximum annual debt service or MADS) The commission plans to increase the balance of the contingency fund by
$1285 million in future years from proceeds of the 2017 bonds as well as from future bonds Funds in this account are
deposited as of the last business day of each fiscal year and can be applied to satisfy the coverage requirement under
the rate covenant
The rate covenant requires net revenue in each year to be at least sufficient to pay debt service and all required annual
service payments to the city In addition together with any transfer from the contingency account net revenue must
equal at least 125x debt service on the 1991 resolution bonds This contingency account transfer effectively allows for
rolling coverage on the bonds In years in which amounts owed after debt service decrease relative to the size of debt
service actual coverage from current-year rates and charges can fall and be offset by the contingency fund The size of
the transfer is limited to 25 of MADS for purposes of calculating the additional bonds test (ABT) While the
contingency account may be used to meet the rate covenant we expect (and management projects) that generating
revenue will equal at least lx debt service from rates and charges without the use of the contingency account If the
contingency fund were to be drawn down for any reason the commission has the authority to set rates and charges to
125x debt service and continue to do so until the contingency fund is rebuilt if ever
The ABT requires that projected net revenue will meet the rate covenant for the proposed debt or that historical
revenue with the transfer will cover outstanding and proposed debt by 125x This test as with nearly all other tests for
airports in the US allows for the use of projected revenue which in essence means some demonstration of
compliance of the 125x multiple by an airport consultant
In terms of the debt service reserve funds the 1991 master resolution established the original reserve account which
provides additional security for all bonds outstanding under the 1991 master resolution except for issues 36A 36B
36C and the series 2009C 2010A and 2010D bonds The reserve requirement for the original reserve account is
MADS The series 2009C and 20 lOD bonds are secured by a separate 2009 reserve account Issue 36A 36B 36C and
the 201 OA bonds do not have a reserve account but are secured by LOCs The proposed series 2017 A and 2017B
WWWSTANDARDANDPOORSCOMRATINGSDIRECT OCTOBER 5 2017 7
192672 1 I 300097587
San Francisco City and County Airport Commission San Francisco International Airport Airport Joint Criteria
bonds will also be secured by the original reserve account but the proposed series 2017C 2017D and 2018A bonds
are contemplated to be secured by a new 2017 reserve account with the reserve requirement at the least of 10 of
par MADS or 125 of average annual debt service
Ratings Detail (As Of October 5 2017)
San Francisco City amp Coty Arpt Comm California
San Francisco Intl Arpt California
San Francisco City amp Cnty Arpt Comm (San Francisco International Airport) (wrap of insured) (FGIC amp AGM) (SEC MKT)
Unenhanced Rating A+(SPUR)Stable Affirmed
San Francisco City amp Cnty Arpt Comm (San Francisco Intl Arpt) arpt rev rfdg bnds rmktd
Long Term Rating A+Stable Affirmed
San Francisco City amp Cnty Arpt Comm (San Francisco Intl Arpt) AIRPORTS
Long Term Rating A+Stable Affirmed
San Francisco City amp Cnty Arpt Comm (San Francisco Intl Arpt) JOINTCRIT
Long Term Rating AA+ I A-1 Affirmed
Unenhanced Rating A+(SPUR)Stable Affirmed
San Francisco City amp County Airport Commission (San Francisco International Airport)
Long Term Rating A+Stable Affirmed
San Francisco City amp County Airport Commission (San Francisco International Airport) VRDB
Long Term Rating AA+ I A-1 + Affirmed
Unenhanced Rating A+(SPUR)Stable Affirmed
San Francisco City amp County Airport Commission (San Francisco International Airport) VRDB
Long Term Rating AA+ I A-1 Affirmed
Unenhanced Rating A+(SPUR)Stable Affirmed
San Francisco City amp County Airport Commission (San Francisco International Airport) VRDB
Long Term Rating AA+ I A-1 Affirmed
Unenhanced Rating A+(SPUR)Stable Affirmed
San Francisco City amp County Airport Commission (San Francisco International Airport) VRDB (ASSURED GTY)
Long Term Rating AANRStable Affirmed
Unenhanced Rating A+(SPUR)Stable Affirmed
San Francisco City amp County Airport Commission (San Francisco International Airport) VRDB (ASSURED GTY)
Long Term Rating AANRStable Affirmed
Unenhanced Rating A+(SPUR)Stable Affirmed
San Francisco City amp County Airport Commission (San Francisco International Airport) VRDB 368
Long Term Rating AA+ I A-1 Affirmed
Unenhanced Rating A+(SPUR)Stable Affirmed
San Francisco City amp County Airport Commission (San Francisco International Airport) (ASSURED GTY)
Unenhanced Rating A+(SPUR)Stable Affirmed
San Francisco City amp County Airport Commission (San Francisco International Airport)
Unenhanced Rating A+(SPUR)Stable Affirmed
Many issues are enhanced by bond insurance
WWW STANDARDANDPOORSCOMRATINGS DIRECT OCTOBER 5 2017 8
1925121 I 300091ss1
Copyrightcopy 2017 by Standard amp Poors Financial Services LLC All rights reserved
No content (including ratings credit-related analyses and data valuations model software or other application or output therefrom) or any part thereof (Content) may be modified reverse engineered reproduced or distributed in any form by any means or stored in a database or retrieval system without the prior written permission of Standard amp Poors Financial Services LLC or its affiliates (collectively SampP) The Content shall not be used for any unlawful or unauthorized purposes SampP and any third-party providers as well as their directors officers shareholders employees or agents (collectively SampP Parties) do not guarantee the accuracy completeness timeliness or availability of the Content SampP Parties are not responsible for any errors or omissions (negligent or otherwise) regardless of the cause for the results obtained from the use of the Content or for the security or maintenance of any data input by the user The Content is provided on an as is basis SampP PARTIES DISCLAIM ANY AND ALL EXPRESS OR IMPLIED WARRANTIES INCLUDING BUT NOT LIMITED TO ANY WARRANTIES OF MERCHANTABILITY OR FITNESS FOR A PARTICULAR PURPOSE OR USE FREEDOM FROM BUGS SOFTWARE ERRORS OR DEFECTS THAT THE CONTENTS FUNCTIONING WILL BE UNINTERRUPTED OR THAT THE CONTENT WILL OPERATE WITH ANY SOFTWARE OR HARDWARE CONFIGURATION In no event shall SampP Parties be liable to any party for any direct indirect incidental exemplary compensatory punitive special or consequential damages costs expenses legal fees or losses (including without limitation lost income or Jost profits and opportunity costs or losses caused by negligence) in connection with any use of the Content even if advised of the possibility of such damages
Credit-related and other analyses including ratings and statements in the Content are statements of opinion as of the date they are expressed and not statements of fact SampPs opinions analyses and rating acknowledgment decisions (described below) are not recommendations to purchase hold or sell any securities or to make any investment decisions and do not address the suitability of any security SampP assumes no obligation to update the Content following publication in any form or format The Content should not be relied on and is not a substitute for the skill judgment and experience of the user its management employees advisors andor clients when making investment and other business decisions SampP does not act as a fiduciary or an investment advisor except where registered as such While SampP has obtained information from sources it believes to be reliable SampP does not perform an audit and undertakes no duty of due diligence or independent verification of any information it receives
To the extent that regulatory authorities allow a rating agency to acknowledge in one jurisdiction a rating issued in another jurisdiction for certain regulatory purposes SampP reserves the right to assign withdraw or suspend such acknowledgement at any time and in its sole discretion SampP Parties disclaim any duty whatsoever arising out of the assignment withdrawal or suspension of an acknowledgment as well as any liability for any damage alleged to have been suffered on account thereof
SampP keeps certain activities of its business units separate from each other in order to preserve the independence and objectivity of their respective activities As a result certain business units of SampP may have information that is not available to other SampP business units SampP has established policies and procedures to maintain the confidentiality of certain nonpublic information received in connection with each analytical process
SampP may receive compensation for its ratings and certain analyses normally from issuers or underwriters of securities or from obligors SampP reserves the right to disseminate its opinions and analyses SampPs public ratings and analyses are made available on its Web sites wwwstandardandpoorscom (free of charge) and wwwratingsdirectcom and wwwglobalcreditportalcom (subscription) and wwwspcapitaliqcom (subscription) and may be distributed through other means including via SampP publications and third-party redistributors Additional information about our ratings fees is available at wwwstandardandpoorscomusratingsfees
STANDARD amp POORS SampP and RATINGSDIRECT are registered trademarks of Standard amp Poors Financial Services LLC
WWW STANDARDANDPOORSCOMRATINGSDIRECT OCTOBER 5 201 7 9
1925121 I 300097587
San Francisco City and County Airport Commission San Francisco International Airport Airport Joint Criteria
good Estimates for fiscal 2017 indicate a decline to $376 million in unrestricted cash or 293 days of operations
Management reports that overall cash balances will increase in fiscal 2018 as a result of a $28 million addition to its
contingency fund Liquidity is supplemented by CP capacity estimated at $4 70 million once the aforementioned bonds
are issued
The airport has a high cost structure in our opinion The cost per enplanement (CPE) was estimated at $1646 in fiscal
2017 down slightly from $1652 in audited fiscal 2016 Managements projections indicate the CPE will rise to $2642
in fiscal 2023 While we consider this rate to be high we understand that this is an average rate for all carriers at the
airport and that based on the facility used (eg the international terminal or a domestic terminal) the rate is higher or
lower This is important when considering the effect of the cost on certain airlines service decisions In addition
strong nonairline revenue growth in recent years has helped to contain CPE non-airline revenue has almost doubled
since 2007 We also believe that actual CPE figures will likely be lower than forecast because in our view
enplanement levels will likely exceed conservatively forecast figures Management also continues to control costs and
make the airport more competitive by increasing concession revenue (especially as planned for Terminal 1) and
attracting new carriers and service The airports debt per enplanement is also high in our view at $179 as of fiscal
2016 With the net effect of the planned issuance of an additional $65 billion and some principal amortization
management forecasts debt per enplanement for fiscal 2023 at $325 which we consider very high
Outlook
The stable outlook reflects our anticipation that United Airlines will continue to operate a major hub at SFO passenger
demand will remain stable and liquidity will remain good The prudent implementation of a capital plan that maintains
managements estimates of additional debt will also be an important rating factor in our opinion
Upside scenario
Given our view of SFOs significant additional debt needs and current debt profile we do not expect to raise the ratings
during the next two years
Downside scenario
We could lower the rating if enplanements decline materially reducing the airports ability to manage rising debt or if
the airports DSC significantly declines on a sustained basis
Specific Capital Improvement Projects
Significant projects in the Ascent Program--Phase I of the CIP include the renovation of Terminal 1 at a projected cost
of $23 billiqn the renovation and reconfiguration of the eastern and western side of Terminal 3 ($10 billion) and the
International Terminal Refresh project to improve the terminal operational efficiencies ($272 million) The commission
is also constructing a multistory office block for its own administrative uses and other tenants and a project dedicated
to increasing customer experience and concession revenue opportunities Major groundside projects include a new
airport-owned hotel and hotel AirTrain station to be funded by $278 million in hotel bonds and $260 million in hotel
special facility bonds The hotel is slated to open in summer 2019 An additional $202 million project includes an
WWWSTANDARDANDPOORSCOMRATINGSDIRECT OCTOBER 5 2017 6
1926721 I 300097587
San Francisco City and County Airport Commission San Francisco International Airport Airport joint Criteria
extension of the AirTrain system to connect to the existing and new long-term parking garages and the new long-term
parking garage itself ($161 million) The balance of projects includes projects geared toward safety and security
technology utility and energy efficiency projects and taxiway improvements Major projects in the Infrastructure
Projects Plan include net jet fuel storage tanks ($52 million) and various airfield improvements
Bond Provisions
The bonds are secured by the airports net revenue and are issued under the 1991 resolution We consider the bond
provisions credit neutral Net revenue includes that which the commission earns from operating the airport in
accordance with generally accepted accounting principles but explicitly excludes special facility revenue and PFCs
unless specifically pledged The airport has $48 billion in parity debt outstanding
The 1991 resolution allows for the establishment of a contingency account that can be used for debt service
operations and maintenance and certain other airport costs The commission is not obligated to replenish this account
in the event funds are withdrawn The balance in this account as of June 30 2017 was $95 million (equal to about 22
of maximum annual debt service or MADS) The commission plans to increase the balance of the contingency fund by
$1285 million in future years from proceeds of the 2017 bonds as well as from future bonds Funds in this account are
deposited as of the last business day of each fiscal year and can be applied to satisfy the coverage requirement under
the rate covenant
The rate covenant requires net revenue in each year to be at least sufficient to pay debt service and all required annual
service payments to the city In addition together with any transfer from the contingency account net revenue must
equal at least 125x debt service on the 1991 resolution bonds This contingency account transfer effectively allows for
rolling coverage on the bonds In years in which amounts owed after debt service decrease relative to the size of debt
service actual coverage from current-year rates and charges can fall and be offset by the contingency fund The size of
the transfer is limited to 25 of MADS for purposes of calculating the additional bonds test (ABT) While the
contingency account may be used to meet the rate covenant we expect (and management projects) that generating
revenue will equal at least lx debt service from rates and charges without the use of the contingency account If the
contingency fund were to be drawn down for any reason the commission has the authority to set rates and charges to
125x debt service and continue to do so until the contingency fund is rebuilt if ever
The ABT requires that projected net revenue will meet the rate covenant for the proposed debt or that historical
revenue with the transfer will cover outstanding and proposed debt by 125x This test as with nearly all other tests for
airports in the US allows for the use of projected revenue which in essence means some demonstration of
compliance of the 125x multiple by an airport consultant
In terms of the debt service reserve funds the 1991 master resolution established the original reserve account which
provides additional security for all bonds outstanding under the 1991 master resolution except for issues 36A 36B
36C and the series 2009C 2010A and 2010D bonds The reserve requirement for the original reserve account is
MADS The series 2009C and 20 lOD bonds are secured by a separate 2009 reserve account Issue 36A 36B 36C and
the 201 OA bonds do not have a reserve account but are secured by LOCs The proposed series 2017 A and 2017B
WWWSTANDARDANDPOORSCOMRATINGSDIRECT OCTOBER 5 2017 7
192672 1 I 300097587
San Francisco City and County Airport Commission San Francisco International Airport Airport Joint Criteria
bonds will also be secured by the original reserve account but the proposed series 2017C 2017D and 2018A bonds
are contemplated to be secured by a new 2017 reserve account with the reserve requirement at the least of 10 of
par MADS or 125 of average annual debt service
Ratings Detail (As Of October 5 2017)
San Francisco City amp Coty Arpt Comm California
San Francisco Intl Arpt California
San Francisco City amp Cnty Arpt Comm (San Francisco International Airport) (wrap of insured) (FGIC amp AGM) (SEC MKT)
Unenhanced Rating A+(SPUR)Stable Affirmed
San Francisco City amp Cnty Arpt Comm (San Francisco Intl Arpt) arpt rev rfdg bnds rmktd
Long Term Rating A+Stable Affirmed
San Francisco City amp Cnty Arpt Comm (San Francisco Intl Arpt) AIRPORTS
Long Term Rating A+Stable Affirmed
San Francisco City amp Cnty Arpt Comm (San Francisco Intl Arpt) JOINTCRIT
Long Term Rating AA+ I A-1 Affirmed
Unenhanced Rating A+(SPUR)Stable Affirmed
San Francisco City amp County Airport Commission (San Francisco International Airport)
Long Term Rating A+Stable Affirmed
San Francisco City amp County Airport Commission (San Francisco International Airport) VRDB
Long Term Rating AA+ I A-1 + Affirmed
Unenhanced Rating A+(SPUR)Stable Affirmed
San Francisco City amp County Airport Commission (San Francisco International Airport) VRDB
Long Term Rating AA+ I A-1 Affirmed
Unenhanced Rating A+(SPUR)Stable Affirmed
San Francisco City amp County Airport Commission (San Francisco International Airport) VRDB
Long Term Rating AA+ I A-1 Affirmed
Unenhanced Rating A+(SPUR)Stable Affirmed
San Francisco City amp County Airport Commission (San Francisco International Airport) VRDB (ASSURED GTY)
Long Term Rating AANRStable Affirmed
Unenhanced Rating A+(SPUR)Stable Affirmed
San Francisco City amp County Airport Commission (San Francisco International Airport) VRDB (ASSURED GTY)
Long Term Rating AANRStable Affirmed
Unenhanced Rating A+(SPUR)Stable Affirmed
San Francisco City amp County Airport Commission (San Francisco International Airport) VRDB 368
Long Term Rating AA+ I A-1 Affirmed
Unenhanced Rating A+(SPUR)Stable Affirmed
San Francisco City amp County Airport Commission (San Francisco International Airport) (ASSURED GTY)
Unenhanced Rating A+(SPUR)Stable Affirmed
San Francisco City amp County Airport Commission (San Francisco International Airport)
Unenhanced Rating A+(SPUR)Stable Affirmed
Many issues are enhanced by bond insurance
WWW STANDARDANDPOORSCOMRATINGS DIRECT OCTOBER 5 2017 8
1925121 I 300091ss1
Copyrightcopy 2017 by Standard amp Poors Financial Services LLC All rights reserved
No content (including ratings credit-related analyses and data valuations model software or other application or output therefrom) or any part thereof (Content) may be modified reverse engineered reproduced or distributed in any form by any means or stored in a database or retrieval system without the prior written permission of Standard amp Poors Financial Services LLC or its affiliates (collectively SampP) The Content shall not be used for any unlawful or unauthorized purposes SampP and any third-party providers as well as their directors officers shareholders employees or agents (collectively SampP Parties) do not guarantee the accuracy completeness timeliness or availability of the Content SampP Parties are not responsible for any errors or omissions (negligent or otherwise) regardless of the cause for the results obtained from the use of the Content or for the security or maintenance of any data input by the user The Content is provided on an as is basis SampP PARTIES DISCLAIM ANY AND ALL EXPRESS OR IMPLIED WARRANTIES INCLUDING BUT NOT LIMITED TO ANY WARRANTIES OF MERCHANTABILITY OR FITNESS FOR A PARTICULAR PURPOSE OR USE FREEDOM FROM BUGS SOFTWARE ERRORS OR DEFECTS THAT THE CONTENTS FUNCTIONING WILL BE UNINTERRUPTED OR THAT THE CONTENT WILL OPERATE WITH ANY SOFTWARE OR HARDWARE CONFIGURATION In no event shall SampP Parties be liable to any party for any direct indirect incidental exemplary compensatory punitive special or consequential damages costs expenses legal fees or losses (including without limitation lost income or Jost profits and opportunity costs or losses caused by negligence) in connection with any use of the Content even if advised of the possibility of such damages
Credit-related and other analyses including ratings and statements in the Content are statements of opinion as of the date they are expressed and not statements of fact SampPs opinions analyses and rating acknowledgment decisions (described below) are not recommendations to purchase hold or sell any securities or to make any investment decisions and do not address the suitability of any security SampP assumes no obligation to update the Content following publication in any form or format The Content should not be relied on and is not a substitute for the skill judgment and experience of the user its management employees advisors andor clients when making investment and other business decisions SampP does not act as a fiduciary or an investment advisor except where registered as such While SampP has obtained information from sources it believes to be reliable SampP does not perform an audit and undertakes no duty of due diligence or independent verification of any information it receives
To the extent that regulatory authorities allow a rating agency to acknowledge in one jurisdiction a rating issued in another jurisdiction for certain regulatory purposes SampP reserves the right to assign withdraw or suspend such acknowledgement at any time and in its sole discretion SampP Parties disclaim any duty whatsoever arising out of the assignment withdrawal or suspension of an acknowledgment as well as any liability for any damage alleged to have been suffered on account thereof
SampP keeps certain activities of its business units separate from each other in order to preserve the independence and objectivity of their respective activities As a result certain business units of SampP may have information that is not available to other SampP business units SampP has established policies and procedures to maintain the confidentiality of certain nonpublic information received in connection with each analytical process
SampP may receive compensation for its ratings and certain analyses normally from issuers or underwriters of securities or from obligors SampP reserves the right to disseminate its opinions and analyses SampPs public ratings and analyses are made available on its Web sites wwwstandardandpoorscom (free of charge) and wwwratingsdirectcom and wwwglobalcreditportalcom (subscription) and wwwspcapitaliqcom (subscription) and may be distributed through other means including via SampP publications and third-party redistributors Additional information about our ratings fees is available at wwwstandardandpoorscomusratingsfees
STANDARD amp POORS SampP and RATINGSDIRECT are registered trademarks of Standard amp Poors Financial Services LLC
WWW STANDARDANDPOORSCOMRATINGSDIRECT OCTOBER 5 201 7 9
1925121 I 300097587
San Francisco City and County Airport Commission San Francisco International Airport Airport joint Criteria
extension of the AirTrain system to connect to the existing and new long-term parking garages and the new long-term
parking garage itself ($161 million) The balance of projects includes projects geared toward safety and security
technology utility and energy efficiency projects and taxiway improvements Major projects in the Infrastructure
Projects Plan include net jet fuel storage tanks ($52 million) and various airfield improvements
Bond Provisions
The bonds are secured by the airports net revenue and are issued under the 1991 resolution We consider the bond
provisions credit neutral Net revenue includes that which the commission earns from operating the airport in
accordance with generally accepted accounting principles but explicitly excludes special facility revenue and PFCs
unless specifically pledged The airport has $48 billion in parity debt outstanding
The 1991 resolution allows for the establishment of a contingency account that can be used for debt service
operations and maintenance and certain other airport costs The commission is not obligated to replenish this account
in the event funds are withdrawn The balance in this account as of June 30 2017 was $95 million (equal to about 22
of maximum annual debt service or MADS) The commission plans to increase the balance of the contingency fund by
$1285 million in future years from proceeds of the 2017 bonds as well as from future bonds Funds in this account are
deposited as of the last business day of each fiscal year and can be applied to satisfy the coverage requirement under
the rate covenant
The rate covenant requires net revenue in each year to be at least sufficient to pay debt service and all required annual
service payments to the city In addition together with any transfer from the contingency account net revenue must
equal at least 125x debt service on the 1991 resolution bonds This contingency account transfer effectively allows for
rolling coverage on the bonds In years in which amounts owed after debt service decrease relative to the size of debt
service actual coverage from current-year rates and charges can fall and be offset by the contingency fund The size of
the transfer is limited to 25 of MADS for purposes of calculating the additional bonds test (ABT) While the
contingency account may be used to meet the rate covenant we expect (and management projects) that generating
revenue will equal at least lx debt service from rates and charges without the use of the contingency account If the
contingency fund were to be drawn down for any reason the commission has the authority to set rates and charges to
125x debt service and continue to do so until the contingency fund is rebuilt if ever
The ABT requires that projected net revenue will meet the rate covenant for the proposed debt or that historical
revenue with the transfer will cover outstanding and proposed debt by 125x This test as with nearly all other tests for
airports in the US allows for the use of projected revenue which in essence means some demonstration of
compliance of the 125x multiple by an airport consultant
In terms of the debt service reserve funds the 1991 master resolution established the original reserve account which
provides additional security for all bonds outstanding under the 1991 master resolution except for issues 36A 36B
36C and the series 2009C 2010A and 2010D bonds The reserve requirement for the original reserve account is
MADS The series 2009C and 20 lOD bonds are secured by a separate 2009 reserve account Issue 36A 36B 36C and
the 201 OA bonds do not have a reserve account but are secured by LOCs The proposed series 2017 A and 2017B
WWWSTANDARDANDPOORSCOMRATINGSDIRECT OCTOBER 5 2017 7
192672 1 I 300097587
San Francisco City and County Airport Commission San Francisco International Airport Airport Joint Criteria
bonds will also be secured by the original reserve account but the proposed series 2017C 2017D and 2018A bonds
are contemplated to be secured by a new 2017 reserve account with the reserve requirement at the least of 10 of
par MADS or 125 of average annual debt service
Ratings Detail (As Of October 5 2017)
San Francisco City amp Coty Arpt Comm California
San Francisco Intl Arpt California
San Francisco City amp Cnty Arpt Comm (San Francisco International Airport) (wrap of insured) (FGIC amp AGM) (SEC MKT)
Unenhanced Rating A+(SPUR)Stable Affirmed
San Francisco City amp Cnty Arpt Comm (San Francisco Intl Arpt) arpt rev rfdg bnds rmktd
Long Term Rating A+Stable Affirmed
San Francisco City amp Cnty Arpt Comm (San Francisco Intl Arpt) AIRPORTS
Long Term Rating A+Stable Affirmed
San Francisco City amp Cnty Arpt Comm (San Francisco Intl Arpt) JOINTCRIT
Long Term Rating AA+ I A-1 Affirmed
Unenhanced Rating A+(SPUR)Stable Affirmed
San Francisco City amp County Airport Commission (San Francisco International Airport)
Long Term Rating A+Stable Affirmed
San Francisco City amp County Airport Commission (San Francisco International Airport) VRDB
Long Term Rating AA+ I A-1 + Affirmed
Unenhanced Rating A+(SPUR)Stable Affirmed
San Francisco City amp County Airport Commission (San Francisco International Airport) VRDB
Long Term Rating AA+ I A-1 Affirmed
Unenhanced Rating A+(SPUR)Stable Affirmed
San Francisco City amp County Airport Commission (San Francisco International Airport) VRDB
Long Term Rating AA+ I A-1 Affirmed
Unenhanced Rating A+(SPUR)Stable Affirmed
San Francisco City amp County Airport Commission (San Francisco International Airport) VRDB (ASSURED GTY)
Long Term Rating AANRStable Affirmed
Unenhanced Rating A+(SPUR)Stable Affirmed
San Francisco City amp County Airport Commission (San Francisco International Airport) VRDB (ASSURED GTY)
Long Term Rating AANRStable Affirmed
Unenhanced Rating A+(SPUR)Stable Affirmed
San Francisco City amp County Airport Commission (San Francisco International Airport) VRDB 368
Long Term Rating AA+ I A-1 Affirmed
Unenhanced Rating A+(SPUR)Stable Affirmed
San Francisco City amp County Airport Commission (San Francisco International Airport) (ASSURED GTY)
Unenhanced Rating A+(SPUR)Stable Affirmed
San Francisco City amp County Airport Commission (San Francisco International Airport)
Unenhanced Rating A+(SPUR)Stable Affirmed
Many issues are enhanced by bond insurance
WWW STANDARDANDPOORSCOMRATINGS DIRECT OCTOBER 5 2017 8
1925121 I 300091ss1
Copyrightcopy 2017 by Standard amp Poors Financial Services LLC All rights reserved
No content (including ratings credit-related analyses and data valuations model software or other application or output therefrom) or any part thereof (Content) may be modified reverse engineered reproduced or distributed in any form by any means or stored in a database or retrieval system without the prior written permission of Standard amp Poors Financial Services LLC or its affiliates (collectively SampP) The Content shall not be used for any unlawful or unauthorized purposes SampP and any third-party providers as well as their directors officers shareholders employees or agents (collectively SampP Parties) do not guarantee the accuracy completeness timeliness or availability of the Content SampP Parties are not responsible for any errors or omissions (negligent or otherwise) regardless of the cause for the results obtained from the use of the Content or for the security or maintenance of any data input by the user The Content is provided on an as is basis SampP PARTIES DISCLAIM ANY AND ALL EXPRESS OR IMPLIED WARRANTIES INCLUDING BUT NOT LIMITED TO ANY WARRANTIES OF MERCHANTABILITY OR FITNESS FOR A PARTICULAR PURPOSE OR USE FREEDOM FROM BUGS SOFTWARE ERRORS OR DEFECTS THAT THE CONTENTS FUNCTIONING WILL BE UNINTERRUPTED OR THAT THE CONTENT WILL OPERATE WITH ANY SOFTWARE OR HARDWARE CONFIGURATION In no event shall SampP Parties be liable to any party for any direct indirect incidental exemplary compensatory punitive special or consequential damages costs expenses legal fees or losses (including without limitation lost income or Jost profits and opportunity costs or losses caused by negligence) in connection with any use of the Content even if advised of the possibility of such damages
Credit-related and other analyses including ratings and statements in the Content are statements of opinion as of the date they are expressed and not statements of fact SampPs opinions analyses and rating acknowledgment decisions (described below) are not recommendations to purchase hold or sell any securities or to make any investment decisions and do not address the suitability of any security SampP assumes no obligation to update the Content following publication in any form or format The Content should not be relied on and is not a substitute for the skill judgment and experience of the user its management employees advisors andor clients when making investment and other business decisions SampP does not act as a fiduciary or an investment advisor except where registered as such While SampP has obtained information from sources it believes to be reliable SampP does not perform an audit and undertakes no duty of due diligence or independent verification of any information it receives
To the extent that regulatory authorities allow a rating agency to acknowledge in one jurisdiction a rating issued in another jurisdiction for certain regulatory purposes SampP reserves the right to assign withdraw or suspend such acknowledgement at any time and in its sole discretion SampP Parties disclaim any duty whatsoever arising out of the assignment withdrawal or suspension of an acknowledgment as well as any liability for any damage alleged to have been suffered on account thereof
SampP keeps certain activities of its business units separate from each other in order to preserve the independence and objectivity of their respective activities As a result certain business units of SampP may have information that is not available to other SampP business units SampP has established policies and procedures to maintain the confidentiality of certain nonpublic information received in connection with each analytical process
SampP may receive compensation for its ratings and certain analyses normally from issuers or underwriters of securities or from obligors SampP reserves the right to disseminate its opinions and analyses SampPs public ratings and analyses are made available on its Web sites wwwstandardandpoorscom (free of charge) and wwwratingsdirectcom and wwwglobalcreditportalcom (subscription) and wwwspcapitaliqcom (subscription) and may be distributed through other means including via SampP publications and third-party redistributors Additional information about our ratings fees is available at wwwstandardandpoorscomusratingsfees
STANDARD amp POORS SampP and RATINGSDIRECT are registered trademarks of Standard amp Poors Financial Services LLC
WWW STANDARDANDPOORSCOMRATINGSDIRECT OCTOBER 5 201 7 9
1925121 I 300097587
San Francisco City and County Airport Commission San Francisco International Airport Airport Joint Criteria
bonds will also be secured by the original reserve account but the proposed series 2017C 2017D and 2018A bonds
are contemplated to be secured by a new 2017 reserve account with the reserve requirement at the least of 10 of
par MADS or 125 of average annual debt service
Ratings Detail (As Of October 5 2017)
San Francisco City amp Coty Arpt Comm California
San Francisco Intl Arpt California
San Francisco City amp Cnty Arpt Comm (San Francisco International Airport) (wrap of insured) (FGIC amp AGM) (SEC MKT)
Unenhanced Rating A+(SPUR)Stable Affirmed
San Francisco City amp Cnty Arpt Comm (San Francisco Intl Arpt) arpt rev rfdg bnds rmktd
Long Term Rating A+Stable Affirmed
San Francisco City amp Cnty Arpt Comm (San Francisco Intl Arpt) AIRPORTS
Long Term Rating A+Stable Affirmed
San Francisco City amp Cnty Arpt Comm (San Francisco Intl Arpt) JOINTCRIT
Long Term Rating AA+ I A-1 Affirmed
Unenhanced Rating A+(SPUR)Stable Affirmed
San Francisco City amp County Airport Commission (San Francisco International Airport)
Long Term Rating A+Stable Affirmed
San Francisco City amp County Airport Commission (San Francisco International Airport) VRDB
Long Term Rating AA+ I A-1 + Affirmed
Unenhanced Rating A+(SPUR)Stable Affirmed
San Francisco City amp County Airport Commission (San Francisco International Airport) VRDB
Long Term Rating AA+ I A-1 Affirmed
Unenhanced Rating A+(SPUR)Stable Affirmed
San Francisco City amp County Airport Commission (San Francisco International Airport) VRDB
Long Term Rating AA+ I A-1 Affirmed
Unenhanced Rating A+(SPUR)Stable Affirmed
San Francisco City amp County Airport Commission (San Francisco International Airport) VRDB (ASSURED GTY)
Long Term Rating AANRStable Affirmed
Unenhanced Rating A+(SPUR)Stable Affirmed
San Francisco City amp County Airport Commission (San Francisco International Airport) VRDB (ASSURED GTY)
Long Term Rating AANRStable Affirmed
Unenhanced Rating A+(SPUR)Stable Affirmed
San Francisco City amp County Airport Commission (San Francisco International Airport) VRDB 368
Long Term Rating AA+ I A-1 Affirmed
Unenhanced Rating A+(SPUR)Stable Affirmed
San Francisco City amp County Airport Commission (San Francisco International Airport) (ASSURED GTY)
Unenhanced Rating A+(SPUR)Stable Affirmed
San Francisco City amp County Airport Commission (San Francisco International Airport)
Unenhanced Rating A+(SPUR)Stable Affirmed
Many issues are enhanced by bond insurance
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1925121 I 300091ss1
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Copyrightcopy 2017 by Standard amp Poors Financial Services LLC All rights reserved
No content (including ratings credit-related analyses and data valuations model software or other application or output therefrom) or any part thereof (Content) may be modified reverse engineered reproduced or distributed in any form by any means or stored in a database or retrieval system without the prior written permission of Standard amp Poors Financial Services LLC or its affiliates (collectively SampP) The Content shall not be used for any unlawful or unauthorized purposes SampP and any third-party providers as well as their directors officers shareholders employees or agents (collectively SampP Parties) do not guarantee the accuracy completeness timeliness or availability of the Content SampP Parties are not responsible for any errors or omissions (negligent or otherwise) regardless of the cause for the results obtained from the use of the Content or for the security or maintenance of any data input by the user The Content is provided on an as is basis SampP PARTIES DISCLAIM ANY AND ALL EXPRESS OR IMPLIED WARRANTIES INCLUDING BUT NOT LIMITED TO ANY WARRANTIES OF MERCHANTABILITY OR FITNESS FOR A PARTICULAR PURPOSE OR USE FREEDOM FROM BUGS SOFTWARE ERRORS OR DEFECTS THAT THE CONTENTS FUNCTIONING WILL BE UNINTERRUPTED OR THAT THE CONTENT WILL OPERATE WITH ANY SOFTWARE OR HARDWARE CONFIGURATION In no event shall SampP Parties be liable to any party for any direct indirect incidental exemplary compensatory punitive special or consequential damages costs expenses legal fees or losses (including without limitation lost income or Jost profits and opportunity costs or losses caused by negligence) in connection with any use of the Content even if advised of the possibility of such damages
Credit-related and other analyses including ratings and statements in the Content are statements of opinion as of the date they are expressed and not statements of fact SampPs opinions analyses and rating acknowledgment decisions (described below) are not recommendations to purchase hold or sell any securities or to make any investment decisions and do not address the suitability of any security SampP assumes no obligation to update the Content following publication in any form or format The Content should not be relied on and is not a substitute for the skill judgment and experience of the user its management employees advisors andor clients when making investment and other business decisions SampP does not act as a fiduciary or an investment advisor except where registered as such While SampP has obtained information from sources it believes to be reliable SampP does not perform an audit and undertakes no duty of due diligence or independent verification of any information it receives
To the extent that regulatory authorities allow a rating agency to acknowledge in one jurisdiction a rating issued in another jurisdiction for certain regulatory purposes SampP reserves the right to assign withdraw or suspend such acknowledgement at any time and in its sole discretion SampP Parties disclaim any duty whatsoever arising out of the assignment withdrawal or suspension of an acknowledgment as well as any liability for any damage alleged to have been suffered on account thereof
SampP keeps certain activities of its business units separate from each other in order to preserve the independence and objectivity of their respective activities As a result certain business units of SampP may have information that is not available to other SampP business units SampP has established policies and procedures to maintain the confidentiality of certain nonpublic information received in connection with each analytical process
SampP may receive compensation for its ratings and certain analyses normally from issuers or underwriters of securities or from obligors SampP reserves the right to disseminate its opinions and analyses SampPs public ratings and analyses are made available on its Web sites wwwstandardandpoorscom (free of charge) and wwwratingsdirectcom and wwwglobalcreditportalcom (subscription) and wwwspcapitaliqcom (subscription) and may be distributed through other means including via SampP publications and third-party redistributors Additional information about our ratings fees is available at wwwstandardandpoorscomusratingsfees
STANDARD amp POORS SampP and RATINGSDIRECT are registered trademarks of Standard amp Poors Financial Services LLC
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1925121 I 300097587