Bond Sale for Airport Challenged : Burbank: City attorney says council approval is required. Commissioners still hope to collect as much as $350 million to buy land for expansion.

In the first step toward financing construction for a larger Burbank Airport terminal, airport officials hoped to issue millions of dollars in tax-exempt bonds with the Burbank City Council’s approval.

But Burbank City Attorney Joe Fletcher has determined that council members may deny the request, posing a potential obstacle for airport officials who have waited 11 years to expand the 163,000-square-foot terminal.

Under federal law, tax-exempt bonds cannot be issued until a public hearing is held and Burbank council members or other elected officials approve the plan, Fletcher wrote in a staff report Thursday.

“In no case, however, can the approval be by an individual or body not elected by the residents of the affected governmental unit,” he added, in reference to the airport’s nine commissioners, who are not elected officials.

The Airport Authority, made up of appointed commissioners from Burbank, Glendale and Pasadena, won a major court victory last month enabling it to move the multimillion-dollar project closer to the construction phase.

The commissioners had hoped to collect as much as $350 million in either tax-exempt or taxable bonds to purchase land on which the terminal will be built, and complete the first phase of the project by 1998.

Tax-exempt bonds allow a public entity such as the Airport Authority to raise much-needed capital, while investors can earn interest without having to pay federal or state income taxes.

Taxable bonds, which carry higher interest rates, could cost the Airport Authority millions of dollars more than tax-exempt bonds over several years, said airport spokesman Victor Gill. But taxable bonds do not require a public hearing or approval prior to being issued.

On Tuesday, Vice Mayor Dave Golonski asked for Fletcher’s legal opinion on the matter, in light of strong opposition to the project from some Burbank residents.

Some council members, including Golonski, have expressed frustration in recent weeks over a perceived lack of information about the project from the Airport Authority.

“I don’t think we’ve gotten very much information from them,” said City Manager Robert (Bud) Ovrom. “We didn’t know much about what the Airport Authority was doing in the past week.”

Airport Commissioner Robert Garcin responded to Fletcher’s report with resolve. “The project will go forward,” he said, adding that the Airport Authority may instead seek approval from the county Board of Supervisors or issue only taxable bonds.