How would you describe Jay Leno? Your first instinct might be to call him a comedian, especially given his time hosting NBC’s “The Tonight Show with Jay Leno.” But for many of us, “car enthusiast” is probably also on the list of terms we would use to describe the celebrity.
Leno has a YouTube channel, Jay Leno’s Garage (1), with video topics ranging from classic cars to auto repair projects. It has launched its own line of vehicle care products (2). He even has a famous collection of at least 181 cars and 160 motorcycles in his “Big Dog Garage”, located in Burbank, California.
So it makes sense that Leno was selected to represent Hollywood Burbank Airport in a new video about financing its terminal relocation project. And that his love for cars was reflected in the video.
In the marketing video, Leno gets behind the wheel of a 1930 Duesenberg at the terminal construction site to inform the public about the project’s progress and sell airport revenue bonds to help finance the terminal’s completion.
Hollywood Burbank Airport is about 53 kilometers from Los Angeles International Airport (LAX) and close to many employees of large networks and studios, such as NBCUniversal, Netflix, Nickelodeon and The Walt Disney Company, says Bloomberg (3).
In the video, Leno describes Burbank as “an oasis” in Los Angeles and calls Los Angeles a “crazy city with homelessness, crime and taxes.”
The airport is relocating and renovating this terminal to meet current Federal Aviation Administration (FAA) safety standards. It will be 355,000 square feet, will have 14 doors and will include up to 6,637 parking spaces (4).
Los Angeles officials expect many travelers to use the terminal in the coming years: the city will host the Super Bowl in 2027 (5) and the Summer Olympics and Paralympics in 2028 (6). The new terminal is expected to be ready this October.
The project is expected to cost more than $1.3 billion (7). According to the Burbank city government website, “The investment needed to pay for the new terminal will be funded by the FAA, airlines, and airport users (8).”
Jay Leno is trying to help the airport raise some of that $1.3 billion by selling roughly $379 million in airport revenue bonds.
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An airport revenue bond is a type of municipal or “muni” bond. States, cities, counties, and government organizations issue municipal bonds to finance projects such as building schools, sewer systems, or airports (9).
Since airport revenue bonds are used to build a new terminal, the debt is collateralized by airport activities such as landing fees, concessions, and parking fees (10).
You can buy municipal bonds with terms of up to 30 years. The longer the term, the higher the return you will get (11).
Fitch Ratings (12), one of the three major U.S. bond rating agencies, gives Burbank-Glendale-Pasadena Airport Authority bonds an A- rating (13). Municipal bonds can have much lower ratings and A- is considered “investment grade.” Bonds with lower ratings are called “non-investment grade” and are called junk or high-yield bonds (14).
The higher a bond’s rating, the more likely the issuer will be able to make interest payments to investors and repay the debt at maturity. Additionally, bonds with higher ratings pay lower yields because they involve less risk. Bonds with lower ratings (in the B, C, or D range) pay higher yields because they are riskier (15).
In most cases, you do not need to pay federal taxes on the interest on municipal bonds. You are also usually exempt from state and local taxes on the interest if you live in the state where the bond is issued (16).
The airport marketing video featuring Jay Leno includes a disclaimer that it is intended to provide information, not investment advice.
Airport revenue bonds and municipal bonds in general can be solid tools for diversifying your investment portfolio.
That said, if you’re new to investing, it’s probably not the first thing you want to put your money into. If your employer offers a retirement plan, especially one with a company match, that’s a good place to start. Also consider investing in mutual funds, exchange-traded funds, and individual stocks through an IRA. If you’ve covered these bases, then you can start thinking about revenue bonds (17).
Income bonds are typically best for people who are approaching retirement and want lower-risk investments and tax-free income. These tax-free investments could also be a good option for people who live in states with high tax rates (18).
Before investing in municipal bonds, look up the bond’s rating at Fitch Ratings or one of the other two bond rating agencies, Moody’s (19) or Standard’s & Poor’s (20). The higher the rating, the smarter and safer the investment should be.
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YouTube (1); Leno’s Garage (2); Bloomberg (3); City of Burbank (4), (8); Los Angeles Super Bowl Host Committee (5); LA28 (6); Raise BUR (7); United States Securities and Exchange Commission (9), (16); Investopedia (10); FMS Bonds (11); Fitch Ratings (12),(13); Fidelity (14),(15),(17),(18); Moody’s (19); S&P Global (20)
This article originally appeared on Moneywise.com with the title: Jay Leno Hops in a 1930 Duesenberg to Help Sell Nearly $400 Million in Bonds to Pay for Burbank Airport Terminal Project.
This article provides information only and should not be construed as advice. It is provided without warranty of any kind.
