City lands $337 million from U.S. for O'Hare
Mineta says runway expansion is key to transportation
By Jon Hilkevitch
Tribune transportation reporter
Published November 22, 2005
Hoping to end "headaches and heartaches" among air travelers delayed in Chicago, the Bush administration approved a $337 million down payment Monday to build new runways at O'Hare International Airport.
The approval, announced at O'Hare by U.S. Transportation Secretary Norman Mineta, exceeded Chicago's request for $300 million in federal airport improvement funds for the first phase of airfield expansion.
But the federal government will stagger delivery of the money over 15 years instead of the 10 years sought by the city. That will result in annual payments of $20 million rather than $30 million, possibly requiring the city to sell more bonds to finance construction.
The letter of intent Mineta signed with Mayor Richard M. Daley in the basement of the United Airlines terminal also included a separate commitment of $37.2 million that will be paid to the city over the next five years.
"O'Hare must expand in order to keep ahead of the growing demand for air travel," Mineta said. "If it doesn't, our entire national aviation system suffers. And, frankly, that is not going to happen on my watch."
The Federal Aviation Administration approved the city's O'Hare Modernization Program on Sept. 30. But it later rejected Chicago's benefit-cost analysis as flawed. To qualify for federal money, airports are required to demonstrate that the benefits of a project exceed the costs.
The FAA pointed to "misleading" information provided by the city that "inappropriately suggests ... sufficient evidence to justify the proposed project," according to FAA documents obtained by the Tribune.
The FAA, eager to move ahead on O'Hare expansion, hired a consultant to re-do the benefit-cost analysis after the agency concluded, "The benefits estimated under the [city's] approach are artificial and would never have been realized."
In the new analysis, the FAA concluded that the city's financial plan to pay for the first phase of O'Hare expansion is "realistic, reasonable and credible."
Officials of American Airlines and United Airlines, which signed agreements with Chicago to back airport revenue bonds with landing fees and other payments to the city, applauded the federal funding decision. But the airlines have so far agreed only to the first half of the massive airport overhaul.
O'Hare handles about 2,850 flights daily. Chicago's plan to reconfigure intersecting runways into a parallel-runway design will allow about 500 additional flights each day by the end of the decade, Mineta said.
The FAA says the expanded airport could safely accommodate 1.2 million flights annually with a reasonably low level of delays.
O'Hare handled 992,471 flights in 2004, when it scored the worst on-time flight performance of the largest U.S. airports, "causing headaches and heartaches for countless travelers nationwide," Mineta said.
But the FAA cautioned that severe flight delays could return to O'Hare shortly after construction is completed, or when activity reaches 1.4 million flights annually.
Daley smiled broadly as he watched Mineta sign the funding agreement before picking up a pen himself. The mayor noted that O'Hare has not added a runway in more than 30 years.
"A modern, efficient O'Hare Airport will be welcomed not just by residents of the Chicago area, but also by a man in Toledo who needs to get to L.A., a woman in Des Moines with business interests in London," Daley said. "The whole nation benefits. People get to spend more time doing what they want to do."
The anticipated total federal funding is $677 million over the life of the runway project. That accounts for about 9 percent of the $7.52 billion (based on 2004 dollars) the city currently estimates it will cost to reconfigure O'Hare's runways.
About 59 percent of the money would come from general airport revenue bonds sold by the city; 22 percent from passenger ticket taxes; and 10 percent from third-party financing.
Capital improvements necessary to make the airfield project work, plus new terminals, would bring the total cost to almost $15 billion, according to the city.
However, the $15 billion price tag does not include building a planned western-access roadway into O'Hare; expanding surrounding expressways, toll roads and major arterial streets; or building up mass-transit rail lines to accommodate the expected surge in passengers. Those airport-related improvements would cost about $4 billion, according to estimates by the Illinois Department of Transportation.
Opponents of O'Hare expansion said they expected the federal funding approval. The decision, they said, opens the door to challenge in court the FAA's benefit-cost analysis that triggered the funding approval.
"This project is just bad, and it shouldn't go forward," said Bensenville Mayor John Geils. "With the funding now official, we finally get to try this case on the merits in court."
The funding approval came less than a week after a federal judge in Chicago tossed out a case brought by O'Hare opponents seeking to prevent the city from acquiring a religious cemetery and more than 400 acres in Bensenville and Elk Grove Village for expansion. A separate appeal is still pending in the U.S. Court of Appeals in Washington, D.C.
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jhilkevitch@tribune.com