O'Hare Expansion Costs Rise USD$400 Mln
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O'Hare Expansion Costs Rise USD$400 Mln
October 16, 2006
With a bond sale for Chicago's O'Hare International Airport set for November, Chicago officials are disclosing an approximately USD$400 million cost overrun for the first phase of a massive overhaul and expansion of the airport.
Litigation that has blocked land acquisition for the project and construction delays were the main reasons for the ballooning price tag, according to Roderick Drew, a spokesman for the O'Hare Modernization Program.
Bensenville and Elk Grove Village, suburbs that stand to lose land to the airport expansion, along with a cemetery in the path of the expansion, have been fighting the project in court. Cases are pending in federal courts in Washington DC and Chicago.
Wade Nelson, a spokesman for the suburbs' airport coalition, said the higher price tag for the project was no surprise.
"We've been saying for years the city was underestimating or understating the cost of this project," he said.
The program's initial phase had been estimated at nearly USD$2.9 billion.
Drew said the city plans to fund shortfalls with the same financing sources slated for the entire project -- general airport revenue bonds, passenger facility charges and airport improvement funds. He added that discussions on securing additional funding will continue with airlines at O'Hare.
The cost overrun came up in rating discussions, said Peter Stettler, a Fitch Ratings analyst, pointing to Chicago's plan to sell up to USD$275 million of airport refunding bonds through UBS Financial Services in November.
"It's something we're going to have to take into consideration," Stettler said.
The Federal Aviation Administration gave final approval in September 2005 to the project, which was expected to cost USD$7.5 billion. The project, which adds, relocates and extends runways, among other improvements, was aimed at reducing flight delays at O'Hare that ripple through the US air traffic system.
Last November, the FAA committed more than USD$337 million to the initial phase of the plan.
Other projects that were not part of the FAA's approval and that some say are necessary for the O'Hare plan to work would push the price tag up to nearly USD$14.3 billion, according to FAA documents.
(Reuters)
With a bond sale for Chicago's O'Hare International Airport set for November, Chicago officials are disclosing an approximately USD$400 million cost overrun for the first phase of a massive overhaul and expansion of the airport.
Litigation that has blocked land acquisition for the project and construction delays were the main reasons for the ballooning price tag, according to Roderick Drew, a spokesman for the O'Hare Modernization Program.
Bensenville and Elk Grove Village, suburbs that stand to lose land to the airport expansion, along with a cemetery in the path of the expansion, have been fighting the project in court. Cases are pending in federal courts in Washington DC and Chicago.
Wade Nelson, a spokesman for the suburbs' airport coalition, said the higher price tag for the project was no surprise.
"We've been saying for years the city was underestimating or understating the cost of this project," he said.
The program's initial phase had been estimated at nearly USD$2.9 billion.
Drew said the city plans to fund shortfalls with the same financing sources slated for the entire project -- general airport revenue bonds, passenger facility charges and airport improvement funds. He added that discussions on securing additional funding will continue with airlines at O'Hare.
The cost overrun came up in rating discussions, said Peter Stettler, a Fitch Ratings analyst, pointing to Chicago's plan to sell up to USD$275 million of airport refunding bonds through UBS Financial Services in November.
"It's something we're going to have to take into consideration," Stettler said.
The Federal Aviation Administration gave final approval in September 2005 to the project, which was expected to cost USD$7.5 billion. The project, which adds, relocates and extends runways, among other improvements, was aimed at reducing flight delays at O'Hare that ripple through the US air traffic system.
Last November, the FAA committed more than USD$337 million to the initial phase of the plan.
Other projects that were not part of the FAA's approval and that some say are necessary for the O'Hare plan to work would push the price tag up to nearly USD$14.3 billion, according to FAA documents.
(Reuters)
