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Chicago Proposes Use of Ticket Taxes for Expansion

Tue March 27, 2007 - Midwest Edition
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CHICAGO (AP) The city of Chicago plans to seek federal approval to use $270 million in passenger ticket taxes to cover the growing costs of expanding O’Hare International Airport.

The money would come from ticket taxes, also called passenger facility charges, already collected in the form of a $4.50 fee that travelers pay on each leg of travel. FAA approval is required to spend the tax money.

The $270 million would represent almost two years’ worth of O’Hare ticket tax collections.

It would pay for suburban land acquisition and building demolition needed for new runways as part of a larger $15 billion O’Hare expansion project that already is $400 million over budget, according to Project Director Rosemarie Andolino.

The planned application to the FAA is an attempt to make up some of the shortfall after the airlines turned down the city’s request to sell $500 million more in general airport revenue bonds. Airlines must approve new bonds backed by their revenues.

The city filed a public notice of its intent in late December, triggering a period of public comment that ends Feb. 2, city Spokesman Roderick Drew said. After that, the city planned to file a formal application to the Federal Aviation Administration, Drew said.

“The airlines said ’no’ for new money right now, and that’s okay with us,” Andolino said. “We have a problem to solve and we are solving it in a way that bypasses the need for new [revenue bonds]. The airlines still support the modernization program.”

The airlines agreed to underwrite $1.87 billion for the first phase of the project, but are urging the city to keep costs down and get the project back within its budget, according to airline officials.

“Until we and the city have thoroughly explored all ways to bring the project within budget, we think it is premature to issue more general airport revenue bonds to fund cost overruns,” American Airlines Spokeswoman Mary Frances Fagan said. “We want Phase One built on-budget.”

Foes of the project said the airlines finally are becoming aware of cost overruns.

“The costs are spiraling out of control and the airlines say they won’t pay for it anymore,” said Elk Grove Village Mayor Craig Johnson.

The city said the airport overhaul project will reconfigure intersecting runways into a more modern, parallel layout, substantially reducing delays and allowing for increased capacity as well as construction of a new terminal facility with more gates and parking on the airport’s west side.

The expansion is expected to reduce delays at the airport by 68 percent, the FAA has said.

Andolino said the request to tap into the fees would help move the expansion forward without affecting ticket prices.

“It’s not a new tax. … It doesn’t affect travelers,” Andolino said. “What does affect travelers is we’re building those runways that are long overdue at O’Hare.”

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