City To Issue $1B In Bonds To Fund O’Hare Expansion
CHICAGO (STMW) – Mayor Daley’s plan to issue $1 billion in bonds — retired by airline ticket taxes and other airport revenues — to build a new south runway and other projects at O’Hare Airport has finally been cleared for take-off.
One week after city concessions and $155 million in new federal funds got Daley’s signature project back on track, City Hall declared its intention to proceed with the massive borrowing that had been stalled by an unprecedented lawsuit filed by United and American Airlines.
The Daley administration now plans to issue $1 billion in general airport revenue bonds during the week of April 18 to finance: a far south runway originally scheduled to be completed last; a new south air traffic control tower; completion of a center runway that includes a disputed cemetery; relocation of Irving Park Road; and a series of taxiways and facility buildings.
Another $51 million in bonds will be retired by the so-called “passenger facility charge” tacked on to airline tickets.
“We must continue to invest in our airport infrastructure. These bonds will provide important financing for continuing our key construction projects at O’Hare,” Chief Financial Officer Gene Saffold said in a press release.
Aviation Commissioner Rosemarie Andolino called the massive runway expansion project that had virtually ground to a halt the nation’s “largest civil construction project.
“This financing helps us continue to move forward … to secure Chicago’s leading position in the global aviation system,” she said.
Both bond issues were approved by the City Council last fall, only to be stuck in a holding pattern after United and American filed a lawsuit they have now agreed to drop.
U.S. Transportation Secretary Ray LaHood brokered the deal and put $155 million in new federal money on the table to make the numbers work for airlines squeezed by skyrocketing fuel prices.
Daley did his part by dividing the $3.4 billion in remaining O’Hare projects — and leaving the second part of it for Mayor-elect Rahm Emanuel to resolve.
The city also agreed that a new western terminal the airlines don’t want will be developed only if demand requires it, and that construction of a north runway will be negotiated and not dictated by the city.
Under the compromise, the city will kick in $365 million in ticket tax revenues and the airlines will contribute $300 million through their landing and rental fees. The city will use this revenue stream to support general aviation revenue bonds.
The $1 billion in bonds will be underwritten by Citi and will include Siebert Brandford Shank & Co., an African-American firm, as co-senior manager.