The Battle Goes On To Fund the O'Hare Modernization Program

The fight over the O'Hare Modernization Program continues.  In our last episode, opponents of the program -- including the villages of Bensenville and Elk Grove, St. John's United Church of Christ and St. Johannes Cemetery -- had just lost their battle in the D.C. Circuit Court of Appeals to stop construction under the federal Religious Freedom Restoration Act.  I wrote about this in the Dec. 20 issue (subscribers only) of Aviation Daily. 

The lawsuit had charged that OMP has committed a "host" of federal statutory violations under RFRA and the federal Airport and Airway Improvement Act, which prohibits FAA from funding OMP's $2.8 billion Phase I Airfield Project.

FAA awarded OMP an Airport Improvement Program  grant of $337 million for Phase 1 in August.  In its ruling, the court found that the choices made by the city of Chicago as owner and operator of O'Hare Airport do not constitute federal action and therefore are not subject to the Religious Freedom Restoration Act.  Opponents say that by receiving the federal AIP grant, OMP was subject to RFRA, but the court disagreed.

But now documents obtained by opponents under a Freedom of Information Act request show that O'Hare's airline tenants turned down the city's request to issue another $500 million in bonds to fund the OMP. My story (subscribers only) appeared in the Jan. 16 issue of Aviation Daily.  The extra money is needed to cover a funding shortfall for the $2.8 billion phase one of the project, which has grown to $3.2 billion.

"It was determined by a Majority-In-Interest of Airline Parties that this proposal is not beneficial, and, as such, have voted to disapprove this request," wrote Sandra Widerborg, chairwoman of Chicago O'Hare Airlines Top Committee, in a letter to Commissioner Nuria Fernandez. "We feel it is incumbent upon the OMP leadership to identify substantial cost savings that will bring the program costs back within the approved $2.88 billion budget."  So to handle the funding gap, the City of Chicago asked permission from FAA to impose a $4.50 Passenger Facility Charge (PFC) at O'Hare International Airport, worth $270 million.

Meanwhile, lawyers for the OMP opponents again filed with the D.C. Circuit Court of Appeals, asking it to consider the airlines' refusal letter while considering the villages' challenge to federal funding for the O'Hare project. Opponents note that the $270 million PFC is above a pending request for more than $1 billion in PFC funds for the Phase 1 Airfield Project and above the $337 million federal grant commitment currently under challenge in the federal courts.

My question is why did OMP move ahead with construction without making sure it had all the land it needed beforehand?  The city moved ahead with the program despite not having bought all the land it needed because "we were confident the City of Chicago's plan would be approved," said OMP spokesman Roderick Drew. "The ruling means we will continue to move forward with construction on this project. We have withstood every legal challenge thus far, and we are confident that the OMP will be built in its entirety."   And I noticed a PDF file on the OMP's Web site with six pages listing the properties that the program still needs to purchase for construction to move ahead, at a cost of $283.4 million.  As of the end of November 2006,  OMP had acquired 331 of the 611 parcels in the Village of Bensenville, 54 percent of the number of parcels slated for acquisition.

OMP has already awarded $559 million in construction contracts through the end of November 2006, with plans to advertise contracts worth another $150 million through the end of 2006 and another $1 billion in 2007.  The program has created 195,000 more jobs, and  $18 billion in annual economic activity, so it's not easy -- or politically practical -- to let a thing like land acquisition get in the way of things.

But it seems to me that a lot of time and money has been spent on these legal challenges, and one has to wonder if the continued fighting has contributed to OMP's budget shortfall.  I do understand that construction costs across the country have increased substantially due to the aftereffects of Hurricane Katrina.  But where and how does this end?