Airport Financing:

Use of Funds for Capital Improvements at Chicago O'Hare International Airport

RCED-00-275R: Published: Sep 29, 2000. Publicly Released: Oct 5, 2000.

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Gerald Dillingham, Ph.D.
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Pursuant to a congressional request, GAO provided information on the use of funds for capital improvements at Chicago O'Hare International Airport, focusing on several funding sources: (1) the Airport Improvement Program (AID), a grant program administered by the Federal Aviation Administration (FAA); (2) passenger facility charges, (PFC) a per-passenger fee levied on each passenger enplaning at the airport; (3) General Airport Revenue Bonds (GARB) issued by the city of Chicago, which owns and operates the airport; and (4) other revenue bond funds that are not secured by general airport revenues, but by specific sources of airport income.

GAO noted that: (1) from 1990 through 1999, the four funding sources provided the city of Chicago with $2.4 billion for use at O'Hare International Airport; (2) of this amount, the city spent about $1.9 billion for capital improvement projects; (3) a portion of the remainder was spent on capitalized interest during the construction period of the capital improvement projects, certain debt service payments, and related financing costs; (4) as of December 31, 1999, approximately $205 million was available for capital improvement projects and earmarked for future projects, according to city officials; (5) the types of capital projects varied by funding source; (6) for example, over two-thirds of the AIP funds were spent on taxiways, noise mitigation, and aircraft parking aprons, while PFC funds were distributed more widely among additional types of projects, such as terminals and runway rehabilitation; (7) a substantial amount of the funds from GARBs purchased property adjacent to the airport from the federal government, and most of the funds from other bonds were used for improvements at the international terminal; (8) the types of capital projects at O'Hare airport and the amounts spent on them varied for each specific source; (9) the city has spent $209 million of the $224 million in AIP funding available for capital improvements, mainly for four types of projects: taxiways, noise mitigation, aircraft aprons, and security; (10) these four project types accounted for 78 percent of the total AIP funds spent from 1990 through 1999; (11) the remaining funds have been earmarked for specific projects; (12) most AIP funds were spent in the early 1990s, before the shift to the newly created PFC program; (13) since the city first began collecting a PFC in late 1993, it has spent $409 million of the total collected through 1999; (14) about 60 percent of this amount funded four types of projects: airport terminal rehabilitation, taxiway improvements, aircraft aprons, and noise mitigation; (15) of the $743 million derived from GARBs from 1990 through 1999, the city has spent $591 million on capital projects, mainly for land and terminal support, which includes land purchased from the federal government, access roads, and parking structures; and (16) of the $914 million generated from other bonds, the city has spent about $669 million on capital projects--specifically, the international terminal, noise mitigation, and airfield drainage improvements.

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