Future O'Hare tax use gets OK

Chicago reached a major milestone Tuesday by receiving federal approval to collect almost $1.3 billion in future air passenger ticket taxes to expand O'Hare International Airport.

In addition to getting help paying for new runways, the approval permits the city to use the ticket taxes to help pay for increases in the cost of acquiring land. The airlines strongly oppose using ticket taxes for land acquisition.

The Federal Aviation Administration decision marked the first authorization to use O'Hare's $4.50 passenger facility charge, which is added to airfares on every departing flight, for the $15 billion airport expansion project. The ticket tax revenues, currently used to improve airport facilities, will be shifted to support O'Hare expansion starting in 2016 and continuing until May 1, 2024.

The FAA decision does not increase the ticket tax for the traveling public. But the Chicago Department of Aviation and other large airport authorities have asked Congress for permission to boost the tax from the current $4.50 per flight to $7.50 -- a 67 percent increase -- to help pay for airport capital-improvement projects.

The FAA approved the city's entire request to use $1.27 billion in ticket taxes to finance construction of two new runways, extend an existing runway and absorb $270 million in unanticipated additional costs to buy suburban properties near the airport.

American Airlines, United Airlines and the other carriers serving O'Hare vigorously challenged the city's plans to sell more bonds or use ticket taxes to pay for land-acquisition costs, which have risen from an original estimate of $381 million to $651 million.

The airlines argued that ticket-tax revenue should be spent improving airport facilities. City officials blamed the climbing land costs on the FAA approving the expansion project later than the city expected and on litigation with airport opponents.

Rosemarie Andolino, the city's chief of O'Hare expansion, insisted the airlines remain on board with the overall goal of increasing capacity at the world's second-busiest airport, even though no airline has agreed to help fund the second phase of the project, which is where the majority of the reductions in flight delays would occur.

Andolino also said Tuesday's FAA decision was a major victory against airport critics.

"To opponents of O'Hare expansion we say the program is being built and it is being funded," said Andolino, executive director of the O'Hare Modernization Program.

"It's really not up for discussion any longer because the FAA has come back and said this is a much-needed project to increase flight capacity and decrease delays," she said.

However, Bensenville, Elk Grove Village and religious groups attempting to save the St. Johannes Cemetery, which lies in the path of O'Hare expansion, are continuing to challenge the airport project and FAA funding of it in both federal and local courts.

The next hearing, involving a preliminary injunction barring Chicago from demolishing vacant properties it owns in Bensenville, is set for Wednesday in DuPage County Circuit Court.

Chicago has acquired 512 of the 611 properties it says are needed for O'Hare expansion.

Joseph Karaganis, an attorney representing the airport opponents, said the FAA's approval of using passenger ticket taxes for the O'Hare project also will be challenged in federal court. The opponents argue that the expansion project fails a federally mandated cost-benefits test and therefore is ineligible for federal funding. They also contend the planned demolition of the cemetery violates religious-freedom laws.

Under Tuesday's FAA action, the agency granted more than $1.29 billion in ticket tax authority to Chicago.

As part of the total, Gary-Chicago International Airport received authority to direct $8.2 million in passenger ticket taxes toward airport improvements.

The ticket-tax revenue collected from 2016 until May of 2024 will help pay for the first phase of the massive airfield project, which is behind schedule and about $400 million over budget, according to the latest estimate that Andolino has provided.