GAO/RCED-00-275R Airport Financing at Chicago’s O’Hare Airport

B-286088

September 29, 2000

The Honorable Henry J. Hyde

The Honorable Jesse Jackson, Jr.

House of Representatives

Subject: Airport Financing: Use of Funds for Capital Improvements at Chicago

O’Hare International Airport

This report responds to your concerns about the funds provided and spent at Chicago

O’Hare International Airport for capital improvements in light of the questions you

have raised about the capacity of the airport system in the Chicago area. Specifically,

you asked us to determine funding sources for capital improvements at Chicago’s

O’Hare International Airport from 1990 through 1999 and the type of projects this

funding was spent on. As agreed, we focused our work on the following four funding

sources:

• the Airport Improvement Program (AIP), a grant program administered by the

Federal Aviation Administration (FAA). Historically, somewhat more than 50

percent of this funding has been allocated on the basis of formulas mandated by

the Congress, although FAA has discretionary authority to allocate part of the

funds on the basis of specific needs identified by airports. If all formula changes

associated with funding AIP at levels authorized in AIR 211

are implemented, the

share of AIP allocated by formula would increase above 60 percent.

• passenger facility charges (PFC), a per-passenger fee levied on each passenger

enplaning at the airport. Airports have more flexibility using these funds than

using AIP, although FAA still must approve an airport’s application to impose this

fee, as well as the total amount to be collected and the projects to be funded with

the proceeds.

• General Airport Revenue Bonds (GARB) issued by the city of Chicago, which

owns and operates the airport. These bonds are secured by a pledge of the

general revenues of Chicago O’Hare International Airport.

1

The Wendell H. Ford Aviation Investment and Reform Act for the 21st Century, P.L. 106-181, signed

April 15, 2000.

Resources, Community, and

Economic Development Division

United States General Accounting Office

Washington, DC 20548
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2 GAO/RCED-00-275R Airport Financing at Chicago’s O’Hare Airport

• other revenue bond unds that are not secured by general airport revenues,

but by specific sources of airport income. In the last 10 years, the city of

Chicago has issued bonds backed by revenue collected from the PFC

program and bonds backed by revenue generated specifically from the

international terminal at the airport.

In summary, we found that from 1990 through 1999, these four funding sources

provided the city of Chicago with $2.4 billion for use at O’Hare International Airport.

Of this amount, the city spent about $1.9 billion for capital improvement projects. 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. As of December 31, 1999, approximately $205 million was

available for capital improvement projects and earmarked for future projects,

according to city officials. Figure 1 shows the amounts provided and spent for

capital improvement projects from each of the four funding sources. These amounts

represent the nominal sums of the dollars spent each year and have not been adjusted

for inflation. In enclosure V, we show figure 1 with amounts provided and spent in

constant (inflation-adjusted) 1999 dollars.
B-286088

3 GAO/RCED-00-275R Airport Financing at Chicago’s O’Hare Airport

Figure 1: Funds Provided and Spent for Capital Improvements, by Funding Source, 1990 Through 1999

22%

•

31%

•

38%

•

9%

22%

•

31%

•

36%

•

11%•

•

Airport Improvement

Program funds

Passenger

Facility Charges

General Airport

Revenue Bonds

Other

revenue bonds

Total funds provided: 

$2.4 billion

Total funds spent 

on capital projects: 

$1.9 billion

$224

$519

$743

$914

$209

$409

$591

$669

Dollars in millions

Note: The $519 million available from the PFC program represents 23 percent of the $2.2 billion FAA has

approved for collection through 2017.

Source: GAO’s analysis of FAA’s and Chicago’s data.

The types of capital projects varied by funding source. 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. 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. The types of capital projects at O’Hare airport and the

amounts spent on them were as follows for each of the specific sources:
B-286088

4 GAO/RCED-00-275R Airport Financing at Chicago’s O’Hare Airport

• AIP funding: The city has spent $209 million of the $224 million available for

capital improvements, mainly for four types of projects: taxiways, noise

mitigation, aircraft aprons, and security. (See fig. 2.) These four project types

accounted for 78 percent of the total AIP funds spent from 1990 through 1999.

The remaining funds have been earmarked for specific projects. For the period of

our review, most AIP funds were spent in the early 1990s, before the shift to the

newly created PFC program.

Figure 2: AIP Funds Spent on Capital Projects at O’Hare International Airport, 1990 Through 1999

30%

20%

18%

22%

Taxiway improvements

$61.7

Noise mitigation

$42.4

Aircraft aprons

$37.9

Airport security

$20.8

All others

$46.3

10%

Dollars in millions

•

•

•

•

•

Source: GAO’s analysis of FAA’s data.
B-286088

5 GAO/RCED-00-275R Airport Financing at Chicago’s O’Hare Airport

• PFC funding: Since the city first began collecting a PFC in late 1993, it has spent

$409 million of the total collected through 1999. About 60 percent of this amount

funded four types of projects: airport terminal rehabilitation, taxiway

improvements, aircraft aprons, and noise mitigation. (See fig. 3.)

Figure 3: PFC Funds Spent on Capital Projects at O’Hare International Airport, 1993 Through 1999

Dollars in millions

16%

12%

41%

Terminals

$77.8

Taxiway improvements

$67.1

Aircraft aprons

$49.5

Noise mitigation

$47.1

All others

$168.0

12%

19%

Source: GAO’s analysis of Chicago’s data.
B-286088

6 GAO/RCED-00-275R Airport Financing at Chicago’s O’Hare Airport

• General Airport Revenue Bonds: Of the $743 million derived from GARBs

from 1990 through 1999, the city has spent $591 million on capital projects,2

mainly for land and terminal support, which includes land purchased from the

federal government, access roads, and parking structures3. (See fig. 4.) The

remainder of the proceeds is earmarked for future use on capital projects.

Figure 4: GARB Funds Spent on Capital Projects at O’Hare International Airport, 1990 Through 1999

Dollars in millions

47%

25%

Land support

$280.3

Terminal support

$148.5

All others

$162.4

27%

Note: Percentages do not add to 100 because of rounding.

Source: GAO’s analysis of Chicago’s data.

2

In addition, Chicago paid $155.6 million in capitalized interest on these bond funds that did not go

directly to the projects.

3

During the same time period, Chicago also issued nearly $1.5 billion in GARBs to refinance existing

debt. Because these funds were not available to the city for capital projects, we did not include them

in our analysis.
B-286088

7 GAO/RCED-00-275R Airport Financing at Chicago’s O’Hare Airport

• Other revenue bond funds: 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.4(See fig. 5.) The

remainder was used to fund capitalized interest and debt service reserve funds for

these bonds, except for $29 million which is earmarked for future use on noise

mitigation and airfield drainage improvements.

Figure 5: Other Revenue Bond Funds Spent on Capital Projects at O’Hare International Airport, 1990

Through 1999

Dollars in millions

74%

22%

International terminal

$496

Noise mitigation

$147

Airfield drainage

$26

4%

Source: GAO’s analysis of Chicago’s data.

Enclosures I through IV provide more details about each of these funding sources.

Agency Comments

We provided a draft of this report to the Department of Transportation (DOT) and the

city of Chicago for their review and comment. FAA responded for DOT. Both FAA

and city of Chicago officials also provided us with technical clarifications, which we

incorporated as appropriate.

Scope and Methodology

To determine the funding sources, we obtained information from financial data

provided by FAA and the city of Chicago. Our analysis covered the period from 1990

4

Chicago paid an additional $47.4 million in capitalized interest on these bonds that did not go directly

to the projects.
B-286088

8 GAO/RCED-00-275R Airport Financing at Chicago’s O’Hare Airport

through 1999, except for PFCs, which were not a source of revenue to the city until

1993. All figures reported in this report and in enclosures I through IV are presented

in nominal dollars, that is, without any adjustment for the inflation that has reduced

the purchasing power of the dollar during this period. In enclosure V, we present

figure 1 in constant (inflation-adjusted) 1999 dollars. We used the Department of

Commerce’s chain-type price index for gross domestic product to convert from

nominal to constant dollars.

For the AIP amounts, we used data and records supplied by FAA. The data reflect

the actual amounts of AIP funding that FAA released to the city of Chicago. Because

of time constraints, the city was not able to review and reconcile any differences

between FAA's data and records and the data and records maintained by the city.

For the PFC amounts approved for collection, we used FAA’s database of PFCs and

FAA’s Record of Decision, which approves the PFC applications. For actual PFC

collections and use, we used financial data provided by the city of Chicago. The data

were derived from the Independent Auditor’s Report and Financial Statements

prepared for O’Hare International Airport. For the period 1990 through 1999, these

audits have concluded the financial statements present fairly, in all material respects,

the airport’s financial position. We did perform limited cross-checking of information

with external sources to assess the reasonableness of the expenditure data. To do

this, we obtained quarterly reports on revenue and expenditures provided to FAA by

the city of Chicago. The city’s reports on PFC expenditures are also audited annually

by an independent auditor. We reviewed the audit reports to ensure that no problems

were noted with these amounts.

We obtained information on bonds from bond prospectuses, expenditure listings, and

other data supplied by the city of Chicago. We did not verify the accuracy of this

information, but it is part of the financial statements of O’Hare International Airport,

which is audited annually by an independent auditor.

We also interviewed officials at FAA’s PFC Branch, the Great Lakes Regional Office

Airports Division, and the Chicago Airports District Office. At the city of Chicago, we

discussed the use and reporting of airport revenues with representatives of the office

of the City Comptroller, the Department of Law, and the Department of Aviation.

We conducted our review from May through August 2000 in accordance with

generally accepted government auditing standards.

-----

Unless you publicly announce its content earlier, we plan no further distribution of

this report until 5 days after its issue date. At that time, we will send copies of the
B-286088

9 GAO/RCED-00-275R Airport Financing at Chicago’s O’Hare Airport

report to the Honorable Rodney E. Slater, Secretary of Transportation; the Honorable

Jane F. Garvey, Administrator, Federal Aviation Administration; and other interested

parties. We will also make copies available to others on request.

If you have any questions about this report, please call me at (202) 512-2834. Key

contributors to this report were Steven Calvo, Christopher Jones, Christopher

Hatscher, and Randy Williamson.

Gerald L. Dillingham, Ph.D.

Associate Director

Transportation Issues

Enclosures- 5
Enclosure I

10 GAO/RCED-00-275R Airport Financing at Chicago’s O’Hare Airport

Airport Improvement Program Grants

Airport Improvement Program (AIP) grants are made available from the Airport and

Airway Trust Fund5and are distributed in accordance with provisions contained in title

49 of the United States Code. Specifically, AIP funds are distributed by formula for use

at a specific airport or in a specific state or insular area are referred to as

apportionments. Under AIP, the funds are broken down as passenger entitlements,

which are apportioned based on the number of enplaned passengers; cargo entitlements,

which are apportioned based on the landed weight of all cargo aircraft; state

apportionment, which is based on population and area; and Alaska supplemental, which

is apportioned according to a grandfather provision for amounts apportioned in 1980.

A second type of fund is the Small Airport Fund, portions of which can be used for

projects at small hub, nonhub, commercial service, and general aviation airports. The

remaining funds are for use at the discretion of the Secretary of Transportation. The

restrictions are commonly referred to as discretionary set-asides. Of the remaining

funds, 75 percent is set aside for primary airports and relievers for capacity, safety,

security, or noise projects and 25 percent for any eligible project at the discretion of

FAA. These discretionary funds may also be restricted to certain types of work or

airports. For example, there are set-asides for the noise planning and projects and for

projects within the Military Airport Program.

Airports must share in the cost of projects approved for AIP funding. The airports’ share

of costs varies with the type of airport and type of project. For large primary airports,6

such as O’Hare International, the federal share is equal to 75 percent of a project’s

allowable cost.7The FAA defines the project’s scope in the grant agreement. The city of

Chicago funds the difference.

From fiscal years 1990 through 1999, the city of Chicago spent about $209 million of $224

million in AIP funds available for projects at O’Hare. The funds were spent on 11

different types of projects. (See table 1.) Four of the project types—taxiway

improvements, noise mitigation, aircraft aprons, and security—account for 78 percent of

the total. The remaining $15 million has been earmarked for specific projects.

5

The Trust Fund is financed by taxes on domestic and international airline travel, domestic cargo

transported by air, and noncommercial aviation fuel.

6

By law, AIP projects for large- and medium-hub airports, those that enplane 0.25 percent or more of the

total annual U.S. enplanements, have a 25-percent local match requirement.

7

For noise planning and mitigation, the ratio for large- and medium-hub airports is 80/20 federal/local.
Enclosure I

11 GAO/RCED-00-275R Airport Financing at Chicago’s O’Hare Airport

Table 1: AIP Expenditures for O’Hare International Airport, by Project Type, Fiscal Years 1990 Through 1999

Expenditures

Project type Amount Percent of

total

Examples of projects

Taxiways $61,676,811 30 • Construction of high-speed exit taxiway

• Rehabilitation of parallel taxiway “H”

Noise mitigation 42,355,040 20 • Design and construction to soundproof O’Hare area schools.

Aprons 37,877,919 18 • Construction of international aircraft parking apron

Security 20,817,341 10 • Design and installation of an access control and intrusion detection

system

Runways 17,036,538 8 • Overlay and regrooving of runway

• Repair of runway pavement joints

Weather equipment 7,958,098 4 • Purchase of snowplows, blowers, brooms, and deicers

Roadways 6,107,408 3 • Construction of road to international terminal

• Construction of new ditch bridge

Land 4,892,000 2 • Acquisition of leasehold rights to cargo facility

Terminal development 4,129,215 2 • Construction of terminal security bay

• Upgrading and improving pedestrian corridors

Lighting 3,922,198 2 • Rehabilitation of runway/taxiway lighting

• Installation of runway centerline lighting

Safety 2,282,500 1 • Purchase of 3000-gallon fire fighting vehicle

• Installation of 625 taxiway guidance signs

Total $209,055,068

Source: GAO’s analysis of FAA’s data.

AIP amounts have varied substantially from year to year, from a high of $43.7 million in

fiscal year 1990 to $1.9 million in fiscal year 1995. (See fig. 6.) Annual amounts have

been lower in the second half of the decade than in the first half. Several factors

contributed to this trend. First, during the 1990s, the lowest levels of AIP appropriations

occurred in 1995 and 1996. Second, 1995 project funding was largely provided in 1994

with a multi-year grant award. Finally, the PFC program began at many airports,

including O’Hare. The PFC program requires that large- and medium-hub airports like

O’Hare return 50 percent of their AIP apportionment funds.
Enclosure I

12 GAO/RCED-00-275R Airport Financing at Chicago’s O’Hare Airport

Figure 6: AIP Grant Awards to the city of Chicago at O’Hare International Airport, Fiscal Years 1990 Through

1999

0

5

10

15

20

25

30

35

40

45

50

1990 1991 1992 1993 1994 1995 1996 1997 1998 1999

Dollars in millions

Source: GAO’s analysis of FAA’s data.

The shift away from AIP funding is further evident in the expenditure data, in that over

half of the AIP funds for the decade were expended prior to fiscal year 1995. (See table

2.) The project types that consistently continued to receive AIP funding after this shift

were taxiway construction and rehabilitation and noise mitigation.

Table 2: AIP Expenditures for O’Hare International Airport, by Year and Project Type, Fiscal Years 1990

Through 1999

Dollars in millions

Project type 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 Total

Taxiways $2.6 0 $3.3 $8.0 $20.6 0 $6.9 $10.6 $9.7 0 $61.7

Noise mitigation 5.2 $9.0 8.1 6.0 3.6 $1.9 4.1 1.8 2.6 0 42.4

Aprons 17.3 0 0 6.6 14.0 0 0 0 0 0 37.9

Security 16.2 0 4.5 0 0 0 0.1 0 0 0 20.8

Runways 0 0 6.4 4.9 0 0 0 0 5.8 0 17.0

Weather equipment 2.4 0 0.7 0 0 0 4.8 0 0 0 8.0

Roadways 0 6.1 0 0 0 0 0 0 0 0 6.1

Land 0 0 0 4.9 0 0 0 0 0 0 4.9

Terminal development 0 2.8 1.3 0 0 0 0 0 0 0 4.1

Lighting 0 1.7 1.6 0.7 0 0 0 0 0 0 3.9

Safety 0 0.3 0 2.0 0 0 0 0 0 0 2.3

Total $43.7 $19.9 $25.9 $33.1 $38.3 $ 1.9 $15.9 $12.3 $18.1 0 $209.1

Note: Amounts may not add because of rounding. Fiscal year 1999 awards totaling $15 million remained unspent as

of September 30, 1999.

Source: Developed by GAO on the basis of FAA’s data.
Enclosure II

13 GAO/RCED-00-275R Airport Financing at Chicago’s O’Hare Airport

Passenger Facility Charges

In 1990, the Congress gave commercial airports the option to impose a Passenger Facility

Charge (PFC) as an additional means to raise funds for airport development. Beginning

in 1992, airports were able to collect up to $3 per enplaned passenger.8FAA must

approve an airport’s request to impose the fee, including the total amount to be collected

and the projects to be funded. PFC funds can be used to further airport development by

(1) preserving or enhancing airport safety, security, or capacity; (2) reducing noise; or (3)

enhancing airline competition. To some degree, airports have more flexibility in using

these funds than they have using some of the other major funding sources available to

them—federal grants, state grants, bonds, and airport revenues. For example, PFCs may

be used to build aircraft gates, while federal AIP grants may not. PFCs are more likely to

be used for “land-side” projects,9 such as passenger terminal and ground access

improvements.

FAA first approved PFCs at O’Hare in late 1993, and since that time has approved the city

to collect over $2.2 billion through late 2017 for 11 different types of projects. As of

December 31, 1999, the city had collected $519 million and spent $409 million in PFC

revenue on capital projects. The remaining amount has been approved to be spent on

specific capital projects. The amount spent has risen since the program’s inception in

1993, reaching a peak of $107.7 million in 1999. (See fig. 7.)

8

AIR 21 increased the ceiling for PFCs to $4.50 per enplaned passenger.

9

In contrast to land-side projects, air-side projects include runways, taxiways, aircraft aprons, and safetyrelated projects.
Enclosure II

14 GAO/RCED-00-275R Airport Financing at Chicago’s O’Hare Airport

Figure 7: PFC Expenditures for O’Hare International Airport, 1993 Through 1999

0

20

40

60

80

100

120

1993 1994 1995 1996 1997 1998 1999

Dollars in millions

Source: GAO’s analysis based on Chicago’s data.

Most of the $409 million of PFC funds that were spent through 1999 at O’Hare were for

terminal construction and rehabilitation, taxiway improvements, aircraft aprons, and

noise abatement. Figure 8 shows the amounts approved for collection through

November 2017 and the amounts spent on each of the 11 project types through the end of

1999.
Enclosure II

15 GAO/RCED-00-275R Airport Financing at Chicago’s O’Hare Airport

Figure 8: PFC Funds Approved and Expended at O’Hare International Airport, by Project Type, 1993 Through

1999

Terminal

Expended through 1999

Approved for collection through 2017

Noise

Access

Other

Apron

Runway

Implementation

Security

Taxiway

Equipment

Planning

Lighting

0 200 400 600 800 1000

Dollars in millions

a
Enclosure II

16 GAO/RCED-00-275R Airport Financing at Chicago’s O’Hare Airport

Notes:

Other is miscellaneous on-site projects, including service roads, fences, weather equipment, and environmental

projects.

Implementation includes expenses for PFC program management and construction management costs, as well as

consultation meetings, auditing, and legal services.

a

The amount spent on taxiways may exceed the amount approved because PFC regulations (14 C.F.R. 158.37) allow

an airport operator to collect up to 15 percent more than the amount approved on a PFC application without

submitting an amendment to FAA.

Source: GAO’s analysis based on Chicago’s data.

As of December 31, 1999, the individual projects that received the most PFC funds are

the international terminal ($39.1 million), a new aircraft hold pad ($31.4 million), and

upgrades to airport concourse G ($19.1 million). Table 3 provides more details on the

capital projects that have been funded in each category.

Table 3: PFC Expenditures at O’Hare International Airport by Project Type, 1993 Through 1999

Expenditures

Project type Amount Percent

of total

Examples of projects

Terminals $77,841,172 19 • International terminal common-use areas

• Upgrading of concourses E/F/G

Taxiways 67,114,812 16 • Rehabilitation of multiple taxiways, including pavement

markings and lighting

Aprons 49,466,670 12 • Construction of an aircraft hold pad

• Rehabilitation of aprons at Concourses E/F/G/H/K

Noise mitigation 47,107,097 12 • Sound insulation for O’Hare area schools

• Sound insulation for O’Hare area residences

Runways 41,623,815 10 • Rehabilitation of runways, including pavement

replacement, markings and lighting

Equipment 28,399,531 7 • Acquisition of aircraft rescue and fire fighting equipment

• Acquisition of snow removal equipment

Access 23,455,053 6 • Construction of airport transit system remote parking lot

station

• Repair of lower level terminal roadway

Other 22,274,142 5 • Improvements to airfield drainage

• Rehabilitation of hangar service road

• Repairs to cargo tunnel

Planning 19,406,550 5 • Conduct site, environmental, and construction analyses

for PFC projects

Implementation and

administrative costs

17,178,263 4 • PFC consultation meetings, auditing, and legal services

• PFC program and construction management

Security 12,021,210 3 • Upgrades to perimeter guard posts

• Upgrades to former military area to comply with FAA

requirements

Lighting 3,596,918 1 • Acquisition of air traffic control tower lighting panel

Total $409,485,234

Source: GAO’s analysis based on Chicago’s data.
Enclosure III

17 GAO/RCED-00-275R Airport Financing at Chicago’s O’Hare Airport

General Airport Revenue Bonds

The largest category of airport funding—for airports in general and also for O’Hare—is

bonds. Because airport sponsors in the United States are nearly always local or state

governments or a special public authority, the form of debt is usually a tax-exempt

General Airport Revenue Bond (GARB). These bonds are secured by a pledge of an

airport’s revenue. The issuer pledges to make scheduled payments on the interest and

principal over the life of the bond. These bonds tend to be used by large- and mediumsized airports whose revenues are large enough to provide adequate security.

From 1990 through the end of 1999, the city of Chicago issued about $743 million in

GARBs to finance new projects. Table 4 shows the bond issues and the primary purpose

for the bond proceeds.

Table 4: GARBs Issued to Finance Capital Improvement Projects at O’Hare International Airport, 1990

Through 1999

Bond issued Amount Primary purposes

General Airport Revenue Bonds, 1990

Series A and Series B

$244,035,000 • Construction of international terminal

• Construction of automated guideway transit system

• Improvements to access roadway

General Airport Revenue Bonds, 1992

Series A

130,055,000 • Construction of international apron

• Improvements to central terminal utilities

• Improvements to roadways and parking

General Airport Second Lien Revenue

Bonds, 1994 Series B

68,700,000 • Expansion of heating and refrigeration plant

• Improvements to runway de-icing fluid facility

• Rehabilitation of roads and parking

General Airport Second Lien Revenue

Bonds, 1994 Series C

83,800,000 • Improvements to parking

General Airport Second Lien Revenue

Bonds, 1996 Series A and Taxable

Series B

216,075,000 • Acquisition from U.S. government of property

located adjacent to the airport

Total $742,665,000

Source: GAO’s analysis based on Chicago’s data.

Over this period, about $591 million of the GARB proceeds were spent on a variety of

projects.10 These projects include runway and taxiway improvements, service roads,

aircraft parking areas, terminal structures, heating and refrigeration plants, public

parking facilities, roadways, walkways, ground transportation system, and land

acquisition. The remaining funds are earmarked for future use on these projects. Figure

9 shows the specific categories in which proceeds were spent.

10 In addition to the $591 million, the city paid an additional $155.6 million in capitalized interest on these

bonds.
Enclosure III

18 GAO/RCED-00-275R Airport Financing at Chicago’s O’Hare Airport

Figure 9: GARB Expenditures, 1990 Through 1999

0 50 100 150 200 250 300

International

terminal

Airfield

Domestic terminal

Implementation

cost

Terminal support

Land support

Dollars in millions

Notes:

Land support costs consist of outlying areas that surround the airport’s central core but are within its boundaries,

such as land acquisition, signage, lighting, and the safety and security communication center.

Terminal support costs consist of public parking facilities, roadways, walkways, automobile rental areas, ground

transportation system, and the O’Hare Hilton Hotel.

Implementation costs consist of costs associated with developing projects, such as project management and

construction management.

Domestic terminal area costs consist of domestic terminal structures and a designated portion of the heating and

refrigeration plant.

Airfield costs consist of aircraft parking areas, runways, taxiways, and service roads.

International terminal costs consist of designated portions of the heating and refrigeration plant related to the

international terminal.

Source: GAO’s analysis based on Chicago’s data.
Enclosure IV

19 GAO/RCED-00-275R Airport Financing at Chicago’s O’Hare Airport

Other Revenue Bond Funds

Besides GARBs, the city of Chicago has issued other special revenue bonds for capital

projects. We identified two types of special revenue bonds the city issued from 1990

through 1999- -International Terminal Special Revenue Bonds and PFC Revenue Bonds.

Like GARBs, these bonds were used to finance capital projects. However, these bonds

differ from GARBs in that they are not secured by the airport’s general revenue. Instead,

they are secured with revenue from the international terminal and by the revenues

collected from the PFC program.

From 1990 through 1999, the city of Chicago issued about $914 million in these two types

of bonds. Over this period, about $669 million of these bond proceeds were spent on the

International Terminal, noise mitigation, and airfield drainage improvements.11 The

remaining funds were earmarked for future use on noise mitigation and airfield drainage

improvement projects. Table 5 shows the bond issues and the primary purposes for the

bond proceeds.

Table 5: Other Bonds Issued to Finance Capital Improvement Projects at O’Hare International Airport, 1990

Through 1999

Bond issued Amount Primary purposes

International Terminal Special Revenue

Bonds, Series 1990 A

$489,735,000 • Planning, designing, acquiring, constructing and

equipping a new international terminal and all related

facilities

International Terminal Special Revenue

Bonds, Series 1992

174,550,000 • Planning, designing, acquiring, constructing, and

equipping a new international terminal

Passenger Facility Charge Revenue

Bonds, Series 1996 A and 1996 B

250,000,000 • Noise mitigation projects

• Improvements to airfield drainage

Total $914,285,000

Source: GAO’s analysis based on Chicago’s data.

11 In addition to the $669 million, the city paid $47.4 million in capitalized interest on these bonds.
Enclosure V

20 GAO/RCED-00-275R Airport Financing at Chicago’s O’Hare Airport

Funds Provided and Spent for Capital Improvement Projects,

1990 Through 1999

Figure 1 (see p. 3) showed the amounts provided and spent for capital improvement

projects at O’Hare from 1990 through 1999. Because inflation reduced the purchasing

power of a dollar during this period, figure 10 shows the amount provided and spent at

O’Hare in constant (inflation-adjusted) 1999 dollars. We used the Department of

Commerce’s chain-type price index for gross domestic product to convert from nominal

to constant dollars.

Figure 10: Funds Provided and Spent for Capital Improvements, by Funding Source, 1990 Through 1999

20%

•

31%

•

39%

•

•

9%

21%

•

32%

•

36%

•

11%

• Airport Improvement

Program funds

Passenger

Facility Charges

General Airport

Revenue Bonds

Other

revenue bonds

Total funds provided: 

$2.7 billion

Total funds spent 

on capital projects: 

$2.0 billion

$249

$539

$832

$1 billion

$233

$422

$646

$743

1999 constant dollars in millions, except where noted

Source: GAO’s analysis of FAA’s and Chicago’s data.

(348237)
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