Two Problems and
An Elephant in the Living Room

The Port of Seattle made a big deal with the press this past month about receiving a promise of a future $61.9 million grant from the FAA for the third runway. “Wow, this means that we are all set to build,” the Port spin implied, as if this was all the money they need.

But, there are three problems with the Port's wow–ee spin:

•  They applied for $198.1 million, saying it was mostly for environmental requirements, but they they were only promised $61.9 million. So what got funded and what is now unfunded? And who will pay for the unfunded parts?

•  They haven't actually received the grant. It still has to be approved in Congress, which may not be a dead certainty

•  Even the $198.1 million doesn't begin to fund all the costs that the Port knows about but has not officially included in its cost estimates

Problem 1: What's Unfunded? Who Pays for All That?

What got funded and what's now funded? That's the very question the Port's latest spin was designed to cover up. The Port did not give any details, and the local press didn't ask. The editors of this column were told that the information going to the Congress from the FAA is secret from the public until the Congress has dealt with it! (Like it wasn't the public's money.) So we wish we could tell you, but it's a deep, dark secret.

Who will pay for the unfunded costs? We don't know that either, but we are guessing it won't be the Airport. Unlike other businesses, the Airport does not treat pollution control as a cost of doing business. It never budgets for the costs of damages to the neighbors from Airport operations. It has never paid for a single major environmental measure from Airport income. It uses only FAA or State grants, or increased property taxes—anything to shove its own costs onto someone else. If unable to do that, it dumps the problem on the neighbors. The neighbors have two options: pay the costs themselves or live with the mess. This is how the Port deals with noise pollution, air pollution & associated health problems, depression of property values, pollution of local aquatic resources, surface-transportation SNAFUS—you name it.

This approach is called cost-shifting. The Port is very good at it, helped along by weak federal & state laws, weaker enforcement agencies, not to mention a local press that rarely, if ever, raises the obvious, inconvenient questions about costs. Cost shifting begins with totally inadequate cost estimating systems. It continues with a total absence of independent cost/benefit analysis. And it ends, of course, with Portspin.

Problem 2: Will Congress Really Approve?

The Port's spin on the $61.9 million letter of intent makes it sound like the Port had already received cash. In the real world, it is not certain they will actually get all or any of this. A Congressional committee must first approve the LOI, then, next year the new Congress must appropriate the money.

In 1999, after a lot of pressure (some it from the Congress) FAA adopted a requirement that all its project grants be subject to a rigorous cost-benefit analysis, in accordance with carefully prescribed procedures. However, the Port and FAA did no such cost-benefit analysis on this latest application for more third-runway money. Both know perfectly well that a real cost-benefit analysis of this project wouldn't hold water for ten minutes.

Instead, they tried to circumvent the rules by claiming this was an “amendment” of their 1997 grant. It remains to be seen whether the Congress will let them get away with this scam. Granting this application would render the new procedures moot, because almost every airport in the country has had been given grants at some time in the past. So, just ask for an amendment to your grant from 1991—or 1941—& away you go, with no pesky cost-benefit analysis. Cute, isn't it?

…And the Elephant in the Living Room

And what about that elephant in the third runway's living room: the three billion dollars in unfunded damages to the neighbors identified by the State-funded study in 1997, but overlooked by the Port ever since? When the inevitable class-action suit against the Airport happens, will the FAA fund the Port's costs? Can the Port cover those with its insurance or its income? Do they even have a plan beyond trying to pretend the elephant ain't there and issuing press releases calling the neighbors bad names.

Oops: Another Elephant

Right now, Airport income is used only for expanding the Airport or making it plushier. But even here, there are unfunded costs. Port planners are gambling on a projected massive increase in income from the fees from airlines—just to pay for the expansion without dealing with mitigation for the neighbors, & only covering a portion of the environmental costs. It's revealing to note that Alaska Airlines says it's in favor of the runway, but that it's opposed to paying its share of the costs—Alaska wants the Federal taxpayers to pick up the tab. It seems that Alaska is learning the fine art of cost-shifting.

The Port also seem to counting on Sea–Tac becoming a hub airport, attracting lots of new business—and new revenue. But looked at honestly, this won't work. The most efficient airline at Sea-Tac, Alaska, says it can't live with the proposed new fees. The “Big Six” American airlines (locked into the hub-&-spoke system) are all in bankruptcy, just coming out of it, or thinking how helpful a good bankruptcy would be for them. The hub airlines are in bad shape and getting worse. The hub system is broken beyond repair. As the hub airlines go under, they will drag the hub airports with them. And note, point–to–point airlines like Southwest are canceling flights out of Sea–Tac because of the high landing fees. Sea-Tac is pricing itself right out of the market. No airline is compelled to serve Sea-Tac. No airline is compelled to lose money on Sea-Tac operations just to make the senior Port staff & our inattentive Port Commissioners look good. Won't happen.

So, it does come down to doing a real cost/benefit analysis, as the law would normally require, which includes ALL the costs and doesn't “pad” the benefits. Rather than issue another warped press release, the Port should stop with the Portspin and level with everybody. With a shortfall in FAA funding of $137 million, how much higher must the Port fees to airlines, or local real-property taxes, or both, to cover the remaining costs of the runway? What's the plan for dealing with damage to the neighbors' property? Or is the Port content to risk enormous damage lawsuits from neighbors? Has management considered that the Port itself is headed toward financial ruin, even a municipal bankruptcy?

Those who hoped the FAA meant business about subjecting boondoggles to real cost–benefit analysis are watching this application with interest. In the meantime, the Port is desperately trying to hide the true costs of this runway. And the folks who gave their credit card to the Port will be the last to know.

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