Runway Funding Still Falls Short:
FAA Offers $61 Millions– Less Than
One Third of Port's Request

Port of Seattle plans for funding current work on the third-runway project were subjected to a severe jolt on July 21, when the Federal Aviation Administration decided to make a supplemental grant of only $61.9 million, rather than the $198.1 million requested by Sea-Tac officials on March 25. (The Seattle Times article mis-stated the amount of the request by $20 million.)

If the grant survives Congressional scrutiny, the Port will need another $130.7 million in cash just to cover the runway contract for 2004 and 2005. Airport staff are projecting net airport income for 2004 and 2005 in a total amount of $97.5 million, meaning that at best, the Airport must find another $33.2 million. That assumes that all the net income can be applied to the runway project, which is not realistic. The Port has not identified any revenue source that can cover this shortfall.

Work in 2006 and 2007 (when the project is supposed to be complete) will require another $575 million, according to the most recent estimates by the Airport's financial staff. Contrast that with the $133 million in net Airport income expected in those years.

At present, the Port plans to borrow the money needed to complete the work, hoping that the costs can be passed on, in future years, to the tenant airlines in the form of much-higher landing fees and rentals for terminal space. The airlines have responded that they cannot afford these much-higher costs. For further details, see the article, “Port Financial Staff Has No Concrete Plan For Financing Third-Runway Construction” in our previous newsletter.

Handy End-Run

The Port did not seek "new" funding.  Rather, the request was for an amendment to an earlier, 1997 "letter of intent" (LOI).  This was a handy way to evade the FAA's updated rules about cost-benefit analysis, issued in 1999.  Those rules are more rigorous than the rules in effect in 1997. 

The amendment to the earlier LOI only expresses an intent to obligate funds from future budget authority, & is not a binding commitment for funding.  Whether the Port can borrow money against this amended LOI is unclear.

The Airport claimed in its paperwork to the FAA that the runway's cost had escalated for two major reasons. First, costs went up because “Puget Sound salmon were listed under the Endangered Species Act in 1999”, requiring planners to spend almost another year on their plans. The second factor was costs of “permit delays”. The Port claims that these delays caused an over-run of $55 million. Of course, those assertions are unfounded. Salmon had little or nothing to do with the Port's self-created difficulties. The real problem is that from start to finish the Port seriously underestimated the costs of most major elements of the runway project, & consistently failed to recognize the need to meet State water-quality standards as they are written – at every step, they chose the least expensive possible way to proceed, & made unrealistic assessments of what they needed to do.

For example, for no known reason, the Port & its consultants underestimated the amount of runway-impacted wetlands by a factor of two. So their original water-quality mitigation plans were completely unsatisfactory. Even after that mistake was corrected, the Port's revised plans