Anchorage airport running millions over construction budget

Posted: Tuesday, March 25, 2003

ANCHORAGE - A huge make-over project at the Ted Stevens Anchorage International Airport is running $186 million over the original budget.

State transportation officials said they need to borrow more money to finish the work. But some state lawmakers, who must approve new borrowing, and local airlines, which ultimately would foot the bill, said the project needs to be scaled back.

The centerpiece of the project is a new 447,000-square-foot Concourse C that will house nine jet gates, a ticketing area, a baggage claim, a security screening hall, offices and operations support space.

The construction originally was expected to cost $230 million, but the estimated cost has risen to $416 million. The project also is about two years behind schedule, according to Dave Eberle, the state Transportation Department regional director who is in charge of the project.

Completion is expected in May 2004.

The largest chunk of the overrun is $108 million for the reconstruction of the airport's existing main terminal, most of which is related to seismic upgrades and security measures, according to Eberle.

The Transportation Department has spent about $175 million of the $259 million currently available for the project.

About $233 million of that came from revenue bond sales and interest earned on investing the bond proceeds before spending them. The remaining $26 million came from federal transportation programs.

Eberle said the Transportation Department will ask legislators for approval to sell another $63 million in revenue bonds this year to cover part of the growing costs.

While it is a state entity, the airport is self-funded by passenger, airline and tenant fees.

Lawmakers are cautious about approving more borrowing in light of many airlines' financial situation.

"This project is out of control," said Democratic Sen. Donald Olson of Nome. "Here we've got a project that's over budget, behind schedule, and they're asking for more money."

The idea of borrowing more money to cover the rising costs of the terminal redevelopment project isn't sitting well with some of the airlines, which pay fees that repay the bonds.

Alaska Airlines, the airport's largest tenant, proposes that the state defer other construction and reduce the scope of the terminal redevelopment project until it gets a handle on the overruns.

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