City council gives final approval to O’Hare bonds

By Reuters
Posted Sep. 8, 2010 at 4:25 p.m.

The Chicago City Council gave final approval on Wednesday to $1 billion of revenue bonds to continue expanding O’Hare International Airport.

But the two major carriers at the airport are not saying if they plan on fighting the debt sale.

A spokesman for American Airlines said there was “no comment at this time.”

Jean Medina, a United Air Lines spokeswoman, said, “We continue to be in discussions with the city about reaching a fiscally responsible plan to improve O’Hare.”

At Tuesday’s city council finance committee meeting, aldermen raised concerns about issuing the passenger facility charge and third lien general airport revenue bonds without the approval of airlines at O’Hare as required under a 2005 agreement.

Rosemarie Andolino, Chicago’s aviation commissioner, told the committee there is a possibility the airlines may sue over the bonds, but that she believed a resolution will be reached with the airport’s carriers.

In February, United and American balked over signing onto the second phase of a massive expansion and improvement project at O’Hare after they were hit with fee and rental increases.

Aldermen at Wednesday’s council meeting were also assured that payment of the bonds was dependent solely on pledged revenue — per passenger charges authorized by the Federal Aviation Administration and revenue generated from airport fees and charges — and not on any city tax revenue.

Chicago plans to sell the bonds through Citigroup in January in order to have the cash in hand to commence work on new runways in the spring, city officials have said.

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