Truth in Aviation, August 2004

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 still failed to provide adequate protection for local aquatic resources. In fact, the Port had to try three times before they could come up with mitigation plans that satisfied the Department of Ecology. And that third attempt was not good enough to get past the Pollution Control Hearings Board, or our state's Supreme Court.

Even at this very late date, the Port refuses to comply with existing legal requirements to send its industrial wastewater to the County's plant at Renton for treatment before the wastewater is discharged to Puget Sound. They claim to have the resources to build a $1.3 billon part-time runway, but they say that they do not have the resources to build a simple pipeline from SeaTac to Renton & to pay the County's established fees for treatment of polluted waters from the existing runways.

This sort of planning inevitably causes difficulties later on. Known problems are ignored, cost estimates are based on wishful thinking, but according to the Port, it's always somebody else's fault when the Airport comes face to face with the expensive realities. This is particularly ironic, in view of the fact that in the 1980s most observers, including Port staff, recognized that expansion of Sea-Tac Airport would run into extremely costly environmental problems & was therefore impractical.

Back to Page 1 of Newsletter

Port Application for
additional $198 LOI
[.pdf 8.29MB]

Seattle Times Story on LOI

Why Does the Third
Runway Cost So Much?

The history of the Sea-Tac third-runway project is one of ever-increasing costs. A project that was originally supposed to cost $229 million (the 1992 figure) has now ballooned to more than $1.1 billion – with no guaranty against more increases. This does not take into account hundreds of millions that must be paid as interest on borrowed money. What has gone wrong? Is there any end in sight to these huge over-runs?

In asking the Federal Aviation Administration for another $198.1 million in grants, the Airport presented its latest statement of what still must be provided for the project, amounting to $767,980,000. The Port has already spent approximately $377 million.

Current estimates place the cost of constructing the embankment at $430 million. When the embankment is done, the Port must then build the actual runway. Including the various taxiways to serve the runway, that element will cost $182 million (well above costs at other airports, by the way). Navigational aids, including FAA facilities, are estimated at $67.5 million.

The Port complained long & loud to the FAA that they had been hit with unexpected costs because of environmental issues.

The largest single new environmental item is a system of underground vaults to divert & hold rainwater for release into local streams during the late-Summer drought season. The estimate for this feature is $64.7 million. The Port blames this on “more stringent Federal Clean Water Act permit conditions”. It would be more accurate to say that the Port presented grossly inadequate plans to the State Department of Ecology, plans that wouldn't do the job. The law, the regulations, the water-quality standards were unchanged. If completed, the runway project would create hundreds of acres of new impermeable surfaces, which will divert rainfall away from the local creeks. These streams are already impacted by existing urban developments, so the Summer stream flow levels are quite low. Diverting more water could be fatal, so State and federal environmental standards require that the Airport find ways to keep the stream flows at safe levels in the Summer drought. The Port & its consultants consistently treated this issue as negligible, proposing cheap, ineffective “solutions” in the first two permit applications. In the third application, the consultants came up with the underground vaults. The problem should have been recognized at the start of the process, & dealt with in a straight-forward manner.

Fair-market Prices for
Westside Properties

The third runway site is outside the Airport's 1992 boundary. To provide room for the runway, the Airport had to expand westward, & had to acquire hundreds of single-family homes & dozens of business properties in what is known as the Westside, nearly 500 parcels in all. The Port also needed more land to meet FAA safety requirements at the ends of the runway. Somehow, staff did not make a proper estimate of the fair market value of all this real estate. Its estimate was $185.5 million. But the Port ended up paying $ 270.2 million, an error of more than 32 %. This can only be called a major planning error.

Another planning error involves mitigation for filling wetlands. As most readers will know, Sea-Tac Airport is on high ground, in an area with various small lakes, ponds, peaty wetlands, and streams that drain off into the Green River to the east and directly into Puget Sound, on the west. The general area west of the existing runways contains many acres of wetlands. One early consultant's report warned that an accurate survey might show as much as a hundred acres of wetlands. But the Port decided to plan as if there were only 10 acres of wetlands that would be destroyed by the runway, & it planned its mitigation work on that assumption. The mitigation involves rather expensive activities – building new, artificial wetlands, in particular. In fact, however, the project impacts more than 20 acres of wetland, & mitigation costs went up accordingly, from an original estimate of $8.6 million, to $74.6 million – they underestimated by 867%!