Airport expansion estimate up $1.2B

The long-range expansion of Philadelphia airport is now estimated to cost $1.2 billion more than the original projection of $5.2 billion when the Federal Aviation Administration unveiled the proposal in May 2010.

The reason is that the FAA's calculation was based on 2005 financial data. When airport officials rejiggered the numbers, based on 2010 dollars, the tab rose to $6.4 billion over the next 13 years.

The earlier estimate did not take into account inflation and escalating costs of raw materials and labor. Some examples of the increased costs are for wetlands mitigation for runway and taxiway development, property acquisition associated with the wetlands mitigation, acquisition of public properties, and relocation costs, said airport spokeswoman Victoria Lupica.

The expansion, to be completed in phases through 2025, calls for lengthening two of the airport's four existing runways and building a fifth runway along the Delaware River where United Parcel Service Inc. operates.

It has met with objections from nearby neighbors in Delaware County, and from Philadelphia's dominant airline, US Airways Group Inc., because of the cost.

Building a fifth runway hinges on relocating UPS on land purchased in Tinicum Township. Lawyers for Delaware County and the township were recently in federal appeals court, seeking to overturn a lower-court ruling that Philadelphia could buy property in Tinicum to make room for a UPS sorting facility - which would include leveling 72 homes.

Behind the scenes, airport representatives have been meeting with Tinicum and county officials to try to come up with a "win-win scenario" that would relocate UPS to the freight company's satisfaction and save the 72 homes and even some businesses from the wrecking ball, airport CEO Mark Gale said.

"We would still put UPS down in that area, but it would be on a smaller parcel of land," Gale said. "We're not there just yet, but we're making some progress."

For nearly 25 years, UPS has owned 212 acres on the Delaware.

"If UPS does move, they just want to make sure that whatever piece of land they end up being asked to move to will work for their operation," Gale said, "and that they don't get hurt as part of the process."

About two-thirds of the expansion would be financed with airport-issued revenue bonds, and payment of the debt service would come from the airlines, in rates and charges, and in revenue from concessions, parking, advertising, and car rentals. Also passenger facility charges and federal grants - but not local tax dollars, the airport said.

US Airways, with 435 daily departures here, "remains very concerned about costs," said airline spokesman Todd Lehmacher. Any plans for airport growth must be "fiscally responsible" to address flight delays, enhance customer service, and be "aligned with market demand," since improvement costs "will be borne by travelers and the airlines," he said.

In July 2010, US Airways' vice president of corporate real estate, Michael Minerva, wrote to Gale that a new runway alone would not greatly alleviate delays in takeoffs and landings "until there is a solution to local airspace congestion." Philadelphia is in the nation's most heavily congested air corridor.

The expansion would include a new commuter terminal, more gates, additional parking, a ground transportation center for rental cars, and a "people-mover" system to connect passengers between terminals and eventually parking lots.

The FAA recently pledged $466.5 million for the project, which Mayor Nutter called "vital to the economic fortunes of the region." The improvements would increase the airport's overall economic impact by $12 billion to $26.4 billion annually and create more than 100,000 jobs.

UPS has not agreed to move but "has agreed to have discussions with us," Gale said. "Ultimately, the deal will be predicated on what the site looks like. Then, there are business terms. If we ask UPS to move, we have to build them a new facility. They own land, and if they don't get as much land as they have today, they are due some compensation.

"We're trying to come up with an engineered solution," Gale said, "to see if we can shrink the footprint down to be able to meet the needs of both the community as well as UPS. If we can figure all that out and come to agreement, then we would not look to acquire those homes or some of the businesses."