PHILADELPHIA — A new price tag for Philadelphia International Airport’s controversial expansion farther into Delaware County increased by $1 billion, several months after the federal government approved it.
The new price announcement came shortly before the Federal Aviation Administration awarded a $466.5 million contribution toward the project, indicated by an agency letter of intent sent to the airport Monday.
Given the FAA’s stamp of approval in late December, the airport’s capacity enhancement program was slated to shave about 14 minutes from the average delay time by year 2025 at an estimated cost of $5.2 billion.
But initial cost estimates set forth in the FAA’s environmental impact statement did not include $1.2 billion worth of relocation, mitigation or acquisition costs, airport officials said Monday. It was also based on 2005 financial data.
The official cost estimate of the project is now $6.4 billion, expressed in 2010 financial information, airport officials said.
Examples of the added costs include wetlands mitigation for runway and taxiway development, property acquisition associated with the mitigation and acquisition of public properties and relocation costs, airport Spokeswoman Victoria Lupica said.
The FAA approved the initial price in December 2010 based on 2005 economic data, but that price excluded cost increases due to escalation.
Some escalation factors include inflation, demand for raw materials and labor, and other global and local economic factors, Lupica said.
Escalation’s impact on the capacity enhancement program would be frequently evaluated as the program progresses, she added.
Officials at the FAA did not respond by press time Tuesday as to why 2005 financial data was used in the final assessment.
Despite the cost of the enhancement, the completed program could pay dividends by increasing the Philadelphia region’s economic position and competitive stature, airport CEO Mark Gale said.
“The CEP is anticipated to create more than 100,000 jobs in the region,” he said Tuesday. “The completion … is expected to increase the airport’s overall economic impact by $12 billion to $26.4 billion annually, which underscores the importance of this program.”
Philadelphia city officials said the FAA’s significant monetary contribution represented the agency’s faith in the enhancement program. The $466.5 million contribution is the second-largest award donated in agency history.
“This substantial award demonstrates the FAA’s commitment to our planned airport expansion, which is vital to the economic fortunes of the region,” Philadelphia Mayor Michael Nutter said in a press release.
But since the program requires the acquisition and eventual demolition of 72 homes and 80 businesses in Tinicum, many in the area are not enthusiastic about the plan and critical of the price increase.
While the project was originally marked with a $5.35 billion price tag, local opposition leader and Tinicum resident Dave McCann said the figure dropped to $5.2 billion in December — then jumped up to $6.4 billion several months later.
“How could you have so much uncertainty as to how much this figure changes?” said McCann, president of Residents Against Airport Expansion in Delaware County. “At a time when we are struggling economically, I don’t understand how you can jump so dramatically. And who knows where this is going to be in terms of price tag?”
Tinicum could also suffer the loss of about $216,000 per year in real-estate taxes and $226,000 per year in parking revenues if the program is implemented, according to an analysis by the township, because the program requires the acquisition of three privately owned parking facilities.
The Interboro School District could similarly lose about $348,000 annually in taxes with the loss of those facilities, and Delaware County would lose an estimated $267,000 per year in real-estate taxes, according to the analysis.
An airport press release stated airport revenue bonds would constitute two-thirds of the project’s funding, while a variety of other funding sources — including user fees and additional grants — would make up the difference.
Airport officials previously stated tax dollars from the city of Philadelphia would not fund the expansion program.
Scheduled to be completed in phases over the next 13 years, the capacity enhancement program looks to add one new runway and extend two existing runways.
The additions would reduce delays by allowing for simultaneous, independent aircraft operations in poor weather conditions, airport officials said.
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