DENVER -- City officials here said yesterday the Denver International Airport is within its original $2.7 billion budget, but it will need another $44 million to pay for extra construction requested by airlines.
Denver Mayor Wellington Webb also said the city will announce a postponed opening date Monday. Planners have drawn up January, February, and March scenarios to replace the scheduled Dec. 19 opening.
In yesterday's special City Council meeting, Webb and his airport construction officials outlined the financial situation and construction progress at the site, one of the country's largest construction projects. Denver International will replace Stapleton International Airport.
The council meeting was called amid reports that city funds might have to be used if the project is to be completed.
"Denver International Airport is financially sound and continues to follow a conservative plan of finance," Webb said.
"Airport funds are far more than the estimated cost to open DIA. No [city] tax dollars have been used or will be used to complete this project. And no more new debt will be required," he said.
Here is the city's latest cost scenario: The original budget of $2.7 billion was increased by $177 million to $2.875 billion because Continental and United Airlines wanted more facilities than original plans called for, the city said.
The airport system brought in more revenue than was expected for a variety of reasons, which helped pay for some of the changes in scope of the project. Reserves from the original bond issues paid for more. But Denver is still $44 million short.
The city could go back to the bond market for more financing, but instead has chosen to find money in other airport system budgets to pay for the increased costs, then repay those accounts with DIA revenues. The city has identified $179 million in the airport system budget that it could use for the airport.
Of the $179 million, $21 million would come from a two-month airport operating reserve; $47 million from a bond coverage account that needs to be funded according to bond covenants by the end of 1994; $37 million from 1985 Stapleton bond proceeds that went unused; $36 million in excess aviation fuel taxes; $18 million in escrow funded by Stapleton operating profits, and $20 million from bond monies that was to be used in 1994 for capital improvements that were delayed from earlier plans.
"We could go out and get new debt, but we don't need it," said Denver revenue manager Patricia Schwartzberg.
Much of the physical structure of the airport, on 26 acres east of Denver, has been completed without major delays. However, Ginger Evans, the project manager, said contractors on the electrical systems for airline ticket reservations and telephone lines " are struggling mightily." The automated baggage system, while already built below the surface of the airport, still has to be wired and operators need to be trained on its sophisticated computer software system.
Those and other more minor problems with car rental and terminal facilities have caused planners to push the decision on the airport's opening at least two months.
But the city hopes to arrive at a solid opening date by Monday, when the council will again meet to decide whether to approve the use of the Stapleton Airport funds.
City officials are meeting with airline executives all this week to get their opinion on the opening date. While city officials are hopeful the Council will come to a conclusion, it is possible the opening date decision could be delayed again, Schwartzberg said.
The airlines, in an effort to avoid a Christmas mess with the Dec. 19 opening, offered to pay the debt service on Denver International if the city would delay the opening. The tab: $15 million in capital interest costs per month, which would be offset by $6 million in monthly profits thrown off by Stapleton.
Schwartzberg said the bond convenants allow excess Stapleton profits to be used for Denver International and that the city's bond attorney, Mike Cheroutes of Davis, Graham & Stubbs, has approve the action.
Richard Ciccarone, director of tax-exempt research at Kemper Securities Corp., said the $44 million shortage "is not a deal buster."
But Kemper senior analyst Mark Webber said the city has not been clear on what constitutes the change in scope requested by airlines and what is actually a cost overrun. "If the airlines are going to pay for it, why do they need to dip into Stapleton funds?" Webber asked.
