CHICAGO -- Chicago's plans to finance a third airport in the city may be in for some turbulence as the estimated cost of the project in an upcoming feasibility study is projected to hit $25 billion.

City officials had pegged the cost of an airport on the city's southeast side at around $5 billion, but sources familiar with the financing study said the price tag could be five times higher.

Mayor Richard Daley of Chicago is pushing for the so-called Lake Calumet site over four other sites being considered by the bistate Policy Committee for the Site Selection of a Supplemental Airport in the Chicago Area. Those sites are the existing Gary, Ind., Regional Airport, and three Illinois sites outside of Chicago in Kankakee, Peotone, and on the Illinois-Indiana border east of Beecher. The committee is made up of officials from Chicago, Indiana, and Illinois.

At a press conference Thursday announcing business community support of an airport at Lake Calumet, Mayor Daley disputed the $25 billion price tag, saying the airport -- which would be built in stages -- would cost under $5 billion.

However, supporters of the rural Illinois sites said the high cost of the Lake Calumet site, which would include the expense of moving thousands of residences, an auto plant and other businesses, wetlands, landfills and cleaning the area of toxic wastes, should sound the death knell for Mayor Daley's plan.

"At $25 billion you're talking about something really questionable," said Beth Ruyle, a member of the Third Airport Alliance and director of the South Suburban Mayors and Managers Association. "I don't see how you can do it."

A feasibility study the city prepared for the Lake Calumet site in February 1990 outlined a 28-year $5 billion financing plan that incorporated the use of nearly $600 million of revenue bonds; $1.5 billion of state and federal grants; $50 million of excess revenues from Chicago's O'Hare International Airport; $407 million of airline and other user revenue; $513 million in interest income; and $1.9 billion in passenger facility charges.

In addition, city officials have talked about leveraging the approximately $84 million a year the city will collect from a $3 passenger facility charge at O'Hare for additional bonding.

William Smithburg, chairman of the Quaker Oats Co. and head of a business group formed for the third airport by Mayor Daley earlier this year, said the Chicago site would hold an advantage in bond ratings because the group believes and airport at Lake Calumet would attract more passengers than the other sites. He explained that the larger number of passengers at the site, combined with the city's ability to raise funds through a passenger facility charge at O'Hare, could result in a higher credit rating and therefore a lower interest cost on bonds issued for the Lake Calumet Airport.

Sources said the financial feasibility analysis will estimate costs for the other sites at $15 billion for the Gary airport and about $5 billion for any of the three rural sites.

Ms. Ruyle said the price tag for the rural sites was doable by using a mixture of federal grants, revenue bonds, and by privatizing some of the airport facilities.

Donald Corinna, program manager for the bistate committee, said while the financial feasibility analysis by Price Waterhouse was scheduled to be completed in early October, it was one of dozens of studies the committee will weigh when it gets a final report from its primary consultant TAMS Consultants Inc. at the end of October.

He pointed out that the financial study would look at estimated revenue generation, operating expenses, and financing options for each prospective airport.

The site selection process, which has been going on for two years, will end Jan. 5, when the committee is expected to choose one of the five sites or a "no build" option, Mr. Corinna added. If a site is selected another 12 months would be spent developing a master plan.

As for the committee's vote, Dave Dawson, a spokesman for Gov. Evan Bayh of Indiana, who holds four seats on the committee, said the governor prefers the Gary site.

A spokesman for Illinois Gov. Jim Edgar, who also appointed four members to the committee, did not return calls. According to Ed Paesel, director of the Third Airport Information Clearing House, Gov. Edgar, under Illinois law, has to approve any new airport located in the state.

Ms. Ruyle said the Illinois governor's involvement would be important if the Lake Calumet site was chosen purely for political reasons, rather than technical ones, Chicago has three votes on the committee.

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