CHICAGO -- The governors of Illinois and Indiana are not ready to throw in the towel on a $10.8 billion, partially bond-financed airport, even though Mayor Richard M. Daley has proclaimed the project dead.

Mayor Daley, who has been the airport's strongest advocate, declared the plan defunct Wednesday after the Illinois Senate failed to pass legislation for the project.

But despite the bill's failure in the state Senate, Gov. Jim Edgar of Illinois said it was still alive in the Illinois General Assembly.

"I don't think the project is dead. I hope it's not dead. I hope [Mayor Daley] is not giving up on it," Gov. Edgar said Wednesday night. "He understands the legislative process and knows that you just don't make a phone call anymore and have these thing happen. Sometimes it takes a while."

If passed, the airport bill would allow for formation of a new bistate authority to supervise development of the new airport on Chicago's southeast side and to oversee the city's O'Hare International and Midway airports. The bill had been approved by the House on June 26.

The authority would have responsibility for issuing the $8.5 billion of revenue bonds Chicago has included in its financing plan for the airport and for paying off the approximately $3.8 billion of outstanding airport bonds issued by Chicago.

Gov. Edgar, Gov. Evan Bayh of Indiana, and Mayor Daley had signed an agreement of June 17 to form the authority, pending approval of the two state legislatures and Congress.

William Moreau, special counsel to Gov. Bayh, said Thursday that the governor shared Gov. Edgar's and Mayor Daley's frustration with the stalemate on the airport bill. He also said Gov. Bayh is urging the mayor to remain "steadfast"in his fight for the airport.

Mr. Moreau added there was still hope for passage in the Illinois legislature's fall session in November. Gov. Bayh has said Indiana law-makers would consider the airport plan when they convene in January.

Meanwhile, Robert Repel, Mayor Daley's representative on the airport issue, reaffirmed the mayor's stance yesterday, saying "we are not going to pursue this in the November session."

Even the airport plan chief opponent in the Illinois legislature, Senate Minority Leader James Philip, R-Elmhurst, did not shut the door completely on future consideration of the plan.

Mark Gordon a spokesman for Sen. Philip, said the senator would consider the proposal if the mayor gets the necessary federal approval for the airport. Sen. Philip has contended the current Chicago site, which contains thousands of homes and business as well as environmental problems, would be to expensive to develop for an airport.

Mr. Daley had hoped to help finance the airport on the city's southeast side with $90 million in proceeds from passenger facilities charges on airline tickets at Chicago's O'Hare International and Midway airports. He said the money would now be used to finance "economic development" at O'Hare and Midway.

In February, a federally financed committee made up of representatives of Indiana, Illinois, and Chicago chose the so-called Lake Calumet site in Chicago over four other proposals after three years of deliberations. Those proposals were the existing Gary, Ind., Regional Airport and three rural Illinois sites in Kankakee, Peotone, and the Beecher area.

Yesterday, Sen. Aldo DeAngelis, R-Chicago Heights, a member of the committee, said he would push for consideration of one of the rural sites. He added that fellow committee member Illinois Secretary of State George Ryan and legislator-sincluding Sen. Philip supported the plan.

He said the alternatives open to the committee include a rural site based on the committee's previous work or asking the Federal Aviation Administration to launch a new study. He added that the state could also pursue a site on its own.

"We don't want the state to lose the economic benefit of this once-in-a-lifetime opportunity," Sen. DeAngelis said.

Donald Corinna, program manager for the bi-state committee, said the committee can still consider other sites since it was not dissolved after its last meeting.

After recommending the Lake Calumet site in February, committee members recessed, giving them the option to reconvene to discuss any issue, Mr. Corinna said.

Still, Gov. Edgar said he believed the Lake Calumet site was the best one chosen by the committee because it did not cost the state any money.

"My concern about a green grass site is how much it's going to cost the state," he said, referring to the rural sites. "It would cost the state probably billions of dollars, and probably mean a tax increase."

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