CHICAGO -- The governors of Illinois and Indiana and the mayor of Chicago signed an agreement yesterday to form a bistate authority to oversee the development of a partially bond-financed $10.8 billion airport on the city's southeast side.

"I think this is a significant step today that Indiana has joined us and made this truly a regional airport," said Gov. Jim Edgar of Illinois.

In February, Mayor Richard Daley and Gov. Edgar signed a similar agreement that allowed for Indiana's participation in an airport authority that would also control Chicago's O'Hare International and Midway airports.

Chicago and Illinois officials have said Indiana's participation in the authority is important because current plans call for part of the facility to lie in Indiana and because it increases the chances of attracting federal funds for the project.

Gov. Evan Bayh of Indiana said yesterda he agreed to his state's participation in the authority because of the jobs and economic revitalization the new airport would bring to the northwest corner of his state.

"This is an opportunity too good to pass up," he said.

Though all three governments would seek the necessary approvals and funding for the airport from federal agencies, the two states would be responsible only for funding infrastructure improvements, while the burden of funding the airport itself would rest with Chicago.

The city's financing plan calls for the issuance of $8.5 billion of revenue bonds, backed by proceeds from passenger facility charges, landing fees, and other airport revenues, as well as the use of federal aviation and road funds.

The governors will have to seek approval from their legislatures for the regional airport authority. In Illinois, a bill may be introduced as soon as today, according to Mike Lawrence, Gov. Edgar's spokesman. However, the bill faces a fight from Republican lawmakers representing communities around O'Hare Airport, where residents want to link approval of the authority to limits on growth at O'Hare.

Gov. Bayh, who is up for re-election in November, said a bill would be introduced in January when the Indiana Legislature convenes. He added he did not believe the airport authority would be a divisive issue with lawmakers. Under the agreement, Indiana has until June 1, 1993, to pass the necessary legislation, or be dropped from the authority.

In addition, because the authority would represent an interstate compact, it must also be approved by Congress.

"We still have more steps to take and hurdles to overcome," Gov. Edgar said.

Under the agreement, the authority would initially have five directors representing Chicago and two each from Illinois and Indiana. A majority of each group of representatives is needed before any bonds could be issued for the airport. Once necessary federal approval is received for the airport, the governments, representatives would number three each.

The agreement also sets a goal of 25% participation by minority-owned firms and 5% participation by women-owned firms for all contracts, including contracts for bond-related services, according to Edward Gower, chief counsel for the Illinois Department of Transportation.

He added that it was the intent of the agreement that the authority would also assume responsibility for the approximately $3.8 billion of outstanding bonds Chicago has issued for O'Hare Airport. But there was no final decision on that point, he said.

The agreement specifies that Indiana and Illinois are not responsible for the Chicago-Calumet Skyway, a 7.8-mile toll road connecting Chicago with northwest Indaiana, that defaulted on $101 million of bonds in 1963.

Members of federally created Illinois-Indiana committee in February selected the Chicago site in the city's Lake Calumet area for a new airport. The next step in the airport's development is the creation of a master plan and an environmental impact statement, a process that Chicago officials have said could take one to two years.

Subscribe Now

Access to authoritative analysis and perspective and our data-driven report series.

14-Day Free Trial

No credit card required. Complete access to articles, breaking news and industry data.