Seattle port suspends Sea-Tac airport project

The Port of Seattle's governing board voted Monday to suspend construction on a major Sea-Tac International Airport project for up to 12 months due to an inability to sell municipal bonds to cover the $412 million price tag.

The port authority's decision could eventually add more than $40 million to the total cost of the rental car garage and idle more than 3,000 workers until the bonds are sold. The suspension of work is also likely to delay the projected 2011 opening of the facility, which is designed to serve 10 Sea-Tac rental car firms.

Several labor groups and service providers working on the project asked the port authority to consider a metered slowdown of the project. The port board rejected this option, saying the port could no longer continue to fund the project from its general fund.

In October, port officials tapped the general fund for $20 million to keep the project going and the money was supposed to last until buyers for the bond issuance could be found. However, this money will be spent by the end of the year and an additional $2 million a month the project receives from current rental car user fees is not enough to keep the project going.

Construction on the project began in July, coinciding with a tightening bond market for such projects. In addition, the port authority has had difficulty in finding insurance to back the bonds due to financial problems in the bond insurance sector.

Potential bond buyers contacted by the port authority also were concerned that the slowing national economy might undermine the revenue stream of the parking structure, which relies on user fees from rental cars.

The port board also refused to suspend its contract with the main builder on the project, saying that doing so would wind up costing the port more than $85 million, instead of the $40 million in added costs to temporarily suspend the project. The port said delays and contractor claims would make up $15 million of the added $40 million cost, with added overhead and support costs accounting for the remainder. 

Source: American Shipper