Airport Officials Say Unexpected Money Will Offset Overrun

Orange County airport officials said Friday that $18.6 million in unexpected money for John Wayne Airport will more than offset an anticipated overrun of nearly $10 million on the construction of a new passenger terminal building.

But the officials acknowledged that the additional money--$14.1 million saved by lower-than-estimated construction bids on two parking garages and an unexpected surplus of $4.5 million in Federal Aviation Administration money--would have been put to better use for other airport improvements.

“Of course, (that money) could have been used to cover other costs,” said Jan Mittermeier, assistant airport manager. “We would have preferred very much not to have an overrun.”

County Supervisor Don R. Roth called the terminal overrun “just basically terrible. I’m dismayed that that could happen.”

‘Abundance of Errors’

County officials were reacting to a Times report Friday on an independent analysis that found that the architect and consultant on the new terminal made “an abundance of errors” in underestimating the cost of the project by at least $15 million.

Although the consultant, Lee Saylor Inc. of Concord, estimated that the new terminal designed by architects Leason Pomeroy Associates of Orange could be built for $40.8 million, the independent analysis said the terminal would have cost at least $55.8 million to build. The lowest bid for the terminal came in at $58.9 million.

County officials said Friday they had not yet seen the report by O’Connor Construction Management Inc. in Santa Ana. The report was authorized by airport management after the cost overruns first became known earlier this year but was called off after the county got the architect to start trimming costs. However, the purchase order for the independent analysis was never rescinded, and, to the surprise of many county officials, was conducted anyway.

Wittermeier said Friday that by cutting out such amenities as marble-covered floors and walls, the county has succeeded in trimming the overrun to around $8 million to $9 million. She said the overrun could be reduced even further as county officials review the engineering details for any additional savings.

There is more than enough money from the unexpected money to counteract these overruns, Wittermeier added. She said bids on two of the three planned parking structures came in at $14.1 million under original estimates. Additionally, the county this year has received $4.5 million more than it had anticipated in an airport improvement grant from the FAA, she said. The total grant was for $21.4 million.

“It will compensate very nicely for the deficit,” Wittermeier said.

Critics Skeptical

Critics of county government, however, expressed skepticism that taxpayers would be let off the hook.

“We’re going to end up footing the bill one way or another,” said Lee Podolak, a frequent critic of the County Board of Supervisors who is also state social policy director for the League of Women Voters. “I’m afraid some other monies will be taken out of programs that are really needed, like health and welfare.”

Supervisors Roger R. Stanton, Harriett M. Wieder and Gaddi H. Vasquez could not be reached for comment Friday. Rochelle Hatfield, a Wieder aide, said her office is confident that the overrun will be trimmed as much as possible.

“I think we are comfortable with what is going to take place,” Hatfield said.

Fifth District Supervisor Thomas F. Riley, whose district includes the airport and who has been one of its biggest boosters, said Friday he did not believe the overrun was going to seriously harm the county. He said airport officials assured him in a meeting Friday that they were working diligently to cut costs.

Riley said he was shocked when he first learned of the overruns but added that it is too late to order a lengthy redesign because it would delay the scheduled April 1, 1990, completion of the overall $300-million airport expansion project.

Earlier this week, Airport Manager George A. Rebella said the decision not to have architect Leason Pomeroy redesign the project was based on the county’s need to meet an April 1, 1990, occupancy date for the new terminal.

A redesign would have taken up to a year, Rebella said, and revenue from the new airport facilities--rents from airlines and other fees--would not come in. That could jeopardize the county’s ability to make required payments to investors who last summer bought $242,440,000 in Orange County airport construction bonds.

Proceeds Set Aside

The April 1, 1990, date is important, financial experts said Friday, because until that date, bondholders will be paid interest from the proceeds of last summer’s bond sale. When the bonds were sold, a certain amount of the proceeds were set aside in a special fund to cover bond interest payments until revenue from the new passenger terminal was available.

That special fund will run out of money some time around April 1, 1990.

If the new airport facilities are not producing revenue by then, financial experts say, the county would have to come up with about $1.5 million a month to continue the interest payments to bondholders.

However, nobody is predicting that will happen.

Robert L. Citron, county treasurer-tax collector, said Friday that he’s assuming that the airport expansion project will be scaled back to make sure it comes in at the price previously expected.

Even if that money was needed, Citron and bond underwriters said Friday, the county could get it a number of ways, such as raising user fees at the airport or arranging an additional sale of revenue bonds.

Rating Good for Bonds’ Life

Meanwhile, the A-minus rating given the existing bonds last summer was based on assumptions that there would be cost overruns and delays, said Frank Minerva, assistant vice president of Standard and Poors, a New York investment rating service.

“The rating is good for the life of the bonds,” Minerva explained. “The only thing that might change that is if the airport went bankrupt.

“To the extent that they (Orange County) may need a few million dollars more is normal in the course of a construction project this large. That’s one of the reasons why we have an A-minus rating on the project instead of an A.”

Minerva said the county was anxious to sell the bonds quickly because of fears that noise and environmental issues could slow down the project.

“The bond sale went well,” Minerva said.