"Airline seeks millions for Miami terminal overruns"

Tuesday, July 6, 2004

MIAMI-DADE/ Airline seeks millions for terminal - Two years after
receiving $211 million from Miami-Dade to cover cost overruns at Miami
International Airport
The Miami (FL) Herald


American Airlines plans to ask Miami-Dade County for at least $66
million more to complete construction of a new mile-long terminal at
Miami International Airport.

The request comes two years after American vowed not to ask the county
for any more money.

The North Terminal project is $87 million over-budget, the county's
aviation department says, and at least 18 months behind schedule --
setting the stage for another showdown between the airport's largest
carrier and the county's aviation director, who says MIA has paid too
much already.

Aviation Director Angela Gittens wants the county to take over the
project.

"The program has suffered from continual lax program management,"
Gittens wrote County Manager George Burgess.

American's project managers blamed the increased costs on new Homeland
Security requirements, environmental cleanups and the inherent
complexity of building a large-scale project in a working airport.

American also said if Miami-Dade had given it the additional $321
million requested in 2002 -- and not the $211 million it eventually
accepted -- there would be no impasse today.

"We'd be well under budget," said Frank Erickson, the project's senior
coordinator. "We were negotiating pretty intensely because we felt like
we needed more. But we finally agreed this [$211 million] is a number we
could live with."

POLITICAL DISPUTE

The dispute puts Gittens in a tough spot. American -- one of the largest
employers in Miami-Dade and most politically powerful -- is fighting her
attempt to take over the project. At the same time, some county
commissioners are ticked at Gittens because she supports an independent
airport authority, which would strip commissioners from awarding airport
contracts.

Last week, Burgess put Gittens under "management watch," questioning,
among other things, her unwillingness to work with the commissioners.

"Your recent action of signing a petition in support of an aviation
authority in a manner to draw attention [to the issue] showed a lack of
sensitivity and disrespect to me and those we serve," Burgess wrote her
June 25 -- just days after Gittens wrote Burgess to complain about the
American Airlines project.

American's Senior Vice President Peter Dolara sided with commissioners
-- who will ultimately decide if American gets more money -- and went
after Gittens.

'We are troubled by Ms. Gittens' lack of cooperation and are at a loss
as to why she continues to attack the vision of the Miami-Dade County
Commission for this world-class hub," he said.

Gittens declined comment, but her memo to Burgess on June 16 stated:
"[American] has refused all further negotiation on financing the
additional cost overruns for which it is responsible and has rejected
[the airport's] proposal to exercise decision making for the remainder
of the program."

The North Terminal -- to be operated by American, but owned by the
county -- is just one part of the $4.8 billion airport expansion that
has been hampered by ballooning costs, delays and mismanagement.

American's terminal has been controversial from the start. In 1993, the
commission voted for the then-$500 million project over the objections
of the aviation director, Rick Elder. American urged the commission to
fire Elder. He promptly resigned under pressure.

By the time American broke ground on the terminal in 1995, the budget
had risen to $975 million, and the airline subsequently received another
$330 million from county bonds sold for the Capital Improvement Project.

In 2002, American waged its battle with Gittens, eventually getting $211
million from the county and bringing the total cost of the terminal to
more than $1.5 billion.

At the time, Gittens said she worried the carrier would keep coming back
for more money. To that, American Vice President Gary Kennedy told
commissioners: "I have a high degree of confidence that I'm never going
to stand before you like today and ask you for more money."

RESPONSE UNKNOWN

The main question now is how Burgess and the commission will respond to
American's request. Burgess did not rule out having the county pay for
the overruns. No date has been set for American to ask commissioners for
the additional money, which would come at the expense of other airport
projects or by tapping more bond money.

Commission Chairwoman Barbara Carey-Shuler said she is unhappy with the
new request -- especially in a year when MIA needed $81 million more for
the extra security measures mandated by the federal government.

"That's an incredible number," Carey-Shuler said of the additional cost
for the North Terminal. "It's really, really disturbing this time."

Hit hard by the delays have been dozens of small subcontractors.. At
least five have sued.

Minority business owner Andres Solares runs a small stucco and masonry
company called Talmac. His business has been paid $4.36 million, but he
says he's owed $2.4 million. His work has stopped. "I waited six months
for them to put in the elevator," he said. "We get paid as the work is
performed. We couldn't finish anything because we were waiting and
waiting."

The opening of the new terminal, slated for May 2006, is now planned for
November 2007.


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