WASHINGTON - today with great fanfare, but the long-delayed project, which is projected to cost about $3.6 billion more than expected, is the target of a newly filed bondholders' lawsuit and continues to be the focus of numerous federal and congressional investigations.
The airport, whose price tag may run above $5 billion, had been expected to cost about $1.3 billion and to begin operating on Oct. 31, 1993. But a faulty baggage system, suspected shoddy construction, and safety concerns led to major delays and cost overruns.
Yesterday, bondholders filed securities fraud changes against the city and county of Denver in a class action suit in the U.S. District Court in Denver, charging that city officials misled them about the extent of the airport's problems.
The suit, which was filed by lawyers from the firm of Bader & Villanueva on behalf of Bonnie Sonnefeld and other bondholders, claims that their bonds lost value because of the misleading disclosures of information. The suit seeks an unspecified amount of damages or "recision" of the bonds so bondholders can get their money back.
The airport project has been financed with municipal bonds as well as with federal and local funds. The city and county of Denver have issued roughly $3.5 million in tax-exempt and taxable municipal bonds to help pay construction costs, according to city officials.
The Securities and Exchange Commission, the Justice Department, the Senate Banking Committee, and the General Accounting Office are all investigating disclosure or pay-to-play issues in connection with the bond financings, according to city officials and other sources.
The General Accounting Office is examining the airport for several members of Congress, including Sen. John McCain, R-Ariz., who chairs the Senate Commerce, Science, and Transportation Committee's aviation subcommittee.
McCain tentatively plans to hold a hearing on the airport on March 8 or 9, a congressional aide said. While plans for the hearing are still being firmed up, the General Accounting Office would be the main witness, and would testify about the airport's delays and cost overruns, the aide said.
Meanwhile, the Securities and Exchange Commission has been investigating whether the city misled bondholders about the airport's problems. The commission has also been examining whether broker-dealers engaged in pay-to-play practices to win bond business by giving local officials political contributions or other financial benefits.
City officials said the commission has at least 10 investigators working on the case and has obtained over 80,000 documents from the city.
The Senate Banking Committee, which launched its probe of the airport earlier this month, is investigating whether proper disclosures were made to bondholders about the cost overruns and the problems involving safety and the baggage system, committee sources said.
The committee has asked the SEC and other federal agencies for all "nonprivileged documents" relating to the airport.
The General Accounting Office is also studying disclosure issues for Sen. Hank Brown, R-Colo., and expects to be able to give Brown a preliminary report next month, GAO officials said.
In addition, the GAO has been keeping Rep. Frank Wolf, R-Va., up to date on the status of the airport.
The GAO has been investigating the status of agreements with airlines as well as the airport's delays and cost overruns for both Brown and McCain, GAO officials said. The congressional watchdog agency has also been examining problems with the automated baggage system for Brown and airport construction and safety issues for McCain, GAO officials said.
