Airport privatization advisers may not get paid

2014-03-10T14:45:00Z 2014-03-10T17:54:20Z Airport privatization advisers may not get paidBy Keith Benman, (219) 933-3326

Three advisers lauded by city and airport leaders for landing a 40-year privatization deal at Gary/Chicago International Airport may not get paid for their nine months of work on the project.

The airport authority essentially is finding its hands tied when it come to paying them, because the contracts for all three called for the winning bidder to pay their fees, according to Gary/Chicago International Airport Authority Chairman James Cooper.

The adviser standing to win the largest fee of up to $500,000 was JClark Aviation, which is headed by former Indianapolis Airport CEO John Clark. A.C. Advisory Inc., of Chicago, was due to get $250,000 for its services and Hawthorne Strategy Group, of Chicago, would get $67,500.

Responding to an inquiry from the Times on the payments, Clark stated via e-mail he believes his firm should be paid for the work that was performed related to the Gary airport's public-private partnership agreement.

At its Feb. 27 meeting, the airport authority deferred action on a resolution to make the payments. The resolution was not brought up at its regular meeting at the airport administration building Monday.

The final public-private partnership agreement negotiated with winning bidder Aviation Facilities Co. Inc. (AFCO) does not require the company to pay the advisers, because the company made it known in negotiations it would not do so, Cooper said. The only way to pay the advisers now would be to amend their respective contracts.

"We are bound by the four corners of the agreements," Cooper said after Monday's meeting.

The fees due were always described by both the airport authority and the consultants themselves as "sucess-based" or "at-risk."

The Times filed an Access to Public Records request March 3 for the JClark Aviation and A.C. Advisory contracts but has not yet obtained them.

The law firm of Faegre Bakers Daniels, which also advised on the public-private partnership, will get paid, Cooper said. That contract was not an "at-risk" contract, as were the other three. The law firm's bill will be around $1 million.

The airport authority at Monday's meeting also received an update on progress made by AvPorts, an AFCO subsidiary, on bringing the airport under its wing.

AvPorts hopes to have its own temporary airport manager on the ground in Gary as early as next week and within three months bring in a person it has already identified for the permanent job, said Avports CEO Ozzie Moore.

"We don't want to wait any longer before we start putting our stamp of control on this airport," Moore said.

Moore also told the authority AvPorts wants to submit an airport budget for approval by mid-April, as well as transition airport employees to employment with AvPorts.

AvPorts is charging a $10,000 per month fee to operate the airport and will use the airport's current sources of revenue such as lease payments, landing fees and taxpayer subsidies to pay operating costs. 

AvPort's goal is to eventually end the taxpayer subsidy so it can turn a profit. Under its contract with the airport authority AvPort's gets a 20 percent share of profits.

The airport authority on Monday also hired Sycamore Advisers, of Indianapolis, to serve as its financial adviser. A contract for financial advisory services with Acacia Financial Group recently expired.

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