Gary airport preparing to borrow for expansion

2013-02-11T16:00:00Z 2013-02-11T18:07:26Z Gary airport preparing to borrow for expansionBy Keith Benman keith.benman@nwi.com, (219) 933-3326 nwitimes.com

A financial adviser told the Gary/Chicago International Airport Authority on Monday it should be able to borrow the last money it needs for its $166 million expansion project, with its completion deadline looming less than 11 months away.

Acacia Financial Group Senior Vice President Phoebe Sheldon told the airport authority it should be able to issue bonds in the amount of $34.5 million, with $32.9 million of that to spend on the expansion project as well as others at the airport.

"This is a plain vanilla financing," she told the airport authority at its regular meeting. "Nothing too crazy."

The airport is expanding its main runway to 8,900 feet from its current 7,000 feet. The project has been underway since 2006 but has only made significant progress in the last two years.

The $34.5 million borrowing would be paid back during a 30-year period with tax revenue from the Airport Development Zone Tax Increment Financing district, Sheldon said. No calculation has yet been made on how much total in principal and interest would have to be paid back.

The borrowing would carry an interest rate of about 4.8 percent, with that figure encompassing fees due, she said

The Airport Development Zone TIF district is among the largest in the state and encompasses thousands of homes and businesses west of Burr Street. It runs from the airport in the north to Ridge Road in the south.

The plan to complete financing for the project still has a number of moving parts, with an airport application for $16 million in additional federal funds still pending. In addition, the Airport Development Zone currently has more than $20 million in the bank.

Authority member Silas Wilkerson asked what happens if it's found the $32.9 million is not enough to complete the project.

Sheldon said something like a more costly junior-lien bond or a completion bond could be issued if that were the case.

The airport authority on Monday also approved paying construction manager DLZ Corp. $730,000 more for its services as airport expansion construction manager on a 5-1 vote.

Increasing costs for lawyers, consultants and managers have been one of the underlying causes in hiking the cost of the airport expansion to $166 million from original estimates of about $90 million.

Airport expansion project manager Scott Wheeler, of Aecom, said changes in railroad projects that are part of the expansion meant the number of contracts DLZ is managing have swollen to nine in number from the four originally assigned.

A month ago, the airport authority approved paying project manager Aecom $322,612 more for its services.

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