Airport privatization deal readies for takeoff

2014-01-14T00:30:00Z 2014-01-14T13:05:07Z Airport privatization deal readies for takeoffKeith Benman, (219) 933-3326
January 14, 2014 12:30 am  • 

The Gary/Chicago International Airport Authority on Monday put itself on course to approve a 40-year privatization deal for the airport in as little as two weeks.

On a 5-0 vote the Airport Authority accepted an ordinance including agreements with Aviation Facilities Co. Inc., known as AFCO, of Dulles, Va., to operate and manage development at the airport. The authority set a public hearing on the ordinance for Jan. 27.

"This is a significant opportunity for this board and for Northwest Indiana," said Harley Snyder, a member of the joint city/airport committee that negotiated the deal. "Looking at this opportunity in general, I think it's once in a lifetime."

Under the agreements with AFCO, the company would be required to attract $25 million in investments for the airport in the next three years. Within one year, it will present a plan for attracting $75 million more over the deal's 40-year term.

Airport Authority members at Monday's meeting did not seem to share Snyder's confidence after having received the agreements only Friday afternoon. They peppered Snyder and other committee members with questions during a meeting that ran for almost three hours.

Much of the concern revolved around AFCO's right of "first refusal" as master airport developer. With that right, AFCO could demand to be included in any development deal happening at or around the airport.

Outgoing Airport Authority Chairman Tom Collins Sr. wanted to know if the first refusal right meant current airport tenants such as B. Coleman Aviation and the Gary Jet Center would have to partner with AFCO to undertake projects.

Joint city/airport committee member Bo Kemp explained if the project is on property those companies currently lease, AFCO would not be able to insist on a role. But for developments on other parcels, AFCO would retain its right of first refusal.

Authority member Michael Doyne posed the same type of questions using the example of White Lodging, a hotel development company, which currently has a hangar at the airport. He asked what would happen if the company wanted to build a new hangar or a hotel across the street from the airport.

"Do they have to pay the developer to do that?" Doyne asked.

Snyder said the right of first refusal should be seen as an opportunity to do joint ventures with AFCO, not as a restriction on projects.

"There will be all kinds of opportunities," Snyder said.

Although AFCO will share in airport profits once that day comes, the deal appears to exclude the use of the current airport taxpayer subsidy as part of that profit. Airport officials said they soon would be posting a copy of the agreements online but did not have copies immediately available for reporters or the public at the meeting.

Cooper noted the development of a master plan in the next year could cost AFCO about $1 million, countering arguments the company has no "skin in the game" because it is making no upfront payment to the airport or city.

Interim Airport Director B.R. Lane noted the Airport Authority will retain decision-making authority so it can accept or reject development ideas AFCO brings to the table.

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