GARY | The Gary/Chicago International Airport Authority voted 4-0 on Monday to punt $817,500 in consultant fees over to the city of Gary Redevelopment Commission for possible payment.
The bills were run up by three airport consultants that successfully negotiated a 40-year development deal with Aviation Facilities Co. Inc., but that company was unwilling to pay them.
The adviser standing to win the largest fee is JClark Aviation, which is headed by former Indianapolis Airport CEO John Clark. Under an amended contract, JClark Aviation's fee was set at a flat $500,000.
Previously, JClark Aviation's contract for the public-private partnership called for the firm to be paid the greater of $200,000 or one-half percent of the total value of any deal. That means if the airport's goal of striking a $100 million deal was reached, JClark Aviation would have scored a $500,000 payday.
Under agreements signed in January, AFCO must attract a minimum of $25 million in new building and other investments for the airport by 2019 or the deal can be terminated. By next year, it must present a plan for attracting $75 million more in investment by 2054.
A.C. Advisory Inc., of Chicago, is due to get $250,000 for serving as financial adviser on the deal. And Hawthorne Strategy Group, of Chicago, is due $67,500 for public relations services.
Interim Airport Executive Director B.R. Lane said Monday the interlocal agreement negotiated between the Airport Authority and the Redevelopment Commission for the public-private partnership anticipated the commission would share in both the costs and any eventual profits from the deal.
"The goal is for the Redevelopment Commission to share in the payment of those fees, which we all agree should be paid because the work was done," Lane said.
Lane said the Airport Authority will retain responsibility for fees due the law firm of Faegre Baker Daniels, which served as project manager for the public-private partnership negotiations.
That bill for Faegre Baker Daniels was estimated at nearly $1 million just before the deal was concluded.
In early March, Airport Authority Chairman James Cooper said the authority had found its hands tied when it came to paying JClark Aviation, A.C. Advisory and Hawthorne Group. That was because the contracts for all three called for the winning bidder to pay their fees. There was no such provision in the contract for Faegre Baker Daniels.
Gary Redevelopment Commission officials could not be reached for comment on Monday. One possible source of money to pay the bills mentioned at Monday's Airport Authority meeting was the Lakefront Allocation Area, which is a tax increment financing district managed by the Redevelopment Commission.
The Airport Authority on Monday also approved by a 4-0 vote a land lease for Ken Pacholski, who plans to build a 3,600-square-foot hangar at the airport to house his 1956 Lockheed T-33, which was once used as a basic jet training aircraft for the U.S. Air Force and U.S. Navy.
Pacholski plans to spend more than $150,000 on the hangar and will pay $1,980 per year in rent. The lease term is 20 years with one 10-year extension.