Gary airport's rush to privatize raises questions

2013-08-09T15:00:00Z 2013-08-09T22:43:40Z Gary airport's rush to privatize raises questionsKeith Benman, (219) 933-3326

The Gary/Chicago International Airport's rush to privatize is raising red flags with some potential bidders, who wonder how a pact tying up prime airport real estate for 40 years can be concluded with so many issues outstanding.

One prime bidder, the GCIA Group, has asked for a 90-day extension for bid submissions, citing a lack of financial particulars and the unsure state of the airport's $166 million expansion project.

In a July 29 email to airport lawyers, the GCIA Group asks why bids are due just 11 working days after bidders are scheduled to start asking questions and receive the first appraisal of airport property.

"Why the rush?" said Wil Davis, owner of the Gary Jet Center and one of the original partners in the GCIA Group. "No one is able to answer that question for us."

Davis' concern echoes those expressed by others about a June request from the airport asking private firms for expressions of interest and qualifications.

“Asking them to put together a serious concept of what might make sense in just six days just doesn't seem realistic, unless someone has already been working on this for six months,” said Robert Poole, a national expert on privatizations.

Another potential local bidder, The Arsh Group Inc., of Merrillville, stated in a cover letter there was not adequate time to respond to the “very important” questions the airport wanted answered.

On top of that, concerns are growing about the current situation at the Gary Airport Authority.

The authority recently announced delays in its expansion project, initiated searches for a new airport director and attorney, and hired a posse of consultants who will be billing the new board for hundreds of thousands of dollars. The outgoing board also authorized a bond issue, which will put the previously debt-free airport $35 million in debt.

All of those developments will be dropped in the lap of the new authority board, as well as the picking of a winner or winners for privatizing airport management and development. That's because under state legislation passed in the spring, appointing authorities can replace the entire board Sept. 1.

The authority's lack of clear goals and the resulting confusion is exactly why it should look to private firms to run and develop the airport, said Steve Forrer, who is heading up a joint effort by AFCO/AvPorts and the Guggenheim Group to do both.

“You don't need 20 consultants at that airport,” Forre said. “What you need is a single point of accountability.”

Forrer said his group will have no problem complying with the airport authority's bid deadlines.

However, there are suspicions among some that the tight deadlines may be designed to give AFCO/AvPorts and Guggenheim a big leg up on winning the airport jobs.

GCIA partner Patrick Lee said his group has no knowledge of the airport having already picked a winning bidder. But he also said compressed deadlines like those set by the airport are known to be one way of discouraging other parties from bidding.

Billing records of John Clark, the consultant hired to head up the privatization project, show he was talking to a Chicago-based partner at Guggenheim as early as May 2012. Clark subsequently met with the partner that June. Another meeting of three hours duration was held between Guggenheim Group, Clark and Mayor Karen Freeman-Wilson on Oct 9.

That was four months before a joint city/airport committee was formed to look into forming a public-private partnership for the airport.

When asked about that Friday, the mayor said Guggenheim had no advantage over other bidders because of its early involvement.

"Everyone has a fair and equal opportunity to be successful in this process," she said.

Forrer declined comment when asked if his group might ally itself with a company run by clout-heavy Chicago businessman Elzie Higginbottom in making a bid. That company, East Lake Management & Development Corp., already has lease agreements with the airport for two hangars.

Airport consultant John Clark said at this preliminary stage it's impossible to know what East Lake might intend to do.

Forrer said he doesn't think his group has any advantage because it was one of the first movers on the project.

"I think the city is on the right track, which is let's start with the airport and use that for a catalyst," Forrer said.

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