Gary airport scrambles to pay consultants

2014-02-27T20:40:00Z 2014-03-05T14:17:05Z Gary airport scrambles to pay consultantsKeith Benman keith.benman@nwi.com, (219) 933-3326 nwitimes.com
February 27, 2014 8:40 pm  • 

The Gary/Chicago International Airport Authority is considering using its taxpayer-financed Airport Development Zone fund to pay consultants who arranged the 40-year privatization deal signed last month.

Total fees for those consultants could approach $2 million, but Thursday the airport panel deferred action on a resolution to make the payments.

Airport Interim Director B.R. Lane told the Airport Authority Board at its regular meeting there are unresolved questions concerning the bills and she recommended putting off action.

After the meeting, James Cooper, Airport Authority chairman, said the public-private partnership deal is considered part of the airport expansion project and money from the Airport Development Zone fund can be used for that purpose.

The joint city/airport committee that negotiated the privatization agreement had long maintained the winning bidder would pay consultants' fees. But when the 40-year deal was signed last month with Aviation Facilities Company Inc., of Dulles, Va., it lacked any such requirement.

The Airport Development Zone fund receives about $4 million per year from a tax increment financing district on the west end of Gary. A slice of property tax collections from both homeowners and businesses go into the fund.

The Airport Authority on Thursday did move to hire the firm of Drinker Biddle, an accounting litigation law firm, to look into billing activity for the $166 million expansion project.

The action comes after a State Board of Accounts audit found the airport had double-billed for some of the work, resulting in a $10.4 million overpayment from the Northwest Indiana Regional Development Authority.

Drinker Biddle will work with a forensic accounting firm to review billing activity and interview airport employees, according to a prepared statement from the Airport Authority.

"This is certainly not to suggest wrongdoing on anyone's part," Lane said.

Also at Thursday's meeting, Cooper informed the authority the Porter County Board of Commissioners has appointed David Fagan, financial secretary of the Union of Operating Engineers Local 150, as its appointee to the authority board. He replaces Thomas Cavanaugh, who resigned last month.

This month, mayoral appointee Michael Doyne also resigned from the board, according to airport spokesman James Ward. The board is still lacking a governor's appointee following the resignation of former Chairman Tom Collins Sr.

The issue of who will pay consultants for the airport's privatization has been a thorny one for the authority because it does not have money in its budget to pay them.

The law firm on the project, Faegre Baker Daniels, has estimated its bill alone at close to $1 million, Cooper said.

The three other advisers on the privatization deal were JClark Aviation, of Atlanta, a firm headed by former Indianapolis CEO John Clark; A.C. Advisory Inc., of Chicago; and Hawthorne Strategy Group, of Chicago.

JClark Aviation stands to win the biggest single paycheck of those three. If the privatization deal is valued at $100 million, the firm will reap a $500,000 payday. At the least, JClark Aviation will be paid $200,000.

A.C. Advisory Inc. is due to get $250,000 for its services and Hawthorne Strategy Group $67,500. The three advisers combined also have a running tab for $60,000 in expenses.

The Airport Authority on Thursday authorized paying JClark Aviation $25,000 for expenses it incurred.

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