Stalled Gary airport expansion could imperil privatization

2013-07-07T23:00:00Z 2013-07-08T13:19:06Z Stalled Gary airport expansion could imperil privatizationKeith Benman keith.benman@nwi.com, (219) 933-3326 nwitimes.com

In a season of turbulence for Gary/Chicago International Airport, the airport ran into even more serious storm clouds Tuesday, when officials announced its $166 million expansion project will be delayed again.

The latest setback is one more reason Gary airport and city officials should consider slowing down their "very aggressive process" for landing investors through a public-private partnership, said Robert Poole, founder of the Reason Foundation and a leading expert on privatizations.

"The city has to decide what are they really trying to accomplish with the P3 (public-private partnership)," Poole said. "It's nice to be able to tell the voters 'here's the path forward,' but you also want to maximize the odds of a successful development there."

A delegation of local officials led by Gary Mayor Karen Freeman-Wilson gathered at the airport recently and reported pollution in the runway expansion area and problems with nailing down essential agreements with railroads would delay completing the project.

Those officials now say this year's deadline for completing work will be missed altogether, and the runway extension will not be completed until at least September 2014.

Since at least 1987, when the Environmental Protection Agency undertook the first cleanup there, it has been known that areas northwest of the airport's main runway were deeply contaminated. Testing over the decades revealed industrial pollutants such as cyanide, oil, PCBs, hazardous acids and solvents, according to environmental reports obtained by The Times.

The airport has known since at least 2005 it would have to undertake a further cleanup of the area before its main runway could be extended.

Despite the delay in the expansion project, Freeman-Wilson and other officials made it clear they plan to press ahead with their plans for attracting at least $100 million in private investment for the airport by this fall.

A joint city/airport committee running the search for a private investor still plans to pick a winning bidder sometime in September. The Gary airport authority then would have to confirm the committee's choice.

The uncertainty of the expansion project, along with the airport's only passenger airline ceasing Gary flights in August, will have a definite impact on firms considering sinking their own money into the airport, Poole said.

"It certainly is a negative in terms of the airport's perceived attractiveness to passenger airlines," he said.

In addition, the Airport Authority is still at loggerheads with Boeing Corp., its most prestigious tenant, on a lease renewal for Boeing's corporate aviation hangar.

The Airport Authority still plans to go ahead Monday with public hearings on a resolution to borrow up to $65 million to finance the expansion project and other needed airport repairs, according to its meeting agenda.

At the same time, officials are not being definite about the pace of work on the expansion project.

The Airport Authority and its contractors are now trying work out new construction schedules for the next year, airport spokesman Jame Ward said.

When asked if work on the runway expansion will have to stop altogether at some point, Ward said that has not yet been determined. He also pointed out the difficulty securing agreements with railroads is playing a role in the delay.

That delay in reaching agreements with railroads comes despite the Airport Authority's paying Washington, D.C., lawyers $722,875 for that job. The authority originally estimated that work could be done for as little as $50,000.

The airport has already spent more than $40 million on building new tracks and signals for the railroads to make way for the new runway. But those tracks will sit unused until final agreements can be nailed down.

Airport tenants have been watching the latest developments with increasing anxiety.

There only seem to be vague plans for moving forward on the expansion project, and there are questions as to whether funding can be rounded up to finish it, said Wil Davis, the owner of the Gary Jet Center, the airport's aircraft maintenance and fueling provider.

"It's very disturbing to all parties," Davis said. "There are so many open issues here that should not be open at this time."

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