CHICAGO -- The airport in Gary, Ind. has tapped a team that includes Guggenheim Securities and Loop Capital to advance a plan to privatize the Chicago-area facility and surrounding land.
The Ad Hoc Committee of the Gary/Chicago International Airport Authority, which was created earlier this year to evaluate public-private partnership possibilities for the facility, announced Friday that it has entered into exclusive negotiations with Aviation Facilities Company Inc./AvPorts.
The committee expects to negotiate over the next few weeks and make a final recommendation to the full airport board next month.
“Entering into exclusive negotiations is an important step toward our goal of unlocking the value of the airport and the surrounding area to attract jobs, long-term investment and professional management to the airport,” Carrie Hightman, chair of the committee, said in a statement.
The team includes Guggenheim and Loop Capital on the financing side, and Aviation Facilities and AvPorts on the management and development side. Law firm DLA Piper is also on the team.
Guggenheim’s proposal as presented in June would create a new municipal authority to lease the airport from the city. The authority would float tax-exempt airport revenue bonds to finance an upfront cash payment as well as deferred maintenance, fund a capital reserve account for new facilities, a debt service reserve fund and annual payments to the airport authority over time.
Supporters say the privatization will help revitalize the struggling city of Gary and position the airport as Chicago’s third regional airport. The facility is located about 25 miles from downtown Chicago.
The committee chose Aviation Facilities after receiving 10 responses from interested firms in early September. It whittled that down to two, including Aviation Facilities and the GCIA Group, which included the Williams Capital Group.
Unlike other airport public-private partnerships, the Gary proposal features a large swath of vacant land that officials hope private investors will develop to help boost business at the airport and in the city.
In addition to a $100 million investment, the committee is looking for investors to outline a five-year management plan and a five- to 10-year investment plan in the surrounding area, anchored by significant private investment.
The airport is in the midst of a $166 million runway expansion program that is expected to be completed this year.