A Texas probate court ordered the City of Austin to pay $90 million — nine times more than it had once offered — to the operator of a privately-run airport terminal that municipal officials want to demolish as part of a planned expansion project.
(Bloomberg) — A Texas probate court ordered the City of Austin to pay $90 million — nine times more than it had once offered — to the operator of a privately-run airport terminal that municipal officials want to demolish as part of a planned expansion project.
Lonestar Airport Holdings, the operator, had resisted the city’s effort to take over the South Terminal at Austin Bergstrom International Airport, accusing officials of engaging in “municipal thuggery” by attempting to end the New York company’s 40-year lease 34 years early. The city initiated eminent domain proceedings in June, after Lonestar rejected a $10 million offer to buy their lease rights.
The $90 million price tag for the takeover was determined late Monday by three court-appointed special commissioners in Travis County probate court, which administers the area’s eminent domain cases.
“We are pleased with the Special Commissioners’ award that recognizes the significant value we have built at the South Terminal,” Lonestar Chief Executive Officer Jeff Pearse said in a statement. “We continue to desire to work with the City to find an amicable resolution to avoid ongoing, costly and unnecessary litigation.”
Austin Bergstrom has been struggling to meet the growing demand for air travel in one of the nation’s fastest growing metro areas. The city’s expansion plan calls for the demolition of the terminal and the construction of a new facility with at least 10 gates.
Currently, Lonestar has been operating the South Terminal as a hub for low-cost carriers Frontier Airlines and Allegiant since 2016. It’s the only privately-run terminal at the airport. It’s separate from Bergstrom’s main passenger terminal, which is run by the city.
Company executives contend their lease gives Lonestar rights to partake in expansion efforts — an issue at the center of a separate federal lawsuit Lonestar filed against Austin. Late last month, a federal judge said the city can proceed with its efforts to seize the property.
A spokesperson for the Austin airport said in a statement that the new valuation is an important step in the case that “allows expansion efforts to proceed, furthers the airport’s mission to deliver critical improvements and modernization projects needed to support increased passenger and airline activity.”
The case is Lonestar Holdings v. City of Austin, 1:22-cv-00770, US District Court, Western District of Texas (Austin)
(Updates with name of airport and role of probate court.)
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