Austin’s legal costs to oust the South Terminal’s operator double to $3 million

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Photo by Gabriel C. Pérez/KUT

Monday, December 5, 2022 by Nathan Bernier, KUT

Legal bills are piling up in the city’s fight to oust the company that runs the South Terminal at Austin-Bergstrom International Airport. The City Council voted Thursday to double ABIA’s legal services agreement with corporate law firm Winstead PC to more than $3 million.

The move comes after the company with a 40-year lease to operate the South Terminal, Lonestar Airport Holdings, sued in federal court in an attempt to stop the city from forcing it out using an eminent domain.

Thursday’s Council vote was taken without discussion. The money for legal services comes from ABIA’s operating budget, which is funded by airport revenue.

Only two airlines – ultra-low-cost carriers Allegiant and Frontier – operate out of the South Terminal. More than 38,000 passengers traveled through the facility in September, compared to 1.7 million travelers through the main Barbara Jordan terminal.

Officials running the airport in the city want to demolish the South Terminal to make way for a new concourse with space for up to 40 gates, connected to the main terminal by an underground walkway.

An illustration of the new midfield track planned under ABIA's $4 billion expansion

ABIA’s planned $4 billion expansion includes a new midfield concourse with at least 10 gates, connected to the Barbara Jordan Terminal by an underground tunnel. The expansion would encroach on land now occupied by the South Terminal. Photo by the City of Austin.

The project is part of a $4 billion expansion to accommodate unprecedented volumes of travelers. Airport officials hope to open the new corridor by 2027.

In a new use of eminent domain, the city is trying to seize the lease of city-owned land from Lonestar and pay $1.9 million in compensation.

Lonestar said it found the city’s offer of less than $2 million “offensive,” arguing that it spent more than 10 times that amount to fix the facility. Now the company is waging a two-front legal battle against the city in Travis County Probate Court and federal court.

An image of the South Terminal before renovation, showing a green building with corrugated sides.

The South Terminal before renovation. The image is included in a federal lawsuit filed by Lonestar Airport Holdings. photo by Lonestar Airport Holdings.

The vote to increase the airport’s legal war chest to $3 million means Austin is now spending 58 percent more on attorneys’ bills than its rejected offer to Lonestar.

The increase in legal fees “comes after Lonestar filed a federal lawsuit in response to the city’s legal action to obtain the lease,” ABIA said in a statement to KUT, calling the addition of a new center field court “a calls necessary step to capacity for more flights at AUS.”

Lonestar Airport Holdings said the city would not have to spend as much on lawyers if it offered “reasonable terms that reflect our existing 40-year agreement.”

“We are eager to continue to be a good partner to the city, to promote further development of the airport and to resolve this dispute,” Lonestar CEO Jeff Pearse said in a statement. .

U.S. District Judge Robert Pitman set a hearing on the case for Jan. 20.

A look inside the South Terminal showing two seating areas and a mural of Austin on the wall

A waiting area inside the South Terminal. Photo by Gabriel C. Pérez/KUT.

This story was produced as part of the Austin Monitor‘s reporting partnership with KUT.

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