Now Arriving . . .
A clout-heavy Chicago real estate developer is set to land a long-term deal to provide aircraft storage, fueling and maintenance at Gary's government-owned airport.
The deal with Elzie Higginbottom Jr.'s East Lake Management & Development comes after Higginbottom put $10,000 into Gary Mayor Karen Freeman-Wilson's political fund in September 2011 — the first-term mayor's biggest campaign contribution.
Higginbottom is a longtime former chairman of the Cook County Housing Authority and was a major campaign fund-raiser for former Chicago Mayor Richard M. Daley.
The government board that oversees the Gary/Chicago International Airport, which sits along the Indiana Toll Road / Interstate 90 in Gary, gave its preliminary OK last month to bring in Higginbottom's company as the airport's second "fixed-base operator." Four of the airport authority's seven board members are appointed by Gary's mayor, and the rest by Indiana county and state officials.
The airport's deal with the Chicago developer, which could be finalized June 24,
is for at least 20 years. How much it would be worth to East Lake will depend on how much business Higginbottom drums up at the airport.
Higginbottom has agreed to put money into the airport in the form of leases and the construction of a new hangar. In turn, he gets a cut of the rental fees airport tenants pay for hangar space for their planes, plus whatever he can make providing them with fuel and other services.
|Gary Mayor Karen Freeman-Wilson|
Eileen Rhodes, East Lake's vice president, says the company doesn't expect to make much. The venture isn't about making a buck as much as it is about helping Gary kickstart its economy, says Rhodes.
"It will be a blessing and a miracle if we break even," she says.
East Lake would lay out more than $71,000 a year on two deals — to lease an existing hangar and to lease two additional acres on which it will build another hangar. Those deals are for 20 years, with three five-year options. East Lake initially agreed to spend at least $3 million for the new hangar, but it's unclear whether that will be in the final agreement.
The company would make its money from providing aircraft fueling, maintenance and other services and also from fees paid by aircraft owners to rent hangar space. In addition to the hangar it's leasing and the new hangar it will build, East Lake also would take over management of the airport's 60 smaller "T-hangars" under a 14-year property-management deal, with four five-year options — it would get 20 percent of the rental fees for those hangars.
The airport has been running at about 60 percent occupancy. Gary/Chicago, now in the midst of a runway expansion, is home mostly to corporate, cargo and charter clients. The airport's lone commercial airline, Allegiant Airlines, there since February 2012, plans to pull out in August, which will leave the airport without any commercial flights, according to airport spokesman James Ward.
Airport consultant John Clark, who negotiated the deal with Higginbottom, says it's good for both parties because whatever East Lake can do to bring in more tenants and boost its bottom line will also help the airport grow.
|A picture of an airplane at Gary/Chicago International Airport / Flickr: dlkinney (CC BY 2.0)|
Freeman-Wilson, a Harvard Law grad who previously was Indiana's attorney general, says she has never discussed city business with Higginbottom nor did she push for airport officials to agree to the proposal he brought to them last August.
Higginbottom says he also knew three of Gary's former mayors and has managed property in the city for 25 years. He says he's been trying to get in at the Gary airport since 2003 and says there's no link between the money he gave Freeman-Wilson's campaign and his company's being hired.
"I'm a respectable businessman who works very hard to get what I have," Higginbottom says, adding, "I give money to people that are doing a good job or will do a good job in government."
East Lake has extensive property-management experience with commercial and residential properties in Chicago and the suburbs. It also has managed construction at O'Hare and Midway airports.
The work at Gary/Chicago is something new for East Lake, but Higginbottom says, "I did real estate for the first time once."
This story was written and reported by the Better Government Association’s Alden Loury, who can be reached at (312) 821-9036 or email@example.com.