- Austin’s population is growing fast. As a result, the City is looking to expand the airport to meet some of that growth.
- To do that, it is seeking to use eminent domain to close the South Terminal and build a new, bigger terminal.
- Last week, the eminent domain panel awarded the property owner a fair market value 45 times what Austin was originally offering for the property.
Austin is growing fast. That’s not a big secret. Its one of the biggest stories in the country the last few years. I mean – I even do a podcast about it. Really – you should listen. Its pretty good.
One of the inevitable results of this growth is that our infrastructure has to grow with it. Specifically, our airport currently has 34 gates in the main terminal. And that is just not really sufficient for a metro area with about 2.3 million people. Thankfully, the City of Austin recognizes this and has some plans to expand the airport.
I wrote previously, though, that those plans had hit a bit of a snag. Well in the last couple of weeks, there has been a major development in the airport expansion plans. So that’s what we are going to talk about this week.
Issues Facing the City in Expanding the Austin Airport
As a loyal reader of this blog, you probably remember the issues surrounding the airport expansion, but I’ll briefly recap them for our new readers.
The Austin City Council understands the need to expand our airport to meet the growing demand of our city. As a result, they have enacted the 2040 Master Plan. According to the plan, they expect to have 31 million passengers annually through ABIA by 2040. To meet this demand, Austin plans to expand to 64 gates by that time – almost doubling the current ABIA capacity.
In addition to the gate expansion, they also plan to make major renovations to the current main terminal. This will include upgrading the terminal and making it more accessible for the increase in passengers.
Finally, they also plan to add ten new gates to a new midfield concourse – with it ultimately growing to 32 total gates. And that’s where the problems started.
When the South terminal was first built, Austin and Lonestar Airport Holdings agreed to a forty-year lease for Lonestar to operate the South Terminal. Austin wants out of the lease so that it can expand the airport. But, of course, Lonestar does not want to let Austin out of the lease without getting paid what it is owed. As a result, the City decided to use its power of eminent to acquire the South Terminal, which was privately run. And that’s where our story picks up.
Award for Lonestar Much Greater than What City Offered
When using its power of eminent domain, the usual process is the condemning authority (in this case, the City of Austin) will make an offer for the property. And if the property owner does not agree, fight the condemning authority on what the market value of the property is. The first step is usually a hearing before the panel.
In this case, Austin offered Lonestar $1.95 million for the property. Lonestar objected to this. As a result, they went to a hearing before a panel last week. After hearing from both sides, the panel ruled that the City of Austin would have to pay $90 million to Lonestar for the property. That is 45 times what Austin originally offered.
The case is not done yet. It is still tied up in litigation with the City allegedly moving forward on its airport renovation plans. But obviously this large decision by the eminent domain panel puts a wrench into that system. Renovations to the airport have suddenly become a lot more expensive than Austin probably assumed they were going to be.
So what does that mean going forward? Can we still expect to have a significantly bigger airport in the next few years? I guess we just need to wait and see when the plans are ready to take off again.
