Faegre Baker Daniels partner Regina M. Sharrow
With a flagging economy and dwindling population no longer powered by the steel mills that dot Lake Michigan, Gary, Ind., has seen its share of hard times. A $100 million public-private partnership (P3) for the Gary/Chicago International Airport, which Faegre Baker Daniels partner Regina M. Sharrow advised on, is designed to help reverse that trend.
According to Sharrow, who served as co-lead deal counsel with Faegre Partner Richard L. Hill, the agreement is unique because it not only focuses on upgrading and managing the airport, but also involves an investment in developing the surrounding area.
Under the terms of the agreement announced earlier this year, primary investor AFCO Avports Airport Management LLC must invest $25 million in capital during the first three years for upgrades or other projects, and $100 million over 40 years. The airport authority retains airport ownership and will provide operating costs, up to $120,000 per year in management fees and up to 20 percent of the facility’s profits to AFCO. The team also negotiated a master development agreement with AFCO’s partner organization, Aviation Facilities Co. Inc., which requires Aviation Facilities to provide $300,000 over three years to promote jobs in northwest Indiana. The agreement builds in minimum thresholds for minority-, women- and veteran-owned businesses, as well as local businesses.
“The city of Gary does not have a good reputation, and we were very concerned that no one would want to participate in the P3,” she said. “Instead of a starting with an RFP, we did a request for expressions of interest and qualifications (REIQ) first.”
The response to that REIQ, and the subsequent RFP, was “wonderful,” Sharrow said. Many natives of northwest Indiana were eager to help jump start the area’s economy. “There was a lot of personal interest,” she said.
Along with the airport agreement, Sharrow and Hill also served as lead deal counsel on the recent $91 million sale of the city of Westfield, Ind.’s water and wastewater utilities to Citizens Energy Group, a deal designed to help alleviate Westfield’s debt and free up funds for infrastructure improvement.
While Sharrow’s practice mainly focuses on corporate M&A work, she sees P3s as a potential growth area. “This structure could become a template for other communities like Gary,” she said. “P3s in general are getting a lot of people’s attention, and it’s a great opportunity for many municipalities.”