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Airport could land $63M annually from land redevelopment

February 18, 2011

A long-term land-use plan approved Friday morning by the Indianapolis Airport Authority board could generate up to $63 million for the airport annually by 2040, according to a consulting firm.

International aviation cunsultancy Landrum & Brown pegged the potential annual revenues at $30 million to $63 million from seven development zones identified for Indianapolis International Airport and its smaller reliever fields in the metro area.

Besides predictable uses such as cargo and logistics firms, the plan includes offbeat uses such as construction of a solar-energy farm at the southwest corner of the airfield, near Interstate 70.

The only hitch for the ambitious land reuse plan is that the airport authority might have to pay back the Federal Aviation Administration up to $17.4 million for land that had previously been developed with federal funds.

At Indianapolis International, the report contemplates 50 development sites, or 59 million square feet of leasable land. 

The study identified 2.5 million square feet of development potential at Metropolitan Airport in Fishers and 4.6 million square feet at Indianapolis Regional Airport in Hancock County, formerly known at Mount Comfort Airport.

The study concluded that Eagle Creek Airport and the downtown heliport should be preserved largely for aviation purposes.

The potential of generating up to $63 million for the airport annually is based on land-rent income only, Berta Fernandez, executive vice president of Landrum & Brown, told the board.

But it’s likely the airport, in conjunction with other governmental entities affected by the airport, will have to offer incentives to lure businesses. Competition is already robust among other communities and other states waving around tax abatements and other lures.

 “They [businesses] all indicated some sort of incentive package will be needed,” said Mark Hedegard, senior director of business development for the authority.

Those incentives could also come in the form of infrastructure improvements to airport property.

To a person, developers stressed that the market for development is still challenging and likely will be in the short term, Hedegard added.

But, he said of the plan ‘they thought it was well-thought out.”

Another carrot to developers likely will be in how leases are structured.

“If you’re going to do any kind of real estate development, we typically like to get a [long-term] lease,” said Mike Wells, president of Indianapolis-based REI Real Estate. Wells added that leases as long as 99 years aren’t uncommon for some projects to stoke interest.

Airport officials this year will focus on such areas as developing incentives and marketing initiatives, conducting environmental assessments and working with the FAA on land-use changes. The airport has already set aside $1 million for land-use work this year.

“The FAA has been supportive” of the concepts, said Hedegard.

Among the first projects could be the solar-farm concept as well as gas and retail development at Indianapolis International.

The old terminal, because of its proximity to runways and to neighboring interstates, likely will be home to air cargo and logistics-related redevelopment.

The plan will influence airport development for decades to come.

Last year, the authority hired Landrum & Brown to develop the plan, with input from local government and business leaders.

“It is the intent of the IAA to lease, not sell, land-development sites and to look to the private-sector development community to assume financial risk on future development opportunity,” airport staff said in a memo to the board.

The resolution approved Friday states that “wherever and whenever practicable” the authority will return designated airport real estate, developed for non-aviation purposes, to the tax rolls.

For years, jurisdictions such as Decatur Township have complained that the expanding airport land holdings, which are tax-exempt, have hurt their tax base.

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