The Indianapolis Airport Authority plans to sell about 80 acres of land at Stafford Road and Ronald Reagan Parkway to a local developer for $8 million.
The authority also on Friday said it approved a new 10-year lease with AAR Corp., the aircraft maintenance services company, for the former United Airlines maintenance hub, known as the Indianapolis Maintenance Center.
Strategic Capital Partners will buy the 80 acres contingent on successful rezoning by the town of Plainfield for a warehouse or distribution center, airport officials said. That contingency isn’t likely to kill the deal because the area is already developed for those uses.
The airport authority recently approved a master real estate plan that contemplates putting about 1,200 acres on the market for non-aviation uses. The deal with Strategic Capital affiliate SCP Developers LLC was already in the works.
The airport acquired the land for noise mitigation more than 20 years ago, Property Director Eric Anderson said. Houses were torn down, so the airport no longer needs the land for that purpose, he said. The airport will spend the proceeds of the deal on other capital projects, as required by federal regulations, he said.
The land in question is 22.1 acres at the northwest corner of Stafford and Ronald Reagan and 58.8 acres on the southeast corner. The sale price, $100,000 per acre, or $8.09 million, exceeded the average of two independent appraisals, which are required by law, airport General Counsel Joseph Heerens said.
The airport authority approved a letter of intent with Strategic Capital Partners, so the firm can go ahead with due diligence. Airport officials plan to execute a purchase agreement in January, after a public hearing on the sale.
AAR, which last summer announced a major expansion in Rockford, Illinois, could significantly increase its presence in Indianapolis over the next 10 years. Under the new lease, the airport authority agreed to provide up to $3 million in credits to help cover the cost of demolishing docks and other structures in its hangar bays.
The demolitions would allow Wood Dale, Illnois-based AAR to work on five to 10 aircraft per hangar, instead of just one, Anderson said.
As AAR becomes more efficient, the airport has a better chance of benefitting from a profit-sharing provision in the lease, Anderson said.
The airport anticipates $5.9 million a year in revenue under the lease, though that could change, depending on the number of hangars AAR uses each year.
The deal also creates incentives for the airport and AAR to ratchet down even further the Indianapolis Maintenance Center’s operating expenses. If total operating expenses, projected to be $7.5 million for the airport next year, fall below $7 million, AAR will receive 85 percent of those savings, Anderson said.
AAR is the largest tenant of the IMC, which is also home to Republic Airways Holdings Corp. and Express Scripts. Its utility bills are the airport’s single-largest expense in the 1.7 million-square-foot facility, Anderson said.