Austin Airport Plans To Use Eminent Domain To Seize Their Own Property

This is a little bit insane. In 2015 Austin entered into a 30 year lease so that a private company could build a second airport terminal. The ‘South Terminal’ also has two 5 year extension options built into the lease. But the city wants to use eminent domain to terminate the lease, because it now prefers to expand the main terminal.

Austin airport has two terminals, the Barbara Jordan Terminal which is what most people know and the South Terminal which is nearly an 8 mile drive away. All day long passengers go to “the Austin airport” and get dropped off a the Barbara Jordan Terminal.

The low cost carrier terminal is less than three quarters of a mile away but there’s no easy way to get there from the main terminal. Spirit Airlines is willing to pay extra so that its passengers can avoid the experience of a double wide trailer with a food truck.

The South Terminal is 30,000 square feet and opened in 2017. Allegiant and Frontier operate out of the terminal, and Allegiant built a $75 million base. The city says,

  • They need the land back in order to build an expansion of the main terminal
  • They don’t care that they entered into a lease
  • They’re willing to pay the owners $2 million, against a build cost that was six to ten times that much (depending on reports)

Austin plans to use the state’s eminent domain laws to seize land that it already owns basically arguing that eminent domain allows it to renege on contracts that it has signed (effectively, no contract for work on city property is enforceable). Say what?

“There is some precedent to say (the government) can’t use eminent domain simply to take over a business that it had already contracted to allow someone else to do,” [an eminent domain attorney] said.

Usually, eminent domain is used to seize property for a public use. In this case, the city is trying to terminate a lease on its own property.

“That’s a very atypical scenario,” said Luke Ellis, an eminent domain attorney who teaches at UT Austin. “Usually the condemning entity is not the owner.”

It seems to me when you want out of a contract, you offer the counterparty a deal good enough to get them to agree to do so. In any case, eminent domain is intended to avoid the situation of a single holdout landowner from scuttling public plans – when everyone is being offered true fair value for their property. Here there’s just one private party involved, being offered a pittance, to give up a use that the city explicitly authorized.

The city’s plan is to close the South Terminal in summer 2023 as part of their plan to build a midfield concourse with at least 10 more gates, connected to the Barbara Jordan Terminal via underground tunnel. This requires relocating the terminal’s taxiways, and using space currently occupied by the low cost terminal. They’ll also introduce a $77 million baggage system and new ticket counters.

The Austin airport isn’t large enough to support its – and the city’s – growth, despite expanding Barbara Jordan terminal gates by 37% and opening the second South Terminal. And TSA security screening is severely understaffed. Unfortunately the city’s solution shows everything that’s wrong with Austin.

It’s part of broader mismanagement at and around the airport where catering facilities aren’t fully operational, and airport vendors don’t open due to lack of staff, yet the airport doesn’t enforce lease requirements.

And we don’t have an American Express – Escape lounge because the city council ditched the effort based on a frivolous contract dispute by the operators of The Club lounges (giving passengers neither). Why oh why is this airport even owned by the city?

About Gary Leff

Gary Leff is one of the foremost experts in the field of miles, points, and frequent business travel - a topic he has covered since 2002. Co-founder of frequent flyer community InsideFlyer.com, emcee of the Freddie Awards, and named one of the "World's Top Travel Experts" by Conde' Nast Traveler (2010-Present) Gary has been a guest on most major news media, profiled in several top print publications, and published broadly on the topic of consumer loyalty. More About Gary »

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  1. […] We just flew into Austin Airport and as we walked to the terminal, I was reminded that two airlines don’t fly from the main building. On a previous trip, we flew on Frontier and landed at Austin’s South Terminal. The experience was underwhelming and wasn’t made better by the 20-minute bus ride back to the main terminal to rent a car. While the setup isn’t ideal, I was amazed that after opening the terminal and getting Frontier and Allegiant to use it, the airport authority is now trying to seize their own property back by claiming eminent domain. […]

Comments

  1. Gary, how many current Austin city council members did you vote for?

    The good citizens of Austin are getting the government and the representation they voted for. And for better or worse, the good citizens of Austin get to live with the results.

  2. If you recall, a number of years ago the City Council tried to get their hands on the PFC, but of course could not. They needed another piggy bank, Austin Energy wasn’t enough. So, it appears it’s a case of benign neglect. It’s clear the people in charge of AUS are in it way over their collective heads.

  3. I sure hope that when the time comes, the city is able to find a qualified veteran-marginalized-disabled-native-trans-lgbtqialmnop-oppressed-black-poor-aapinh-3spirit(not2)-democrat-owned business that can do the work. Also, no lounges shall be included in the new space because lounges are NOT inclusive. In fact, lounges are racist and transphobic and only cis wealthy white people use them.

  4. Unless they changed the law recently, they would at the very least have to pay fair market value, and prove that there were no other option available. I still don’t think they can use eminent Domain to break a lease, but those are the minimum requirements.

  5. Austin used to be a vibrant, livable capital city in the middle of Texas. Now it’s overrun, not with tumbleweeds, but people. And governed by morons. A pity.

  6. The mass relocation of California to Austin hasn’t worked out quite as hoped. Is anyone surprised?

  7. Sadly, I half expected some level of investigative reporting, where you tell us what the midfield concourse would fix (or fail to fix) at AUS. Are they looking to have more than only the three wide body gates they have today? Are they looking to modernize and expand their currently inadequate immigration and customs facility? Are they looking to dedicate those gates to the dominant carrier at AUS?

  8. I’m a firm believer that regardless of what any airline goes through, any and all airlines will NEVER truly go broke.

  9. Until the Eminent Domain laws are changed I can’t say I feel sorry for these companies. Private owners have been experiencing this since Eminent Domain was used to take real estate from private citizens/owners (and offer them a pittance) and handed over to private developers (you know, to benefit the economy with a few, low-paying service jobs). People don’t just buy real estate for homes (an investment you live in), they often buy property for future financial gain (pure investment purposes), and retirement (purchasing the land/home early before their income is fixed) as assurance against future inflation. When a property is seized through Eminent Domain, the property owner loses that investment and any future gains from the real estate. If property ownership is not a guarantee then why should rental contracts be a guarantee? I would like to say I feel sorry for these companies but I just can’t find the sympathy. Now that Corporate America is on the other side of the Eminent Domain beast maybe they’ll work with citizens to end Eminent Domain once and for all.

  10. And still no actual mass transit that people will use to get to the city from outside (suburbs or ex-urbs) or to the airport. The traffic is insane and the airport is just one small part of the infrastructure sh*tshow that has not kept up with growth in the area. It isn’t just Austin or Travis county either having this issue…the whole area is exploding with no ability to keep up. Yes you right-wing nutjobs, its NOT just left-wing nutjob Austin that’s messing things up…

  11. Well clearly an example of voting for populist, morally corrupt leadership whose vision & priorities exclude the primary covenants of their jobs.
    These populist leaders choose to address severe issues and the greater good as a last resort or when the situation has become untenable..
    We get what we pay for when we choose to ignore character, integrity & moral courage traits over populist and extremist rhetoric.
    Good luck Austin with your cultist state government & populist leadership..

  12. Brought to you by the same “tolerant” folks who wouldn’t allow Chick-fil-A. Maybe if those in charge would lay in the floor of the South Terminal screaming how they are being oppressed and how unfair they are being treated, Frontier and Allegiant would just give the terminal to them and leave.

  13. Ex-UA Plat obviously knows The Peoples Republic of Austin. But then again can you trust ANY promise that our government makes at any level . . . read my lips Afghanistan and Vietnam.

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