A big payout over a development dispute at San Francisco International Airport has turned into a big bill for city taxpayers.
In 2002, with the airport out of cash after selling $3 billion worth of bonds to finance its new international terminal and wishing to update its air freight capacity, Texas-based Airis International entered into exclusive negotiations with SFO on a public-private partnership to build a 742,000-square-foot, $200 million air-cargo warehouse, according to court filings.
After the Board of Supervisors voted against the company’s contract in December 2003, Airis sued The City, alleging airport Director John Martin and others breached contract and sabotaged the bid, choosing not to support it so SFO could build its own cargo warehouse.
The case took several turns. Airis originally sought $40 million. A jury sided with the developer and awarded Airis $1 million for The City breaking a good-faith agreement and not dealing fairly in 2007, only to have a judge later toss out the verdict and award San Francisco $3.43 million in legal fees in 2008, court filings said.
Airis appealed that decision to a state appellate court, which sided with Airis and awarded the company $7.5 million in legal fees. The City’s request for a new trial was dismissed, and the state Supreme Court declined to hear the case.
The $7.5 million payout to Airis is now winding its way through City Hall.
The board reviews all settlements in legal disputes. On Tuesday, the board sent the Airis settlement to its Rules Committee, which meets again next week. The full board ultimately must sign off on the settlement.
A spokesman for City Attorney Dennis Herrera said the office cannot comment on litigation currently awaiting board review.