AUSTIN (KXAN) — Austin City Council approved an $88 million settlement agreement with LoneStar Holdings, the group that operates the airport’s South Terminal, for a lawsuit in Travis County District Court and another in federal court.

The agreement allows Austin-Bergstrom International Airport the ability to move forward with its expansion and redevelopment program, according to an AUS press release. 

As part of its expansion plans for AUS, the city decided last June to use eminent domain to take over the property near the main terminal where the South Terminal sits.

The city agreed to a 40-year deal with Lonestar in March 2016 and then in June 2022 offered to pay the group $1.9 million, which Lonestar denied, citing the amount it took to renovate the South Terminal. As a result, the company filed a lawsuit against the city last August.

“Item 35 on the June 1 Austin City Council agenda authorizes a process and airport funding for a settlement with LoneStar Airport Holdings, LLC. The settlement brings a resolution to the South Terminal dispute and is necessary for moving forward with improving and modernizing the Austin-Bergstrom International Airport through the Airport Expansion & Development Program,” a spokesperson for the airport said.

In the release, AUS called the acquisition of the South Terminal facility a “critical milestone” in the project.

“A critical component of the expansion and development program is a new midfield concourse and supporting infrastructure, such as a new connector tunnel to the main terminal and new taxiways, which requires the removal of the South Terminal facility and 30 other vacant airport-owned buildings. Building removal for the additional 30 structures is currently underway,” the release said.

An AUS spokesperson also noted that the money for the lawsuit came from the Department of Aviation’s operating fund.

“This fund is separate from the City of Austin’s general fund and does not receive any Austin taxpayer dollars,” the city said.