The planned $100 million South Cargo Facility at TF Green International Airport is continuing towards takeoff, as the Rhode Island Airport Corporation approved last Thursday a 30-year ground lease and operating agreement with FedEx’s chosen developer for the complex, the Idaho-based Grand Jr., LLC.

Over the span of the agreement, RIAC will receive at least $33.8 million, with a payment of $834,433 the first year and a 2 percent increase each subsequent year, according to Nikolas Persson, RIAC’s senior vice president of business development and information technology.

Per the terms of the contract, Grand Jr. LLC must have performance, labor, and material bonds in place, Persson told the RIAC Board of Directors on June 13.

“This protects RIAC and in the event of default, puts FedEx in the shoes of the responsible party to ensure construction is completed and rent is paid,” Persson said.

Records on file with the Rhode Island Department of State list Grand Jr., LLC’s office address in Twin Falls, Idaho, a city about 130 miles southeast of Boise. The company registered in Rhode Island on May 3; files show.

FedEx did not respond to requests for comment. A representative for Grand Jr. LLC could not be reached and a spokesman for RIAC did not return follow-up inquiries from The Warwick Beacon.

The South Cargo Facility is envisioned as a replacement for a World War II-era hanger occupied by FedEx and UPS off of Airport Road. Both shipping companies intend to move into the new structure along Strawberry Field Road West, where plans call for 31 loading docks and enough space to accommodate six cargo jets.

Last week, Persson described the project as an “exclusively FedEx investment,” noting “no RIAC funds will be used for the construction of this facility.”

Grand Jr., LLC’s lease covers approximately 10.96 acres of land at the site.

According to Persson, FedEx issued a request for proposals from developers in February. Grand Jr., LLC has so far completed six other facilities for the worldwide shipping giant, “ranging in size from 18,000 square feet all the way up to 119,305 square feet,” Persson said.

“I’ve done extensive background on Grand Jr., LLC,” Persson told the board.        

He added he received recommendation letters from national banking institutions about the company regarding its previous projects and that RIAC is “very comfortable” moving forward with the agreement – a sentiment also expressed by Iftikhar Ahmad, RIAC’s president and CEO, who attested to RIAC’s vetting of the company.

“It’s my understanding … that notwithstanding Grand Jr., LLC’s involvement and having a direct relationship with RIAC, that Federal Express stands behind and has indemnified and/or guaranteed all obligations directly to RIAC,” said RIAC Board Chairman Jonathan Savage. “And should there be any stumble with Grand Jr., LLC, we look directly to Federal Express.”

Persson confirmed that is the case.

“There’s a sublease between Grand Jr., LLC and FedEx that is incorporated in our lease,” he said. “FedEx will remit the ground rent directly to us as part of this lease. So it does not go through Grand Jr. to us. It’s directly from FedEx every month. And during construction, should anything happen, they step in as the responsible party.”

As part of the contract, RIAC will also receive $2.9 million from the developer for reimbursement of design costs and other related expenses incurred by RIAC so far, Persson said.

Prior to the vote last week, Richard Langseth, a Warwick resident who is outspoken on RIAC-related matters, expressed to the board his concern over how the lease and operating agreement was moving toward approval.

Speaking to the Beacon, Langseth pointed to the still-pending review the city requested over the Federal Aviation Administration’s approval of plans for the cargo facility, among other moving parts of the project.

“All of a sudden, the RIAC board is approving this deal with these people, who nobody in the public knows. There hasn’t been any –” Langseth told the board before he was interrupted by Savage.

“Rest assured we have vetted that program,” Savage said.

RIAC moved a bit closer to resolving some of the project’s still pending matters last week when the Planning Board voted to make a favorable recommendation to abandon Fieldview Drive and Murray and Bunker streets – three city-owned streets adjacent to the airport and the site of the planned cargo facility.

RIAC owns the lots surrounding the streets, which once made up a former residential subdivision, and had requested abandonment so a new sound barrier can be built on the site.

The City Council will now have the final say over whether the roadways should no longer be public property.