Lonestar Airport Holdings rejected an offer from the city of Austin to buy out the remainder of its 40-year lease for $1.95 million.

The city plans to close and demolish the South Terminal early to make way for improvements on the main terminal.

Representatives for the Lonestar group called the city’s offer “objectively offensive.”

In a letter sent to the city April 27, Lonestar’s representatives said the offer is less than the company has invested into the South Terminal. The company began operating the terminal, which is home to low-cost airlines, in 2016 and opened it to the public in 2017.

In a statement, an Austin spokesperson said, “The Department of Aviation continues to progress with airport improvement projects to deliver an improved passenger experience for all AUS customers and increase capacity for more flights through the Airport Expansion and Development Program. A vital component of the Program is the development of the new midfield concourse, which necessitates the future closure of the South Terminal. The Department of Aviation will continue to work with all business stakeholders and tenants throughout the duration of this program and looks forward to delivering an improved passenger experience to all AUS customers.”

In the letter, Lonestar's representatives stated the company would take the case to court if the city tries to use eminent domain laws to break its lease.

"Should the City Council consider authorizing this taking, they must contemplate the facts and history summarized in this letter, including the City’s own records and testimony that support our operation. Eminent domain is costly, inefficient and time consuming. Regardless, Lonestar will not walk away from its investment at AUS, and Lonestar stands ready to vindicate its rights in court as needed," the letter reads.