Aldermen give thumbs up to Midway privatization
The Chicago City Council on Wednesday unanimously approved a $2.5 billion lease of Midway Airport to private investors, another step toward making Midway the first major U.S. airport to go private under a pilot program.
Aldermen voted 49-0 to sign off on the 99-year lease agreement, which Mayor Richard Daley's office hopes to close by the end of this year. The final step is for the Federal Aviation Administration to give its OK.
Last year, Midway's five runways handled about 304,000 flights and more than 19 million passengers, city officials have said. Chicago's other major airport, O'Hare International Airport, handled more than 900,000 flights in 2007.
Some aldermen have expressed concern about passengers having to pay more to park and shop at Midway once the airport's under private control. But those worries couldn't trump the promise of new money for thinning city coffers.
If the deal gets the green light the investor group would pay the $2.5 billion in upfront rent. The city expects to clear more than $1 billion in net proceeds with most of that money going toward infrastructure improvements and pension funds.
That money would be left over after officials set aside about $1.5 billion for debts, transaction costs and other obligations the city would have, Paul Volpe, Chicago's chief financial officer, has said.
About 10 percent of the proceeds -- or about $100 million -- would be unrestricted money the city could use, but the Daley administration hasn't been specific about how it would be spent.
Many aldermen hope some of it will be pumped into public works projects in their wards. One aldermen said he wanted a library, and another said the money should be spent on a new high school.
But Alderman Thomas Allen tried to dampen expectations about how much good the Midway cash could do.
"This is not the silver bullet," Allen said Wednesday at the council meeting. "I think we're getting mesmerized by the number."
The city has leased assets before as a way to raise money, including parking garages and a nearly $2 billion deal to lease the Chicago Skyway to a private operator.
More and more government entities are looking at their public assets as cash cows, but consumers can wind up paying more after those roads and other assets are turned over to private entities.
The group that wants the Midway lease includes investors from New York, Boston and Canada. The Midway Investment and Development Company includes Citi Infrastructure Investors from New York, YVR Airport Services Ltd. from Vancouver, Canada, and the John Hancock Life Insurance Co. from Boston, according to the city.
Chicago applied two years ago to be part of the FAA's program to privatize up to five U.S. airports.