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Emanuel moves ahead on Midway privatization, aldermen not so sure

Midway Airport  |  Sun-Times Library

Midway Airport | Sun-Times Library

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Updated: January 22, 2013 10:02AM

Mayor Rahm Emanuel moved ahead Thursday on testing the privatization market for Midway Airport — with a 40-year lease, profit-sharing for Chicago taxpayers and safeguards against consumer price-gouging — but there’s political turbulence ahead.

Aldermen are still gun-shy about the steep schedule of rate increases tied to controversial deals that privatized 36,000 city parking meters and the Chicago Skyway.

They’re not happy about the prospect of selling off an asset as valuable as Midway — and reviving a deal that collapsed in 2009 for lack of financing — even if it’s done in a way dramatically different than one former Mayor Richard M. Daley envisioned.

Emanuel acknowledged Thursday that the parking-meter deal was a turkey and said he’s determined to chart a different course after delivering a preliminary application and timetable to the Federal Aviation Administration and issuing a request for qualifications from interested bidders.

“I wish we weren’t looking at [privatizing] Midway Airport because of the negative connotations we’ve gotten from past privatization deals. I’m not sure opening up this administration to those same criticisms is the right way to go,” said Ald. Michael Zalewski (23rd), chairman of the City Council’s Aviation Committee whose ward includes Midway.

“We are now auditing some of our past privitization deals, Midway being probably the biggest gem of all. We should proceed with caution. The number of employees that would have to be displaced is a concern. We’ve always said that Midway stays as one square mile and we would never expand the airport or take homes around it. All of that is a prerequisite in even looking at” a request for qualifications from bidders, Zalewski said.

Zalewski was not appeased when told that Emanuel plans to do it differently.

“That all sounds good, but I’m skeptical whether the market is out there for somebody to accept all of those prerequisites,” Zalewski said.

Even Ald. Pat O’Connor (40th), the mayor’s City Council floor leader, acknowledged that privatizing Midway will be a tough sell in a City Council roundly ridiculed for its quickie approval of the parking-meter deal, which was made worse when Daley drained the proceeds to balance his last two budgets.

“It’s going to be difficult, to some extent, because you’ve got a whole bunch of people either snake-bitten by the meter deal or by the folklore of it because they weren’t in the City Council when it actually happened,” O’Connorsaid.

“People aren’t necessarily upset that we don’t own the Skyway and we don’t own the meters. They’re upset about the fact that we didn’t address those tremendous price increases that came along with those deals,” O’Connor said. “We could have made money by keeping the meters and raising the price ourselves. But, you can build in reasonable expectations — whether by percentage or gross or net revenues. That way, people know what to expect.”

Instead of 99 years, the lease would be no more than 40 years. Instead of obligating the city to pay for police and fire protection, the private operator would assume that $17 million-a-year cost for prices escalating over time.

There would also be a Travelers Bill of Rights to prevent the private operator from gouging consumers for food, retail and parking and establish rigid standards for safety, terminal and restroom cleanliness and swift baggage claim.

Daley would have allowed Midway Investment and Development Co. LLC to pocket revenues from parking, concessions and passenger ticket taxes in exchange for the massive upfront fee.

Emanuel is insisting on a management agreement and land lease that gives Chicago taxpayers a sliding scale of revenues and a bigger share of the profits when Midway is flying high.

Daley rushed his Midway deal through the City Council — so fast that aldermen beefed that it was “jammed down our throats.”

Emanuel would give them 30 days to analyze the deal and representation on a blue-ribbon committee reviewing the terms with its own independent advisor.

“The parking meters and the Skyway deals were totally different. It was done wrong in the past. They made real mistakes. On process and specific points, this stands in total contrast,” Emanuel said in telephone interview with the Sun-Times.

He said he would proceed only if the price is right. He ruled out using proceeds from the Midway deal for operating expenses after retiring debt used to rebuild the landlocked Southwest Side airport.

State law requires 90 percent of the $1 billion profit to be used to bankroll city infrastructure projects and shore up underfunded city employee pension funds. Midway employees will either be offered “comparable pay and benefits” with the new manager or transfered to another city job, according to City Hall.

“I don’t want this to be used as a crutch as past agreements have been, meaning the parking meters. That’s what I won’t do. Infrastructure and pensions are options. But, we’re not gonna use it for day-to-day operations. That’s a mistake. We’re gonna make the tough decisions here to reform government,” Emanuel said.

Determined to avoid the political furor that followed the parking-meter deal, Emanuel campaigned on a promise to permanently ground the Midway deal.

But he argued Thursday that it makes sense to explore. When the Midway deal collapsed in 2009 for lack of financing, Chicago taxpayers were left with a $126 million down payment but no apparent way to shore up underfunded city pensions.

“Whatever happens at Midway stays at Midway. The whole city doesn’t benefit,” Emanuel said.

“We have critical investments we want to make in modernizing schools and mass transit. All I’m doing is keeping the process alive to explore,” he said. “I’m gonna look at this hard-nosed businesswise and see if it makes sense. My clear principles are value for the taxpayers, protection for workers and commuters and to make sure the process is transparent.”

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