Emanuel appoints panel on privatizing Midway Airport
BY FRAN SPIELMAN City Hall Reporter January 11, 2013 11:10AM
Updated: January 11, 2013 11:12AM
Mayor Rahm Emanuel on Friday appointed a committee--with an independent adviser and representatives from labor, business and the City Council--to advise the city on whether or not to privatize Midway Airport.
Emanuel decided last month to test the privatization market for Midway--with a 40-year lease, profit-sharing for Chicago taxpayers and safeguards against consumer price-gouging--nearly four years after then-Mayor Richard M. Daley's 99-year, $2.5 billion Midway deal collapsed for lack of financing.
But, it'll be a tough sell to convince Chicago aldermen to go along with the deal. They're still gun-shy about the steep schedule of rate hikes tied to the 75-year, $1.15 billion deal that privatized Chicago parking meters and about annual toll increases locked in when the Chicago Skyway was sold for $1.83 billion.
The seven-member Midway Advisory Panel will evaluate and help sell aldermen on the deal, with help from a yet-to-be chosen "independent financial advisory firm with expertise" in such complex transactions.
The panel includes two aldermen: Aviation Committee Chairman Michael Zalewski (23rd), whose ward includes Midway and Budget Committee Chairman Carrie Austin (34th); former independent Ald. Marty Oberman (43rd); James Connolly of the Laborers District Council; Marty Nesbitt, a longtime friend of President Barack Obama who runs a parking management company; Frank Beal of Metropolis Strategies and Peter Skosey of the Metropolitan Planning Council.
Skosey will serve as chairman. He refused to comment prior to the committee's first closed-door meeting late Friday.
In a press release, Emanuel said the committee would be "briefed at every stage" of the process and deliver written reports to the public.
If the mayor decides to forge ahead with a formal bidding process and secures a winning bid, the committee will deliver a report to the City Council that weighs whether the proposed transaction provides "fair value" to Chicago taxpayers.
Emanuel has acknowledged that the parking meter deal was a turkey and said he's determined to chart a different course.
Instead of 99 years, the lease would be no more than 40 years long. 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.
On Friday, he also released a vaguely-worded 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.
It demands: "reasonable prices for parking, including economy options; a "diverse selection" of food and beverage outlets that offer "reasonable prices" that "working families and emloyees can afford" and a "specific number of available restrooms open at all times."
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 up-front 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.
"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," the mayor told the Chicago Sun-Times last month.
The mayor said he would proceed, only if the price is right and 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 under-funded city employee pension funds. Midway employees will either be offered "comparable pay and benefits" with the new manager or transferred to another city job.
"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," he 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, the mayor has argued 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. I'm gonna look at this hard-nosed business wise 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."