Editorial: Outfoxed too often
Mayor Rahm Emanuel has been saying the right things about privatizing city assets, including Midway Airport. He promises an open process and that any proposal must represent a fair value to taxpayers.
But a lawsuit filed this week is a reminder of the pitfalls of privatization and the importance of not rushing things at the last minute to secure a deal. Chicago has been outfoxed before. We can’t afford to be outsmarted again on Midway or, for that matter, the mayor’s new private/public infrastructure trust.
The lawsuit, filed on behalf of the Independent Voters of Illinois and a Chicago woman, argues it was illegal for the city to ban the construction of new parking garages near the four at Grant and Millennium parks that the city leased to private investors for 99 years.
We don’t know how far this lawsuit will proceed. But it’s another example of how privatization agreements often trigger years of legal battles.
A company controlled by Morgan Stanley that paid the city $563 million to lease the parking garages in 2006 essentially is asking for $200 million back because it says the city allowed new parking garages in the banned area. That dispute is tied up in arbitration. The city also is fighting the company that leased municipal parking meters for 75 years and now wants millions of dollars from the city to make up for what it claims are lost revenues.
Chicago is gaining sophistication in these kinds of deals, but the private investors always will have an edge because they have deep experience and, unlike government, know exactly what they want — a healthy return on their money.
If the city moves ahead with a Midway deal, Emanuel has promised to give the City Council 30 days to review any proposal, which is 28 days more than former Mayor Richard M. Daley gave on the parking meters. But it would help for the Council to be briefed throughout negotiations.
Any Midway deal has been complicated by Sen. Dick Durbin, who says part of any proceeds should be used to pay back the federal government for money it put into the airport. That could be a deal breaker.
When promising privatization deals emerge, cash-strapped governments are tempted to rush them through. Bad idea. We don’t want to be outfoxed again.