City not yet grounding Midway privatization possibility
BY FRAN SPIELMAN City Hall Reporter email@example.com March 30, 2012 4:26PM
A Southwest Airlines Boeing 737 waits to take off at Chicago's Midway Airport as another lands. FILE PHOTO. (AP Photo/Charles Rex Arbogast)
Updated: May 1, 2012 8:33AM
The $2.5 billion privatization of Midway Airport that collapsed in 2009 for lack of financing may not be quite as dead as Mayor Rahm Emanuel would like Chicagoans still livid about the parking meter deal to believe.
Earlier this week, Emanuel’s Chief Financial Officer Lois Scott wrote a letter to the Federal Aviation Administration asking for one last extension — until Dec. 31 — in the deadline to decide whether to revive the deal or permanently pull the plug.
At that time, the city will either “have released a request for qualifications” from companies interested in leasing the airport and submit a “reasonable and realistic timetable for transferring the airport” to private control or permanently withdraw its application, she said.
“If the updated information is not submitted by the city to the FAA by Dec. 31, 2012, the city acknowledges that the FAA will, in fact, withdraw the airport’s slot and close docket,” Scott wrote, referring to the FAA’s pilot program for privatizing large airports.
In the letter, Scott further acknowledged the FAA’s right to start a “stand-by list” for the slot being held open for Chicago if other major cities express an interest in privatizing their “large hub” airports.
When former-Mayor Richard M. Daley left office, he said the 99-year Midway lease was “ready to go” but that he would leave the final decision to his successor.
Determined to avoid the political furor that followed Daley’s decision to privatize Chicago parking meters, Emanuel campaigned on a promise to permanently ground the Midway deal. The mayor emphatically repeated that pledge just a week ago.
But, the city’s decision to seek a pair of extensions from the FAA — and the background of two key members of Emanuel’s financial team — has raised suspicions.
Scott co-founded a firm that provided strategic financial advice to state and local governments across the country about privatization.
And as a private attorney, Budget Director Alex Holt advised the group that was poised to acquire Midway before the deal fell apart.
The 2009 collapse of the Midway deal left Chicago taxpayers with a $126 million down payment but no apparent way to shore up underfunded city pensions that threaten to become a financial albatross for future generations of property owners.
The 99-year lease would have allowed Midway Investment and Development Company LLC to pocket airport revenues that topped $130 million in 2006, including parking, concessions, and passenger facility charges.
An estimated $1.15 billion of the city’s proceeds would have been used to pay off Midway Airport debt. The deal also included: $225 million for police and fire protection; $126 million for soundproofing and Midway capital projects already underway and $19 million for transaction fees and legal expenses.
State law required 90 percent of the $1 billion profit to be used to bankroll city infrastructure projects and shore up under-funded city employee pension funds.
That left $100 million to be spent at the city’s discretion.