Five Chicago assets that could be sold off next
FUNDS | After peddling the Skyway, parking meters, Daley could look up -- or down
After draining reserve funds generated by city asset sales, Mayor Daley has hitched Chicago's financial future to continuing the Great Chicago sell-off.
If that's his rabbit in the hat, there are several viable alternatives, provided aldermen vilified for the parking meter fiasco are willing to go along with it.
(Sun-Times)
Daley could privatize the water system or just the sewer portion. He could revive the $2.5 billion Midway Airport deal that collapsed for lack of financing and lay the groundwork to do the same at O'Hare.
If he wants to reduce operating expenses without generating up-front cash, he could privatize garbage collection or recycling. Water billing and other revenue collections are also possibilities.
Here's the rundown:
MIDWAY AIRPORT: This is the most immediate prospect, considering the groundwork already done. Former Daley chief of staff John Schmidt, who advised the city on the Midway and Skyway deals, says "alternative refinancing structures" under study could set the stage for the city to revive the Midway deal within six months without another round of bidding.
"There is no law that says we have to go back through another auction process. There are other bidders who've been found qualified by the airlines," Schmidt said.
"If you look at corporate merger deals, there are a lot of different ways to create a market test to make sure you're getting the best possible deal without" another round of bidding.
O'HARE: If Daley is willing to think big and keep his powder dry, this could attract a monster payout. But roadblocks remain. Hundreds of millions worth of outstanding bonds must be paid off. The massive runway expansion project must be completed. And the Federal Aviation Administration, which agreed to make Midway the first major commercial airport privatization in the United States, would have to approve the transaction.
"It would be enormously complicated. It couldn't be done for 10 years," Schmidt said.
WATER SYSTEM: This sounds intriguing, but it's fraught with political danger. It's one thing to privatize the Skyway and street parking, which play to more limited audiences. But everybody uses Lake Michigan water purified and pumped through Department of Water Management facilities. Does Daley really want to put that service in the hands of a private company that might cut corners to improve its bottom line? One City Hall observer called it "a gamble I wouldn't take." Another complication is the condition of the city's water mains. Like the Midway deal, a private contractor likely would be required to offer jobs to city workers. Would they pay top dollar, only to inherit employees implicated in the Hired Truck and city hiring scandals?
SEWER SYSTEM: This would probably make more sense from a political standpoint. "To put it crudely, people are less sensitive to the quality of what's going out than they are about the quality of what's coming in," Schmidt said. Chicagoans pay a sewer surcharge that amounts to 86 percent of a customer's water bill. If sewer service alone is privatized, those fees tacked on to water bills would have to be separated.
GARBAGE COLLECTION: Daley can't get up-front money without imposing a fee for garbage collection. But he could save money by farming it out, if he could withstand the avalanche of aldermanic opposition. It likely would make the controversy from the failed attempt to privatize side-street snow removal pale by comparison.
No matter what assets Daley wants to unload, nothing will happen quickly. Aldermen were crucified for giving quickie approval to the parking meter deal. They're not about to do it again, said City Council Transportation Committee Chairman Tom Allen (38th).
"The process going forward to sell more assets will be very different than it was for the Skyway and meters. It'll be much more public with the citizens weighing in on it," he said.