Mayor Richard M. Daley today announced the city will lease Midway Airport to a private operator for $2.5 billion.
Daley called the 99-year agreement with Midway Investment and Development Co., "historic," stating that it is "the first privatization of a major American airport."
"During this tough economy, this is very good news for our city and our taxpayers," Daley says. "We believe this to be a very good return, especially given the current stress in the credit markets."
The deal is set to bring the city net proceeds of $1 billion, Daley says. Under state law, 90 percent of that must be used for infrastructure.
Daley isn't sure how the other 10 percent will be used yet. He was adamant about saying that the $100 million won't simply all be used as relief for the city's budget deficit.
"That would be great for this year, but what about next year?" he says, noting that the money is a one-time payment. "It would make our financial problems worse and I can't do that."
He says with the current financial crisis, leaders must have more foresight. Planning needs to be done with the next two, three and four years in mind, rather than just the near term, he says.
"I have to balance the budget for the future, always look to the future," says Daley. He will announce the city's 2009 budget on Oct. 15.
Chicago Chief Financial Officer Paul Volpe says the public is unlikely to see major differences or any sort of dropoff in service at Midway.
"Private operators work very hard to drive traffic through the airport," says Volpe. "They work to create good services at fair prices, and that's what we expect to see."
The City Council must also approve the lease. That vote is on the agenda for the council's Oct. 8 meeting.
The Federal Aviation Administration must also approve the agreement, but Daley says that is likely to be a formality.
As for the city's economic woes, Daley says that other major cities and states across the country are facing similar circumstances, and Chicago itself can't do much about it.
"This is a huge crisis, trying to find a way to stop the slippery slope - we don't even know if it's at the bottom yet," he says.
Midway Investment and Development Co., known as MIDCo, is a consortium consisting of Citi Infrastructure Investors, YVR Airport Services Ltd. and John Hancock Life Insurance Co.
YVR Airport Services operates 18 airports on three continents.
The city applied with the Federal Aviation Administration to participate in a pilot privatization program in late 2006. In April, the city received applications from six bidders.