City agrees to lease Midway to private operator

  • By Amy Lee
  • Transit reporter
  • October 09, 2008 @ 7:30 AM

A one-time cash infusion of $2.5 billion convinced the Chicago City Council yesterday to approve a historic agreement to lease Midway Airport to a private operator for the next 99 years.

The agreement – the first of its kind in the nation – allows Midway Investment and Development Company LLC to operate and collect airport parking, concession and passenger facility charges at the 85-year-old airport on the city’s southwest side. The city will continue to provide police and fire protection at Midway at a cost of about $10 million per year.

Aldermen voted 49-0 yesterday to approve the measure. Many spoke in favor of the deal because the cash-strapped city is struggling to close a $420 million deficit. Others praised the deal because Midway’s 160 union employees are guaranteed their jobs at Midway with the same salary and benefit levels, or a job within another city department, when Midway Investment takes over.

“It is a big deal, because there are a lot of people who work at Midway and the last thing we want to do is hurt people,” said Alderman Ed Smith (D-28). “We asked what would happen to the workers, and we hope the answers [we got] will be sustaining in the lifetime of this contract.”

The worker protection language was included in an Illinois Senate bill passed in 2006 that provides private operators a property tax exemption when leasing publicly-owned land, which cleared the way for Chicago to move forward with plans to lease Midway.

Chicago’s Midway becomes the first of five “public use” airports included in a pilot program launched in 1997 by the Federation Aviation Administration. The Airport Privatization Pilot Program allowed only one large hub airport to be included in the pilot program, and in 2006 Chicago offered up Midway to fill that spot.

The FAA is expected to sign off on the Midway lease deal, as it had already accepted Midway in its pilot program. In 2007, Midway handled about 19 million passengers on some 304,000 flights, while O'Hare, Chicago's largest airport, handled an estimated 76 million passengers last year.

In addition to private airport, Chicago was also the first to privatize a highway in 2004 when it agreed to lease the Chicago Skyway to Cintra Concesiones de Infrastructuras de Tranporte, S.A., a Spanish infrastructure company, for $1.83 billion.

That deal – which nearly resulted in the loss of 100 city highway workers – drew the ire of the Chicago Federation of Labor, an umbrella organization overseeing various unions in Chicago and Cook County, according to President Dennis Gannon. For the Midway deal, the Federation sought to ensure worker-protection guarantees before the city struck a deal with a private operator.

Gannon today said he expects the city to follow the law – despite the fact the city is poised to lay off 1,000 workers and eliminate some 3,000 vacancies to eliminate its looming deficit.

“Those guys working there, the janitor, the security guard, the motor truck driver, those guys will be there or blended into the existing workforce,” Gannon said. “[The city] has to live up to the law, and if they don’t, we’ll have to go and get the attorney general to look into the law and address any violations that are out there.”

John Schmidt, a former chief of staff to Mayor Richard Daley who serves as counsel to the city on the Midway deal, has said the city will absorb any Midway employees who chose not to remain at the airport when Midway Investment takes over. Schmidt did not return calls seeking comment.

Alderman Robert Fioretti (D-2) said while he was happy the 160 jobs at Midway were preserved, he lamented the pending loss of other city employees due to budget woes.

“If we could only do this for the rest of our employees and make these same kind of guarantees we got in this lease agreement, it would be a better city for everyone,” he said.

Amy Lee is a Chicago-based journalist. She covers transit issues for the Daily News.