The new battle of Midway01/20/2013
Mayor Rahm Emanuel has resuscitated one of the city's most controversial ideas: privatizing the operation of Midway Airport. The city on Friday formally opened the bidding process for a long-term lease with a private company.
Chicago came close to a $2.5 billion deal for Midway in 2009, but the private partner pulled the plug on that as the credit markets clutched in the midst of recession.
Though many airports outside the U.S. are privately owned and operated, this is largely uncharted territory in the U.S. Chicago is applying to shift control of Midway under the Federal Aviation Administration's Airport Privatization Pilot Program. Just one airport, Stewart International in Newburgh, N.Y., has switched from public to private hands under that program, and that airport shifted back to public control in 2007.
That's one hurdle. There's another, greater one: Chicago's parking meter hangover.
Talk of leasing any public asset in Chicago inevitably turns to the outrageous deal made in 2008 to lease the city's meters to a private company. The City Council, badgered by then-Mayor Richard Daley to fix a budget crisis, rushed through a final vote just two days after details of the lease were announced. Investors gave the city $1.15 billion for the right to run the meters and pocket the profits for 75 years.
This page and other skeptics asked the aldermen to wait. They didn't listen. A few months after the contract was signed, the city's inspector general reported that the city had undervalued the deal by at least $1 billion. Financial analysts later projected the private group that leased the meter would reap at least 10 times what it paid.
Then Daley and the City Council promptly blew through almost all of the money from the deal.
At a Tribune forum Wednesday night at the Field Museum, Emanuel called the parking meter contract "the single worst deal I've ever seen. It was wrong and it was done poorly."
There was, ah, no dissent from the crowd.
With that in mind, Emanuel has set guidelines for exploring a Midway lease that are designed to assure taxpayers they won't get chumped again.
An advisory board will evaluate and report on the options. Aldermen will have at least 30 days to debate any proposed contract. No deal will exceed 40 years. Money generated will be targeted for bricks-and-mortar projects and to pay down debt. Perhaps most important, the city will share in ongoing airport revenues.
And — you know this had to be in there — "reasonable" prices for airport parking will be guaranteed.
There are more ways the mayor's team could shore up confidence in a Midway deal. As much as possible, put the "traveler's bill of rights" in writing, in the contract. The advisory panel will choose a financial firm to analyze the options. It should choose a firm that has no self-interest in the deal getting done.
"It's really important you have someone advising who is primed to pick out the problems, someone who is able to recommend that the city not do the deal," says Chicago attorney Clint Krislov, who has tried in court to get the parking meter contract dissolved.
The public, particularly residents who live near Midway, should have a chance to weigh in on any proposal. They need reassurance that new owners will be responsive to their concerns. That's something U.S. Rep. Dan Lipinski, whose district includes Midway, tells us he will be watching.
The City Council has changed some since 2008, but there are plenty of aldermen who know they disgraced themselves and burned their constituents with their votes for the meter deal.
They also know, though, that the city has to be creative on revenue and spending. The city faces enormous financial problems, particularly on pensions and health care costs, and can't count on help from Springfield.
A public-private partnership will make sense if the city demonstrates a clear, long-term financial benefit. Parking meters aside, there are plenty of successful examples of such partnerships around the country and in Chicago.
So mayor, aldermen, be deliberate and be transparent. And be open to the very real possibility when the numbers come in that the best option for Chicago is to say no.