Chicago plans to explore leasing Chicago Midway International Airport and would proceed with a deal only if a transaction would benefit taxpayers and travelers, Mayor Rahm Emanuel said today.
The decision by Emanuel, who has criticized a 75-year lease of the city’s parking-meter system pushed by his predecessor, Richard M. Daley, revives an idea that died in 2009. The new proposal envisions a lease of fewer than 40 years, and the city would retain ownership. The airport is Chicago’s second-biggest, behind O’Hare International.
The city said it will submit a preliminary application to the Federal Aviation Administration that would preserve a slot to make such a deal through the Airport Privatization Pilot Program. Emanuel described the move as “exploratory” and said no decisions have been made about leasing the facility. Initial proceeds would be used to pay debt that Chicago issued in 1996 to rebuild Midway.
“I am exploring all options on behalf of taxpayers,” the mayor, a Democrat, said in a news release today. “We all know the parking meter deal was bad for taxpayers and the city, and I have instructed my staff to ensure we mandate significant changes that protect us from the mistakes made with the parking meter deal.”
Daley came under criticism for using meter revenue to plug operating deficits. Emanuel said the city would receive a percentage fee from the lease deal as well as an annual cash stream.
The federal program is designed to enable airports to raise private capital for development and improvements. It allows as many as 10 public airport sponsors to sell or lease an airport, according to a statement from the FAA. The deadline to participate is Dec. 31.
Puerto Rico in July received a $2.6 billion offer in a proposed 40-year lease of its San Juan airport, the busiest airport in the Caribbean.
Midway was dedicated in 1927 and is home to the Chicago operations of Southwest Airlines Co.. (LUV:US) The facility handled about 16.4 million passengers in 2012 through October. That was up 4 percent from the previous year, according to the Chicago Department of Aviation’s website. In comparison, 56.7 million passengers traveled through O’Hare during the same period.
Midway had $1.4 billion of debt as of Dec. 31, 2011, according to an annual fiscal report.
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