After an intense week of hearings on the Citi Infrastructure Investors-led consortium’s $2.5 billion bid for a 99-year concession to operate Chicago’s Midway Airport, the 50-member Chicago City Council resoundingly approved the bid, voting 49-0 in favor.
“For all intents and purposes, it’s already law,” said Chicago alderman Manny Flores, who voted in favor of accepting the bid. Chicago Mayor Richard Daley, who has long expressed support for the project, is expected to sign off on the measure.
Chicago's Midway Airport:
The Midway lease represents the largest privatisation of an airport in the US, which launched an experimental privatisation programme for five US airports in 1997. Midway is the first and the largest of the five to be privatised.
Though some aldermen expressed concern about the way the privatisation process was handled by the City, Flores said that most city council members did not take issue with the price tag.
“We were informed as a body by our chief financial officer and by our attorneys that the $2.5 billion was actually higher than what was originally anticipated and that it was a good offer and one that we should accept,” Flores said.
In exchange for the $2.5 billion payment, the Midway Investment and Development Corporation will be given the rights to the airport’s revenues for 99 years. The Midway investment group includes Vancouver Airport Services, a 50-50 partnership between the Vancouver Airport Authority and Citi Infrastructure Investors, and John Hancock Life Insurance Company.
The $2.5 billion was actually higher than what was originally anticipated
In 2006, the airport’s revenues topped $130 million.
Flores said that the city plans to use $1.5 billion of the payment to pay down existing Midway Airport debt. Of the remaining billion, $900 million is required by state law to be used to fund city infrastructure projects and employee pension plans. The remaining $100 million can be spent at the mayor’s discretion, but only after city council approval.
The Citi-led consortium’s bid beat out three other investor groups that in June were shortlisted by the City of Chicago to bid for the Midway concession. These included a consortium of Macquarie Group-affiliated funds, German infrastructure developer Hochtief bidding with Goldman Sachs Global Infrastructure Partners and Morgan Stanley Infrastructure Partners bidding with Aeroports de Paris.
Chicago announced that Citi's consortium had won the bidding process early last week, just as another major privatisation proposal in which Citi had been involved, the $12.8 billion bid for the Pennsylvania Turnpike, expired without approval from the state's legislators.