The Port of Chicago will receive a $500 million overhaul over the next 10 years, following a 62-year master lease agreement struck between the port’s authority, Illinois International Port District (IIPD), and the Colorado-based investment company Broe Group.
The capital, which will come from Broe Group and other parties, according to a statement issued by the office of Mayor Rahm Emanuel, will be used for infrastructure investments and is estimated to create up to 1,000 new jobs. The statement did not specify who the other parties will be.
The port has not seen any significant investments in its infrastructure since 1981, while the IIPD has been reporting losses for 10 years, carrying a debt burden that was about five times its annual revenue, the mayor’s office said in the statement. The port operated in the black for the first time in 2012.
According to the statement, part of the turn-around can be attributed to significant reforms to the way the port operates. The city also hired an independent consultant who found that despite the port’s potential for job growth and economic activity its limited budget and difficult financial position made it difficult to realize.
“We are taking what was an underutilised, run-down port and turning it into an engine of opportunity through infrastructure investment and job creation that will benefit Chicago and its neighborhoods on the southeast side,” according to the statement.
Emanuel has focused on revitalising the port since his early days in office, said David Narefsky, a partner at the law firm of Mayer Brown who represented IIPD as lead adviser on this transaction.
To that end, Emanuel appointed Mike Forde as Chairman of the IIPD, “to head up the port district and with the charge to galvanise maritime activity, jobs, and economic development,” Narefsky said in a conference call, noting that the port, which opened in 1958, had a meaningful amount of maritime activity during its heyday.
The Illinois International Port District is an entirely self-funded entity and relies primarily on revenues from its tenants in the form of rent and fee payments. It is a joint city-state agency with a nine-member board of directors. The governor appoints four members and the mayor appoints the remaining five. The state senate must confirm the governor’s picks, while the city council is responsible for approving those of the mayor, according to the IIPD website.
The Broe Group is a private, family-owned international investment and management company with assets in transportation, real estate and energy.
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