Apr 20, 2009 1:58 pm US/Central
Midway Airport Privatization Deal Collapses
Private Firm Can't Put Up Financial Backing To Pay City Upfront
CHICAGO (CBS) ―
The city's plan to privatize Midway International Airport has fallen through and will not move forward, officials announced Monday.
The City of Chicago announced Monday afternoon that it has terminated its lease with Midway Investment and Development Company because the firm could not secure the financial backing to pay the upfront rent of $2.52 billion to the city.
The city did collect $126 million that the private company provided as part of the agreement, but will still lose billions that would have been reaped when the deal closed.
City Chief Financial Officer Gene Saffold said in a news release that this development does not mean Midway will never be privatized.
"We still retain the right to competitively offer the Midway transaction again, down the road, when financial market conditions improve," Saffold said in a news release.
To make sure the city's budget won't take a hit because of the failure to close the deal, the city plans to allocate $40 million over two years to this and next year's budgets, Saffold said in the release.
Midway Investment and Development Company was owned mostly by New York-based Citi Infrastructure Investors, and in part by Boston-based John Hancock Life Insurance Company and Vancouver, Canada-based YVR Airport Services. They would have taken out a 99-year lease on Midway in exchange for $2.521 billion upfront.
The city has gone into several other privatization deals in an effort to plug staggering budget shortfalls. Last year, the city privatized parking meters, leasing them for $1.15 billion to a private company for the next 75 years and immediately leading meter rates to skyrocket.
The outrage over the newly high price and frequent malfunctioning has led to vandalism of parking meters last month.
Before that, the city privatized the Skyway ($1.83 billion), and later the downtown parking garages ($563 million).
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