A decade after investors gave the city more than $1.8 billion to lease the Chicago Skyway for 99 years, the rights to run the privatized highway and collect tolls have been sold for $1 billion more than the original price.
A consortium of three major Canadian pension plans announced Friday it had agreed to fork over $2.8 billion to acquire the company that holds the deal to run the Skyway until 2104.
Motorists who use the 7.8-mile-long toll road on the South Side are unlikely to notice any changes as a result of the sale because the schedule of toll increases was laid out in the long-term lease agreement approved by the City Council 10 years ago.
In the first major privatization of a city asset, then-Mayor Richard M. Daley’s administration and aldermen approved the Skyway deal.
The original Skyway concession company was a partnership of Cintra Infraestructuras of Spain and Australia’s Macquarie Group. Their $1.83 billion payment in January 2005 was nearly $1 billion more than the next highest bid, which prompted speculation that the investors had overpaid.
In June, with 89 years left on the agreement, Cintra and Macquarie announced that they were looking to sell out.
The buyers are a consortium made up by the Canadian Pension Plan Investment Board, the Ontario Municipal Employees Retirement System and the Ontario Teachers’ Pension Plan, according to a joint statement from the three entities. Each will have a 33.33 percent stake in the Chicago deal.
“Skyway represents a rare opportunity for us to invest in a mature and significant toll road of this size in the U.S.,” said Cressida Hogg, managing director and head of infrastructure for the Canada Pension Plan Investment Board.
The Council must approve the sale of the Skyway rights. A spokeswoman for Mayor Rahm Emanuel’s administration declined comment.
The Skyway company reported collecting nearly $80.7 million in revenue from tolls last year, a slight increase from 2013.
Cintra, a subsidiary of Madrid-based infrastructure group Ferrovial, owns a 55 percent stake in the Skyway deal. The other 45 percent interest in the Chicago concession belongs to two arms of Macquarie, according to city records.
“The new consortium is expected to continue operations of the Chicago Skyway as usual, with no impact to the driving public,” Ferrovial said in a statement.
The Spanish company said it would make $269 million from the nearly $2.84 billion deal.
At the time of the 2005 privatization pact, then-33rd Ward Ald. Richard Mell effusively praised a beaming Daley: ”If you ever decide to change careers, there’s truly a place in Las Vegas for you. You have been able to pull — not a rabbit out of a hat. You’ve been able to pull a $1.8 billion gorilla out of a hat.”
After leasing the Skyway, the Daley administration entered into long-term concession agreements for four downtown parking garages and for the city parking-meter system, which yielded a $1.15 billion payout under a 75-year agreement.
But unlike the proceeds of the 2008 parking-meter deal — almost all of which were spent long ago — a good chunk of the money from the Skyway deal remains in the city’s coffers. As of March 31, more than $502.5 million from the Skyway deal still sat in a reserve fund, representing most of City Hall’s operating fund balance, records show.
In exchange for the cash infusion, Cintra and Macquarie took over Skyway operations and maintenance and got the right to pocket tolls that rose immediately to $2.50 — after being frozen at $2 since 1993.
The $2.50 toll remained in effect until 2008, when it rose to $3. The deal allowed tolls to go as high as $5 in 2017. After that, the agreement called for annual increases of 2 percent or the rate of inflation, whichever is greater.