Aldermen OK borrowing $4 billion to begin $8.5 billion O’Hare expansion project

SHARE Aldermen OK borrowing $4 billion to begin $8.5 billion O’Hare expansion project

A huge expansion project at O’Hare International Airport is in line for final approval at Wednesday’s Chicago City Council meeting. | Associated Press

Mayor Rahm Emanuel’s $8.5 billion O’Hare Airport expansion plan — and the $4 billion borrowing needed to get it started — are now cleared for take-off at Wednesday’s City Council meeting.

There’s nothing a Chicago mayor loves more heading into a difficult re-election campaign than to have a massive public works project under way that provides thousands of jobs and billions of dollars in contracts to dole out to allies and campaign contributors.

Emanuel will have that marquee project, thanks to Monday’s vote by the City Council’s Finance Committee.

Aldermen authorized $4 billion in so-called “general airport revenue bonds and passenger facility charge bonds” retired by the increased landing fees and terminal rents baked into new airline lease agreements. South Side Ald. Leslie Hairston (5th) cast the only “no” vote because she’s holding out for a list of minority law firms tied to the deal.

Senior managers on the massive borrowing will be JP Morgan Chase, Citi Bank and Loop Capital Markets run by longtime mayoral ally and stadium authority member Jim Reynolds.

Minorities, women and veterans are expected to receive 39.6 percent of total underwriting revenues.

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Chief Financial Officer Carole Brown said the precise composition of each team will depend on whether market conditions dictate “one big deal” of $4 billion or “four smaller deals” of $1 billion apiece.

Already, O’Hare has $8 billion in outstanding bonds issued to build new runways and make other airfield improvements. Those bonds carry an A-rating by Standard & Poor’s and Fitch and A-plus by Kroll.

Under questioning from Ald. John Arena (45th), Brown assured aldermen there is no danger to adding “as much as $9 billion” to that mountain of airport debt.

“Airport bonds are rated based on kind of the strength of the airlines that service it, [passenger] volume and things like that,” Brown said.

“We believe O’Hare remains a strong airport credit. We would expect the ratings would maintain or improve.”

Brown said the senior managers were chosen based on their willingness to diversify a team of pinstripe patronage long dominated by major white players who packed the City Council chambers Monday.

That was not enough to satisfy Ald. Gilbert Villegas (36th), chairman of the City Council’s Hispanic Caucus.

Villegas demanded to know why Hispanics, Chicago’s fastest-growing and second-largest racial or ethnic group, are in line for only a 13.5 percent share and why there is no Hispanic firm serving in the all-important role of senior manager.

“This is not your first rodeo, but we keep seeing the same horses,” Villegas told Brown.

“Here’s a $4 billion opportunity and, once again, we’re getting the short end of the stick.”

Brown countered there are only “four Hispanic firms in the country that do underwriting.”

“Those four firms … are in practically every deal that the city underwrites,” Brown said. “The ability to have a greater percentage of Hispanic participation becomes more difficult if those firms are the only four firms we have to choose from.”

Two years ago, the City Council came within one vote of blocking a $3.5 billion O’Hare Airport bond issue, delivering a powerful message about the lack of minority participation.

At that time, Ald. Roderick Sawyer (6th), chairman of the Black Caucus, warned that future alliances between the Black and Hispanic Caucuses could someday create a political roadblock that would force Emanuel’s hand.

More recently, Sawyer issued a similar warning about the $4 billion borrowing for an O’Hare expansion plan that lone holdout American Airlines endorsed two weeks ago after a hazy promise to speed construction of three gates.

But Sawyer said Monday he has no desire to stop the gravy train from leaving the station.

“I want to make sure this deal goes forward. I mean — this is a big deal. It will empower a lot of us — contractors, professional service people and all the like. This is transformative,” Sawyer said.

Sawyer and Villegas instead plan to settle for creation of an oversight commission to ride herd over the massive project and make certain that minorities and women get a fair share of the bonanza of airport jobs and contracts.

The City Council’s Aviation Committee is scheduled to authorize that oversight commission on Tuesday, setting the stage for Wednesday’s full Council vote on the entire project.

“If we stay on top of it and make sure that we’re vigilant and watch it consistently, I think it’ll go well. We’ve pretty much received everything we’ve asked for,” Sawyer said.

City Hall is promising to develop a “comprehensive workforce development program” aimed at making certain that those hired to fill the 60,000 construction jobs reflect the city’s population.

As for contracting, the city has promised quarterly progress reports and established relatively modest minority and women set-aside goals—25 and 5 percent respectively for design, 26 percent and 6 percent for construction and 16.9 percent and 4.5 percent for commodities.

The mayor’s plan calls for demolishing Terminal 2, and replacing it with a new “global terminal” shared by United and American Airlines that would accept both domestic and international flights.

The massive, multi-year makeover also calls for dozens of new gates and additional concourses. O’Hare would become the first so-called “global alliance hub” in the nation that allows domestic airlines and the international carriers with which those domestic airlines partner to all be located in the same terminal.

No longer would passengers arriving in Chicago and connecting on international flights be forced to endure the delay and inconvenience of having to ride the O’Hare people mover to an international terminal not within walking distance.

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