Mayor Rahm Emanuel on Wednesday took in stride U.S. Sen. Dick Durbin’s demand that the federal government somehow be repaid the $378 million in federal funds used to rebuild Midway Airport if and when the airport is privatized.
Determined to avoid the public outcry that followed the privatization of Chicago parking meters, Emanuel argued that he’s approaching the deal with “caution and a critical eye,” just as Durbin is.
“I don’t think that, when you look at parking meters, either that mindset, that attitude or that perspective was adopted…That’s a lesson to be learned…The mistakes of the past [were that] people rushed pell-mell into trying to do any leasings,” the mayor said.
“When I talked to Sen. Durbin, I said, people should approach this with caution, a skeptical eye, not rush, review it, have an open discussion and–if you make a decision, which is a way’s off–[do it] with a…cautionary, skeptical, tapping-the-brakes kind of approach.”
Emanuel noted that he was under pressure to either test the market or pull the plug by a Dec. 31 deadline established by the Federal Aviation Administration after the FAA had already granted the city a series of extensions.
“I wasn’t gonna let that date pass but that said, I’ve set up a different structure and a different process,” he said.
The mayor has insisted that any deal involve a lease no longer than 40 years as well as profit-sharing for Chicago taxpayers and safeguards against consumer price gouging.
However, Durbin’s letter Tuesday urged that additional considerations be thrown into the mix, consistent with 2011 legislation Durbin introduced, but could not get passed, on the sale and lease of federal transportation assets.
The senator noted that Midway received $378 million in federal funds to rebuild runways and taxiways and to replace a terminal.
“The federal government has borrowed heavily to make investments at Midway and other airports across the country,” according to Durbin’s letter. “I encourage you to look closely at the federal funds these airports have received and make sure these funds are repaid prior to the sale or lease of an airport.”
Durbin’s 2011 legislation would have required the Department of Transportation to create a formula to determine the “depreciated value” of any federal investment before any privatization plan was sealed, said Durbin press secretary Christina Mulka.
The private company could then include that depreciated payback to the federal government in their purchase price, Mulka said.
However, Durbin noted in his letter that he is open to other forms of reimbursement, and wrote that “I have spoken to Mayor Emanuel about these possibilities as well.”
Emanuel is trying to craft a Midway deal dramatically different than the 99-year, $2.5 billion deal that collapsed for lack of financing under former Mayor Richard M. Daley.
Instead of 99 years, the lease would be no more than 40 years long. Instead of obligating the city to pay for police and fire protection, the private operator would assume that $17 million-a-year cost for prices escalating over time.
There would also be a Travelers Bill of Rights to prevent the private operator from gouging consumers for food, retail and parking and force the company to maintain safety, terminal and restroom cleanliness and swift baggage claim for arriving flights.
Daley would have allowed Midway Investment and Development Co. LLC to pocket revenues from parking, concessions, and passenger ticket taxes in exchange for the massive up-front fee.
Emanuel is insisting on a management agreement and land lease that gives Chicago taxpayers a sliding scale of revenues and a bigger share of the profits when Midway is flying high.
Daley rushed his Midway deal through the City Council – so fast that aldermen beefed that it was “jammed down our throats.”
Emanuel would give them 30 days to review the deal, representation on a blue-ribbon committee reviewing the terms with its own independent advisor and proceed, only if the price is right.
Durbin’s letter could throw a monkey wrench into Emanuel’s plan to generate a pot of money that could be used to solve the city’s pension crisis or build infrastructure projects.
But, sources said the senator’s position is “not unique to Midway.”
A few years ago, when there was talk of turning free expressways into tollways as part of a possible privatization deal, he insisted that the feds be paid back for any work to improve those roadways before any deal goes through.
Asked whether Durbin’s position could kill the deal or make it more complicated to privatize Midway, one City Hall source simply called it “another variable” to consider.
“The city could get $378 million less” from any privatization deal, he said. Or, the city could be required to invest $378 million in similar infrastructure,” the source said.