Asset sale could yield $1 billion gain for Chicago Skyway investors

Canadian pension plans that control the Chicago Skyway reportedly are looking to sell their stakes for a handsome profit, courtesy of drivers forking over tolls that have risen steadily since the city let private operators lease it in 2005.

The Canada Pension Plan Investment Board and OMERS Infrastructure, which invests for an Ontario municipal employees’ pension, are seeking buyers for their Skyway stakes, Bloomberg News reported Wednesday. The account, citing “people with knowledge of the matter,” said the firms were hoping for a deal valuing the 99-year Skyway lease at $4 billion.

The firms and the Ontario Teachers’ Pension Plan bought the lease in 2015 for $2.8 billion, getting roughly equal one-third shares in the Skyway. The teachers’ pension plan reportedly plans to keep its stake.

If the deal is completed, it would be another example of private investors profiting from the sale of a public asset. The original investment group that acquired the Skyway lease paid the city $1.83 billion, only to sell it a decade later for a $1 billion gain while keeping Skyway profits along the way.

Former Mayor Richard M. Daley directed the original sale of the 99-year lease in what came to be known around City Hall as the Great Chicago sell-off. The Skyway deal allowed operators to regularly increase tolls. The rate for cars on the 7.8-mile shortcut from Chicago to Indiana is now $5.90, while rates are much higher for vehicles with more than two axles. Cars paid $2 in 2004.

The Canada Pension Plan Investment Board refused to comment and the other firms did not respond to questions about the possible sale. The investors operate as Skyway Concession Co., whose CEO, Kristi Lafleur, did not respond to a message.

The Skyway generated $114.3 million in toll revenue in 2021, up from $84.9 million in 2020 during the height of the pandemic, according to the latest audit conducted for the city by accounting giant Deloitte & Touche. The Skyway investors distributed $36.3 million among themselves last year.

Results of the latest audits were provided to the Chicago Sun-Times by attorney Clint Krislov. As the director of IIT Chicago-Kent’s Center for Open Government law clinic, Krislov has reviewed dozens of transactions to date and provides an annual analysis of each year’s results.

To maintain his longstanding opposition to raising property taxes, Daley followed the Skyway deal by unloading Chicago parking meters and downtown garages.

Although the parking meter lease is the deal aldermen and their constituents love to hate, Krislov has argued that it “pales by comparison” to the Skyway deal.

If investors unload it now for anywhere near the $4 billion they hope to get, it would only rub salt in the wound of Chicago taxpayers, Krislov said Wednesday.

“Just when you think that it couldn’t be worse, it gets worse still. That’s really quite remarkable when you think about it. That’s another $1 billion profit that the city didn’t get,” Krislov told the Sun-Times.

“This is much worse [than the other asset sales]. This is a deal that has survived COVID quite nicely. The whole business of crossing over from here to Indiana has remained a very profitable toll bridge. Whether it’s attributable to COVID or a lot of people moving to Indiana and coming to Chicago or going to the casino, that route has remained a very active and profitable toll road and will remain so unless we stop using cars and trucks to transport people and stuff.”