Mayor Rahm Emanuel's administration on Friday began testing the investment market's appetite for a potential deal to privatize Midway Airport, launching the process for finding prospective bidders.
The city posted a "request for qualifications," seeking expressions of interest and documentation of credentials from teams interested in financing, operating, maintaining and improving the Southwest Side airport, which is the nation's 26th busiest, with about 9 million passengers passing through annually.
The document reiterates a framework, laid out by Emanuel earlier, aimed at providing city taxpayers with a better deal than the widely criticized 75-year agreement to privatize parking meter operations, carried out during former Mayor Richard Daley's administration. Proceeds from the earlier deal were used to plug operating deficits, and meter rates rose sharply.
This time, proposed leases must be less than 40 years, which locks in the city for a shorter period.
Rather than awarding the city only an upfront payment, the private operator also must share revenue with the city on an ongoing basis. Initial proceeds would be used to pay down debt issued since 1996 to rebuild the airport, the mayor's office said. There is about $1.4 billion in outstanding debt.
Longer term, cash flow would be directed to city infrastructure needs. The mayor has pledged proceeds would not be used to pay for city operations.
The city also is seeking assurances that prices for parking, food and beverages will be kept reasonable.
This is the second time Chicago has looked at privatizing Midway. A 99-year lease that would have brought in $2.5 billion died in 2009 when the financial markets froze up.
Prospective bidders will be asked to prove their ability to raise the needed financing, said Tom Alexander, a spokesman for the mayor.
As in the first go-round, the city is using Credit Suisse Securities LLC as its lead financial adviser.
"The city's process and approach will be thorough and open," Lois Scott, the city's chief financial officer, said in a written statement.
Southwest Airlines, the airport's dominant carrier, supports the move.
Some observers have said a structure with a shorter lease and greater control for the city could translate into lower bids.
But Alexander said the city was confident investors "would gladly meet our terms and still make very attractive offers." The city has declined to estimate how much such a deal could garner.
The request for proposal states "there is significant potential to increase commercial revenue both in terms of variety of activities and increases in sales per passenger."
The city posted the request for qualifications shortly after the Federal Aviation Administration accepted its preliminary application to privatize the airport, clearing the way for the city to move forward in its evaluation process.
Prospective bidders were asked to formally express their interest by Feb. 22. If the city moves forward and seeks proposals, a privatization plan could be submitted to the City Council this summer.
kbergen@tribune.com
Twitter @kathy_bergen
Chicago seeks investors for potential Midway Airport deal
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Chicago seeks investors for potential Midway Airport deal
