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Chicago Exploring Alternative Privatization Models for Midway Airport

Leonard Gilroy
May 8, 2009, 7:37pm

Per The Wall Street Journal, Chicago is exploring some alternative privatization approaches for Midway Airport, following the collapse of the city's $2.5 billion deal with a Citi-led consortium two weeks ago:

Chicago is considering a variety of strategies to revive its collapsed $2.52 billion Midway airport privatization, including the possibility of issuing tax-exempt debt to make the deal more tenable, according to a city adviser.

Under the tentative plan, Chicago would issue debt to fund part of the large upfront payment that it was to receive in the deal, which then would be paid back over time through lease fees from the airport's private operator.

John Schmidt, a partner at law firm Mayer, Brown LLP and the city of Chicago's lead counsel on the high-profile Midway deal, said such a move could be a way to substantially lower the amount of financing needed by private investors to make the deal go through. [...]

He said Chicago city officials are considering other potential mechanisms as well to revive the privatization. The city has had talks with a number of investors since the deal fell through two weeks ago, including with some of the unsuccessful bidders, although Schmidt said there haven't been any more "substantial discussions" with the investment group that won the project but ultimately couldn't pull it off.

For more, see Reason's recent blog posts on Midway privatization here, here, and here.

» Reason's Airports Research and Commentary


Leonard Gilroy is Director of Government Reform


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