So Far, So Good on Midway Airport Lease

The Chicago Tribune weighs in on the pending $2.5 billion lease of Midway Airport:

The city’s deal to lease the Chicago Skyway to a Spanish-Australian consortium for 99 years has demonstrated the benefits of leasing public assets judiciously. Chicago got a $1.8 billion windfall, which it used to pay down debt and set up a $500 million rainy day fund. That raised the city’s credit rating and lowered its borrowing costs. The Midway deal would net the city $1 billion after debt and transaction costs. Unfortunately the city can’t invest that money as it did the Skyway money. A 2006 state law requires that most of it be spent on infrastructure projects and to shore up shaky city pension funds. Consider that the payoff to organized labor so it won’t try to squelch a big privatization deal. Not pretty. Of course, if the city could get its hands on the money, it might be tempted to use it to plug a reported $420 million gap in the 2009 budget. That, of course, would only stall some tough budget decisions. Maybe the prospect of a big Midway payoff and new construction jobs will make it easier for labor to accept some things the city has needed to do for a long time—such as reduce the number of workers on each city garbage truck. In principle, this page has supported privatization efforts. It’s a good idea to get the city focused on essential public services and out of the business of running an airport, which can probably be done more efficiently by a private firm. Encouraged by the success of the Skyway deal, Chicago is moving forward with plans to put its parking meters and recycling plants in private hands, and the city has leased four underground parking garages. The guiding principle in all such agreements should be to secure more efficient operations and make government more financially sound. At first glance, the Midway lease appears to pass that test.

Also see my colleague Bob Poole’s recent thoughts on the Midway deal here, as well as his overview of the most recent developments in airport privatization in Reason’s Annual Privatization Report 2008.

Leonard Gilroy is Senior Managing Director of the Pension Integrity Project at Reason Foundation, a nonprofit think tank advancing free minds and free markets. The Pension Integrity Project assists policymakers and other stakeholders in designing, analyzing and implementing public sector pension reforms.

The project aims to promote solvent, sustainable retirement systems that provide retirement security for government workers while reducing taxpayer and pension system exposure to financial risk and reducing long-term costs for employers/taxpayers and employees. The project team provides education, reform policy options, and actuarial analysis for policymakers and stakeholders to help them design reform proposals that are practical and viable.

In 2016 and 2017, Reason's Pension Integrity Project helped design, negotiate and draft pension reforms for the state of Arizona's Public Safety Personnel Retirement System and Corrections Officer Retirement Plan, which both passed with overwhelming bipartisan support in the state legislature and were signed into law by Gov. Doug Ducey.

Gilroy is also the Director of Government Reform at Reason Foundation, researching privatization, public-private partnerships, infrastructure and urban policy issues.

Gilroy has a diversified background in policy research and implementation, with particular emphases on competition, government efficiency, transparency, accountability, and government performance. Gilroy has worked closely with legislators and elected officials in Texas, Arizona, Louisiana, New Jersey, Utah, Virginia, California and several other states and local governments in efforts to design and implement market-based policy approaches, improve government performance, enhance accountability in government programs, and reduce government spending.

In 2010 and 2011, Gilroy served as a gubernatorial appointee to the Arizona Commission on Privatization and Efficiency, and in 2010 he served as an advisor to the New Jersey Privatization Task Force, created by Gov. Chris Christie.

Gilroy is the editor of the widely-read Annual Privatization Report, which examines trends and chronicles the experiences of local, state, and federal governments in bringing competition to public services. Gilroy also edits Reason's Innovators in Action interview series, which profiles public sector innovators in their own words, including former U.S. Transportation Secretary Mary Peters, former Florida Gov. Jeb Bush, former Indiana Gov. Mitch Daniels, former New York City Mayor Rudy Guiliani and more.

Gilroy's articles have been featured in such leading publications as The Wall Street Journal, Los Angeles Times, New York Post, The Weekly Standard, Washington Times, Houston Chronicle, Atlanta Journal-Constitution, Arizona Republic, San Francisco Examiner, San Diego Union-Tribune, Philadelphia Inquirer, Sacramento Bee and The Salt Lake Tribune. He has also appeared on CNN, Fox News Channel, Fox Business, CNBC, National Public Radio and other media outlets.

Prior to joining Reason, Gilroy was a senior planner at a Louisiana-based urban planning consulting firm. He also worked as a research assistant at the Virginia Center for Coal and Energy Research at Virginia Tech. Gilroy earned a B.A. and M.A. in Urban and Regional Planning from Virginia Tech.