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.