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Mayor Daley announced this afternoon that Midway Airport has been leased to Midway Investment and Development LLC. The lease runs for 99 years and will bring in $2.5 billion; Daley hopes some of the money will help close the humongous budget shortfall. Not that airport food was cheap last time we were at Midway, but we're still not looking forward to a $10 pretzel.
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Is that $2.5 billion annually, or $2.5 billion total over the 99 years? Because that's only about $2.5 million a year!
That sum would hardly makes a dent in a $420 budget shortfall. and even if it's a lump sum, it may stem the bleeding now, but what about subsequent budget shortfalls? At current rates, that money will be gone in a decade and there will still be 89 years left on the lease...
I'd be curious to know who makes up "Midway Investment and Development LLC". I suspect it will look like a who's who of the mayor's campaign contributors.
I can't wait till King Daley leases the Chicago River.
It's undoubtedly $2.5B upfront, like the Skyway was $1.xB one-time.
One day we'll talk fondly about the days when Midway was the affordable option.
Benjy:
It is $2.5B lump sum. Your math is a little off, it comes out to just over $25M per year. Ignoring what this lease represents the value of the lease seems OK. This deal also frees up money in the City's budget as they no longer need to budget for Dept of Aviation at Midway. I do have issues with the length of the lease. Something in the range of 30-50 years seems more reasonable and is the length of these types of leases is Europe, the originator of the municipal lease. Time will tell. A lot of time.
I would not have as much of an issue with this if there were restrictions on the amount of leasing that can be performed. If the length of the leases is to be 99 years the city should not be allowed to lease more than 1/99th of its value in any given year. My guess is that the current mayor has greatly exceeded that value as he has already leased two of the most valuable assets the city owns (Skyway and Midway). The water delivery system of the city has been leased for a while (the company is called Chicago Water Partners). The 1/99th thing insures that the cash flow of the city does not get distorted due to these large infusions of cash. Daley is essentially deciding to take revenue from future mayors to fund his current mismanagement.
The length of these leases are way too long. 99 years..who can realistically predict what things will be like in that amount of time? You cant. These things should be 15-20 year time frame. Then you can either renew the lease for more favorable terms or put it out to bid again. The city is giving up some serious long term profits for short term gains. Not to mention we're going to get screwed over big time once the new owners decide to jack the prices up. Just wait until its $20 to ride the skyway..
Maybe I'm crazy but it seems to me using one-time money to cover an operating shortfall is a bad idea- not being sustainable in any way.
Benjy check your math buddy. the city has to use 99% for infrastructure. That leaves less than 25 mil for operations. I'm sure the city is getting the bulk upfront. This should give the owners of Walsh construction a chubby without any blue pill. Im guessing meeks will be getting a nice brand new school out by his church with a swimming pool and every imaginable "white suburban" amenity. I guess the credit markets aren't that bad if these companys were able to raise this much money.