Sept. 06--After picking two finalists for a lucrative lease of Midway Airport, Mayor Rahm Emanuel's administration Thursday abruptly halted its efforts to take the transportation hub private.
Emanuel spokeswoman Sarah Hamilton said one group vying for the deal dropped out "in the past day or two," and the mayor decided not to proceed.
"The mayor said all along he wanted this to be a competitive process in order to get the best possible deal for the citizens of Chicago," Hamilton said. "With only one company left, that wasn't the case."
The privatization process has played out behind closed doors, and the Emanuel administration and the bidders have declined to discuss much in the way of specifics, making it difficult to immediately sort out what happened.
What is clear, however, is that the stalled Midway effort is the latest hitch in Emanuel's attempt to privatize public assets to raise money and help the city dig out from under a mountain of red ink. The mayor's Chicago Infrastructure Trust also has gotten off to a slow start.
The company that remained in the running for Midway was the Great Lakes Airport Alliance -- a partnership of Macquarie Infrastructure and Real Assets and Ferrovial -- while the one that backed out of the bidding was Industry Funds Management and Manchester Airports Group, sources with knowledge of the process said.
Great Lakes this past spring hired as a consultant William Filan, a veteran lobbyist who has a long-standing business relationship with the husband of city Aviation Commissioner Rosemarie Andolino. According to city Board of Ethics records, Filan has paid $154,000 since 2007 to Mark Fary, a former 12th Ward alderman and Andolino's husband, to lobby the city on behalf of a handful of Filan's clients.
In an email, Filan said he has only consulted Macquarie and Ferrovial on their bid. He said he has not lobbied the Aviation Department or any other city department on their behalf but registered to do so because he might. Filan said Fary did not know Filan was representing the two Midway hopefuls until after the Tribune inquired about his involvement late last week.
Andolino declined to comment. Fary could not be reached for comment.
City Finance Department spokeswoman Kelley Quinn said any relationship among Filan, Fary and Andolino has had no bearing on the prospects for the Great Lakes lease bid and said the Aviation Department is not taking part in vetting the Midway proposals.
But Quinn acknowledged that Andolino has had discussions about the airport privatization with staff members of Emanuel's chief financial officer, Lois Scott, the mayor's point person on the Midway lease process.
"The exploration of a long-term lease of Midway Airport -- including all interaction with potential bidders -- is being managed by the city's Chief Financial Officer, with the assistance of outside financial advisers, and input and review from the Midway Advisory Panel," Quinn said in an email.
Neither Scott nor Macquarie is a stranger to privatization arrangements in Chicago. The firm is part of a joint venture that leased and operates the Chicago Skyway, a 2004 deal that generated $1.8 billion for the city.
That 99-year arrangement also involved the consulting firm co-founded by Scott, who joined the Emanuel administration in 2011 after leaving her post as president of Scott Balice Strategies. The firm, which has been a consultant on various government privatization efforts, has touted its role in providing financial analysis for bidders on the Skyway plan.
Hamilton said questions about Scott's role in the Skyway lease played no part in Emanuel's decision to halt the Midway privatization process.
On Thursday, the Tribune raised questions about Scott's prior close business ties to indicted former city Comptroller Amer Ahmad, who awarded business to her private consulting firm when he was Ohio deputy treasurer. Scott later recommended Ahmad for the city comptroller job, which he abruptly quit in July, weeks before being charged in a federal kickback investigation in Ohio.
A spokesman for the Great Lakes Airport Alliance declined comment Thursday. The other finalist, Industry Funds Management and Manchester Airports Group, also declined to comment.
As part of an experimental Federal Aviation Administration program, Emanuel hoped to see Midway become the first major U.S. hub to privatize.
The mayor has pursued the deal because the FAA program would allow him to divert revenue produced at the airport to pay for projects elsewhere that the city otherwise wouldn't be able to afford.
Part of the proceeds from a lease of the airport would have gone to pay off about $1.4 billion in Midway debt. The rest could have gone to infrastructure projects -- or been used to help reduce the city's pension liabilities that threaten to put a massive hole in an already strained budget.
Even if the deal had gone forward, Emanuel would have had to persuade a wary City Council to go along with it.
Aldermen were stung by public criticism for approving Mayor Richard Daley's roundly reviled 75-year lease of the city's parking meters in 2008, and have pledged to be more than rubber stamps for Emanuel's plans to lease public assets. Emanuel has shown the ability to get other controversial revenue-raising packages past the City Council, however.
Daley thought he had a deal to lease the Southwest Side airport for 99 years to a consortium led by a unit of Citigroup Inc., an agreement that would have brought in $2.5 billion. The plan died in 2009 when the financial markets froze.
After taking office, Emanuel refused to commit to another deal to privatize Midway but petitioned the FAA to maintain the privatization slot for the airport to keep his options open.
Emanuel sought to set his efforts apart from those of his predecessor by saying the city would lock into a deal for no more than 40 years and require the private operator share revenue with the city on an ongoing basis rather than making a lump payment.
Sixteen parties told the city in February that they had interest in leasing Midway. The Emanuel administration announced in March that the list of potential bidders had been cut to six.
The Midway proposal picked up steam after a bid to privatize the Luis Munoz Marin International Airport in San Juan, Puerto Rico, drew significant interest in 2011.
Tribune reporter Kathy Bergen contributed.
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