| CHICAGO, Sept 5
CHICAGO, Sept 5 Chicago Mayor Rahm Emanuel on
Thursday put the brakes on a deal to lease the city's Midway
Airport because one of the two bidders dropped out, a
spokeswoman for the mayor said.
The two infrastructure investment consortia that entered
talks with the city about a possible lease of Chicago's
second-largest airport included one combining Macquarie Group
Ltd and Ferrovial SA and the other combining
Industry Funds Management and Manchester Airport Group Plc.
A source close to the IFM/Manchester consortium confirmed
the group had dropped out of bidding, citing valuation issues
for the decision.
The consortium "looked at the revenues, looked at the costs,
and it wasn't working," the source said, leaving the
Macquarie/Ferrovial group as the sole remaining bidder.
A Macquarie spokesman declined to comment late Thursday.
Ferrovial, IFM and Manchester Airport could not be reached for
Sarah Hamilton, the mayor's spokeswoman, said Chicago had
set a "high bar" for taxpayer protection in the deal, including
a short lease term and revenue sharing. The bidding companies
could not make an offer "that would meet what taxpayers
"The main point is this: The city has a bottom line and they
did not meet it," Hamilton said.
Infrastructure leases in Chicago are a politically sensitive
issue, even as the city deals with large budget deficits and is
scrambling to identify new revenue sources. Emanuel's
predecessor, Richard Daley, was roundly criticized for a lease
of Chicago's parking meters that led to an immediate quadrupling
of parking rates in much of the city even as Chicago quickly
spent much of the $1.15 billion proceeds from the 75-year deal.
Emanuel unveiled his plan for leasing the city's second
airport behind O'Hare International Airport, in December 2012. A
previous attempt to lease Midway to private investors fizzled in
2009 under Daley as the economic downturn dried up financing for
the proposed $2.52 billion, 99-year deal.
Emanuel's plan called for an airport lease of 40 years or
less with a revenue-sharing provision allowing the city to
retain ownership of Midway and receive some money that would be
earmarked for capital projects. Initial proceeds from a deal
would have been used to pay off the airport's outstanding bonds.
The city's parking meter lease has continued to cause
headaches for Chicago's mayor. The deal was slammed by the
city's inspector general and some city council members for being
undervalued. Emanuel renegotiated part of the deal with Chicago
Parking Meters LLC in order to avoid paying as much as $100
million the company claimed it had lost due to out-of-service