CHICAGO – After returning its balance sheet to the black, the Illinois International Port District has grander plans to bolster its role in economic development and job creation by turning to private managers to raise the needed capital.
The port launched last month a request for information process for investors interested into entering in a long term management and development contract under a master lease of up to 55 years.
The port was formed in 1951 by the General Assembly to promote and manage the shipment of cargoes and commerce through Chicago ports and to promote the development of facilities to support port use.
The RFI closes Friday and the district will use the responses to prequalify a list of potential investors who in turn would help develop a transaction structure. A formal request for proposals process based on the lease structure would then be launched.
The district would retain ownership of its facilities with the investor/consortium signing a master lease in which it would serve as port manager and be responsible for raising the capital needed to finance investments. The district seeks parties interested in “dramatically enhancing the port’s economic impact in the region, including job creation,” the RFI reads.
“What we are looking for from the respondents is how many jobs” they can create, said Michael Forde, the Mayer Brown LLP partner installed by then freshman Mayor Rahm Emanuel to lead the district’s board.
BMO Capital Markets, Acacia Financial Group, and Cabrera Capital Markets are advising the district. BMO completed a strategic and capital needs study last June that suggested the port was greatly underutilized but it lacked the access on its own to the needed capital.
The port district is governed by a nine-member board that includes five members appointed by Emanuel and four by Gov. Pat Quinn.
The district hopes to capitalize on Chicago’s position as the nation’s largest inland general cargo port and its central location with three major rail lines. “It’s a facility that’s always had great potential but nobody has paid much attention to it,” Forde said.
Forde said his initial goals in leading the district’s board included improving transparency of port finances and operations, moving the district’s balance sheet back into the black, and developing a long range plan.
After a decade of losses, the district closed out 2012 with a $1.2 million profit on its $8 million budget. The profit was achieved even as it continued to subsidize its controversial golf course center which lost $463,000. The district has signed a private management deal in which it is guaranteed a minimum profit of $100,000 this year. The figure could increase significantly depending on golf revenues.
In 2008, the Civic Federation of Chicago called for the district to be dissolved and its operations handed over to Chicago because it has failed to promote maritime commerce and shipping activities. The district in 2003 issued $15 million of variable rate revenue refunding bonds to refinance other loans that financed a clubhouse at the golf course. The bonds mature in 2033. In 2001, the district issued $8.5 million of port revenue bonds so that a private-sector entity could acquire and construct a bulk storage facility on land leased by the district.
