CHICAGO - Chicago Mayor Richard Daley said yesterday the proposed privatization of Midway International Airport, the city's recycling centers, and its parking meter system would "guarantee" the continued investment in neighborhood infrastructure and relieve pressure on city taxpayers.
"That will mean even more police and fire stations, libraries, parks, and senior centers - all essential to neighborhood stability and safety," Daley said in his annual state of the city address yesterday.
Six teams are interested in bidding for the right to operate Midway under a long-term lease in exchange for an up-front cash payment, a transaction that could raise several billion dollars and would mark the first privatization of a major U.S. airport. An estimated 50-year lease could fetch around $3 billion.
City officials previously have said they would use funds first to retire $1.25 billion of Midway debt and then to fund infrastructure and reduce the city's $9 billion unfunded liabilities in its pension funds.
The proposed parking meter system privatization could raise more than $1 billion. The city launched the national wave of government interest in entering into long-term leases on existing assets with its $1.8 billion, 99-year lease of the Chicago Skyway toll bridge in early 2005.
The mayor also said the city would soon unveil a construction program for "new community anchors and other neighborhood improvements across the city" that would be financed with tax-increment financing dollars, a favorite economic tool of the mayor. No additional details were released.
The city has frequently borrowed against future TIF revenue in districts to aid in development projects and two years ago Daley announced a $1 billion school construction program that relies on issuing $600 million of GOs and repaying them with TIF revenues.
Chicago's most lucrative TIF, the Central Loop district, is set to expire this year, but the city has proposed creating a new downtown district to spur redevelopment in the LaSalle Street financial district. The city borrowed $187 million of TIF-backed revenue bonds in 1997 for Central Loop projects, sold an additional $150 million in 2000, and in 2003 sold $175 million.
Daley said he expects Chicago's $6 billion 2008 budget will continue to face strain due to the sluggish economy. Faced with declining revenues and high-than-expected snow removal costs, the mayor last month announced $20 million in cuts.