A $2.5 billion deal to make Midway Airport the first major airport to go private under a federal pilot program has collapsed.
Chicago chief financial officer Gene Saffold said the city and private investors terminated a 99-year lease agreement because of the global financial crunch. The city still will keep $126 million in earnest money already paid by investors as part of the agreement.
A major domestic hub, Midway would have been the first major airport to go private under a federal pilot program.
"I'm disappointed it did not go through," Saffold said. "But it's not that all hope is gone."
Earlier this month, the city gave the investor group -- the Midway Investment and Development Company -- another two weeks to come to terms on a six-month extension the group said it needed to "raise the money amid disarray in financial markets."
Investors from New York, Boston and Canada could not secure the needed funding, despite the extension that was approved last month.
He said other cities should not be dissuaded on similar deals.
In fact, more and more government entities have looked to their public assets as cash cows, but consumers can wind up paying more after those roads and other assets are turned over to private entities.
Some Chicago aldermen had long expressed concern about passengers having to pay more to park and shop at Midway if it fell
under private control. But those worries seemed to trump the promise of new money for thinning city coffers. Last year, aldermen voted 49-0 to sign off on the lease agreement.
Had the deal gone through, the investor group would have paid the $2.5 billion in upfront rent. The city expected to clear more than $1 billion in net proceeds with most of that money going toward infrastructure improvements and pension funds.
Chicago has leased assets before as a way to raise money, including parking meters and garages and a nearly $2 billion deal to lease the Chicago Skyway to a private operator.