RAHM TRIES TO STRENGTHEN HAND IN AIRLINE LEASE NEGOTIATIONS
Mayor Rahm Emanuel is moving to strengthen his hand in high- stakes lease negotiations with major airlines that include a massive makeover and expansion of passenger terminals at O’Hare Airport.
At a Nov. 21 City Council meeting when the media spotlight was focused on approval of the mayor’s 2018 budget, Emanuel quietly introduced an “O’Hare Rates and Operations” ordinance.
The ordinance would establish operating ground rules, landing fees and rents airlines must pay in the event that lease negotiations are not finalized by May 11, 2018, when the existing 30- year airline use agreements expire.
“The negotiations with our airline partners have been very productive and continue to move us closer to a final agreement, but we want there to be no question about the path forward,” Aviation Department spokesperson Lauren Huffman wrote in an email to the Chicago Sun- Times.
“That’s why we’ve introduced this ordinance to ensure that O’Hare’s operations continue efficiently as we work to establish prudent terms for airport business and development so the city’s main economic engine is well- positioned for the future.”
Other sources described the complex ordinance as an “interim step” that must be taken while city negotiators continue to hammer out “intricate business terms for nearly 60 tenants and a joint plan for capital investment,” billed as the largest in O’Hare history.
It includes “revised methodology” to make certain “total charges” imposed on the airlines allow the city to recover its costs of operating the airport” no matter how long the negotiations take, the sources said.
If the City Council approves the ordinance, airlines operating at O’Hare would be required to sign a “Letter of Authorization” — either with a term ending Dec. 31, 2019, or with a month- to- month deadline.
“We fully expect a new use and lease agreement to eventually supersede this rates ordinance and expand upon what’s in place today with more modern business terms and the most efficient path toward an unprecedented capital program for O’Hare,” said a City Hall source familiar with the negotiations.
Yet another City Hall source described the mayor’s ordinance as a “bargaining chip to push United and American into being more friendly during big- money negotiations with a lot at stake.”
Chicago- based United Airlines, O’Hare’s flagship carrier, said it is “aware of the city’s decision to move forward with … a fallback measure,” but remains encouraged by the progress that has been made on a new use and lease agreement.
“We look forward to working with our partners at the city to finalize terms in the near future,” said United spokesman Charles Hobart.
American Airlines, O’Hare’s second- largest carrier, likewise said it’s “focused on” lease negotiations and “expects to complete” those talks before the lease expires in May.
That would allow “the lease — and not the ordinance — [ to] govern our operations, thus allowing us to continue to grow in Chicago,” said American spokesperson Leslie Scott.
Ald. Mike Zalewski ( 23rd), chairman of the City Council’s Aviation Committee, said Thursday he’s not certain whether the complex ordinance will be placed on the committee’s Dec. 13 agenda.
“I want to make sure all the aldermen have an opportunity to hear why it’s necessary and have plenty of time to understand it,” Zalewski wrote in a text message to the Chicago Sun- Times.