Mayor kills deal for private operator of Chicago port
The agency that runs Chicago’s Southeast Side port killed a proposal to turn it over to a private operator after Mayor Lori Lightfoot objected.
Members of the Illinois International Port District board unanimously voted down a proposal to negotiate a master lease with Savage Services, a transportation and logistics company based in Midvale, Utah. It amounted to an about-face for an agency that in March selected Savage as its preferred bidder for the job of revitalizing operations.
Board Chairman Michael Forde said Friday the mayor’s office voiced its objection and members agreed as a courtesy. “The mayor’s office was of the opinion that this was not in the long-term interests of the port,” Forde said.
He declined to offer a further explanation. The mayor’s office later issued a statement saying, in part: “After discussing the proposed transaction between the IIPD and Savage Services with representatives of the board, we have determined that the proposal is not in the best interest of the IIPD or the city. “The City of Chicago is committed to making continued investments that will maximize the port’s potential as a major shipping and transportation hub, while ensuring that any future development strategies are anchored in a robust engagement process to ensure the voices of the city and the surrounding community are represented.”
The port gets no tax money for ongoing operations but has relied on government help for expensive repairs. It has estimated its needs at more than $100 million, but it may get some of that out of the state’s recently passed capital improvements bill.
Its facilities include Iroquois Landing, where Lake Michigan and the Calumet River meet, operations at Lake Calumet and the Harborside International Golf Facility. A site near the golf course is among those being considered as a location for a Chicago casino.
Forde said the agency needs major improvements to its railroad tracks, dock walls and sheds.
“There are significant infrastructure needs. We will go on looking for ways to pay for them,” he said.
The master lease agreement, with an upfront payment for perhaps a 20- or 30-year agreement, was seen as one way of raising cash. But some critics, including Ald. Sue Sadlowski Garza (10th), said it looked more like a giveaway to private interests, such as the city’s sale of the Chicago Skyway.
The district has a nine-member board, five appointed by the mayor and four by the governor, although both executives are supposed to agree on all appointees. Forde, chosen by former Mayor Rahm Emanuel, said he is unsure if Lightfoot will make any changes to the board.
The port has struggled amid overall declines in shipping volumes on the Great Lakes but has reported some operational improvements the last few years. It collects about $4.8 million a year in revenue and in 2018 budgeted for net income of $233,000. Two years earlier, it lost $597,000 on revenue of $4.1 million.
It got a boost from the state in 2017 when lawmakers forgave a $15 million loan the agency owed.
Savage issued its own statement, calling itself “surprised and disappointed” by the board’s sudden change in course. “After many months, we were in the final stages of negotiating an agreement in good faith that would have had tremendous positive impact through our investment of tens of millions of dollars to revitalize the port, support the community and create hundreds of local jobs. We have not yet heard directly from the IIPD and don’t know the reasoning for their decision,” the company said.
Savage also said it could have helped the port take advantage of its strategic location close to rail, truck and marine transportation.