Aldermen OK borrowing $ 4 bil. for O’Hare project
Bonds to be paid off by increased landing fees and terminal rents
Mayor Rahm Emanuel’s $ 8.5 billion O’Hare Airport expansion plan — and the $ 4 billion borrowing needed to get it started — are now cleared for takeoff at Wednesday’s City Council meeting.
There’s nothing a Chicago mayor loves more heading into a difficult re- election campaign than a massive public works project that provides thousands of jobs and billions of dollars in contracts to dole out to allies and campaign contributors.
Emanuel will have that marquee project, thanks to Monday’s vote by the City Council’s Finance Committee.
Aldermen authorized $ 4 billion in bonds paid off by the increased landing fees and terminal rents baked into new airline lease agreements. South Side Ald. Leslie Hairston ( 5th) cast the only “no” vote because she’s holding out for a list of minority law firms tied to the deal.
Senior managers on the massive borrowing will be JPMorgan Chase, Citi Bank and Loop Capital Markets run by longtime mayoral ally and stadium authority member Jim Reynolds.
Minorities, women and veterans are expected to receive 39.6 percent of total underwriting revenues.
Chief Financial Officer Carole Brown said the precise composition of each team will depend on whether market conditions dictate “one big deal” of $ 4 billion or “four smaller deals” of $ 1 billion apiece.
Already, O’Hare has $ 8 billion in outstanding bonds issued to build new runways and make other airfield improvements. Those bonds carry an A- rating by Standard & Poor’s and Fitch and A- plus by Kroll.
Under questioning from Ald. John Arena ( 45th), Brown assured aldermen there is no danger to adding “as much as $ 9 billion” to that mountain of airport debt.
“Airport bonds are rated based on kind of the strength of the airlines that service it, [ passenger] volume and things like that,” Brown said. “We believe O’Hare remains a strong airport credit.”
Brown said the senior managers were chosen based on their willingness to diversify a team long dominated by major white players who packed the City Council chambers Monday.
That was not enough to satisfy Ald. Gilbert Villegas ( 36th), chairman of the City Council’s Hispanic Caucus.
Villegas demanded to know why Hispanics, Chicago’s second- largest racial or ethnic group, are in line for only a 13.5 percent share and why there is no Hispanic firm in the all- important role of senior manager.
“This is not your first rodeo, but we keep seeing the same horses,” Villegas told Brown.
“Here’s a $ 4 billion opportunity and, once again, we’re getting the short end of the stick.”
Brown countered there are only “four Hispanic firms in the country that do underwriting.”
“Those four firms . . . are in practically every deal that the city underwrites,” Brown said. “
Two years ago, the City Council came within one vote of blocking a $ 3.5 billion O’Hare Airport bond issue, delivering a powerful message about the lack of minority participation.
But Ald. Roderick Sawyer ( 6th), chairman of the Black Caucus, said Monday he has no desire to stop the gravy train from leaving the station.
“I want to make sure this deal goes forward. I mean — this is a big deal. It will empower a lot of us — contractors, professional service people and all the like,” Sawyer said.
Sawyer and Villegas instead plan to settle for creation of an oversight commission to make certain minorities and women get a fair share of the bonanza of airport jobs and contracts.
The City Council’s Aviation Committee is scheduled to authorize that oversight commission on Tuesday, setting the stage forWednesday’s full Council vote on the entire project.
“If we stay on top of it and make sure that we’re vigilant and watch it consistently, I think it’ll go well,” Sawyer said.