In the last few years Chicago has become the epicenter of a national debate about the merits of turning over public assets to private corporations. It started in 2005, when city officials made a deal to lease the Skyway for 99 years to a pair of overseas firms for about $1.8 billion plus a guarantee they’d maintain it. It was the first privatization of a major highway in the United States, and it paved the way for others—including the Indiana Toll Road, leased for 75 years in 2006 for $3.8 billion. Supporters of these deals argued that they brought cash and infrastructure investment to strapped governments; skeptics worried that the public would pay higher tolls while losing future revenue and control of the assets.
Yet Daley continues to argue that all of the lease agreements have been good for the city. He’s even said that he’s open to privatizing other assets, including Chicago’s water system and waste-sorting centers. And last week Republican gubernatorial hopeful Jim Ryan jumped on the bandwagon, floating the idea that privatizing the state tollway system could finance much-needed infrastructure improvements.
Yeah, I think we will, because there are situations where you have private operators who can do a better job of managing certain types of operations, and where it’s in the financial interest of public entities to turn the operations over, realize the value, and use it to meet some other needs. So on the one hand the current economic condition has clearly made it harder to do some deals—I mean, Midway is an example of that. On the other hand, it has re-emphasized the fact that public entities are often without resources to do things they really need to do. So the desirability of doing good deals, if they can be done right, is not reduced.
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I once said to someone, what would Old Orchard be like if it were run by the village of Skokie? The answer is that I think it would be all right, but I don’t think it would be the quality that it is. There are areas like that where you have people who have learned how to do it and do it well, and not to take advantage of that, if you can do it on financially attractive terms, seems to me to be a mistake.
When we did the underground garage privatization here, one of the striking things to me was realizing that those garages really were underpriced in comparison to private garages. And for no good reason—I mean, nobody thinks it’s a good thing to subsidize people who want to drive downtown instead of taking public transportation. It was because to raise parking rates in the underground garages you have to go, in that case, to a combination of the City Council and the Chicago Park District. Both have a political, visceral resistance.
No, I don’t think it was inherently a bad idea. I think it was obviously fouled up in the transition—I mean, the mayor has said that, and “fouled up” is probably a polite way to put it. I think financially it’s clearly a very good deal for the city.
