CHICAGO -- Eighteen years ago, Richard M. Daley went into the family business, which is the business of being mayor of this city. Back then, he hardly could have imagined that he would become an accomplished practitioner of today's new wrinkle in public finance, here and elsewhere. He says his father, who died in 1976, would approve, but one wonders.
Richard J. Daley, who was mayor from 1955 until his death, was a builder. He thought of urban success the way many mayors then did and still do, as the improvement and enlargement of the city's physical assets -- bridges, roads, public housing, etc. Today, some mayors and governors are discovering the wisdom of, in effect, cashing in municipal or state assets.
That is why two years ago Chicago became the first city to sell a toll road. Actually, it has leased it for 99 years, which is much the same thing as selling it. The 7.8-mile, six-lane Skyway goes from the Indiana Toll Road (which the state of Indiana last year leased for 75 years to a Spanish-Australian group for $3.85 billion) to Chicago's Dan Ryan Expressway. Skyway was built in the 1950s to bring workers and material to and from the steelworks on the South Side. Most of the steelmaking has gone elsewhere, but Skyway was still a sufficiently attractive investment to have drawn $1.83 billion from the same consortium that leased the Indiana Toll Road.
Now, 99 years is a long time. Ninety-nine years ago the Cubs won the World Series; things change. But that is for the consortium to worry about. Meanwhile, the city has fewer immediate worries because of the one-time infusion of $1.83 billion. The money has financed a $500 million long-term reserve and a midterm reserve that has (note the carefully crafted noncommitment) "mitigated the need to raise taxes over the next eight years." "Mitigated," indeed.
Some of the $1.83 billion has been used for city services, and some has been used to retire city debt -- which has caused the three major credit rating agencies to upgrade the city's rating to its highest level since 1978. This makes it cheaper for Chicago to borrow money, thereby increasing the value to the city of the lease arrangement.
The city also has leased, again for 99 years, four underground parking garages for $563 million -- $61,342 for each of the 9,178 parking spaces. What probably will be next? Midway Airport, which is used by 11 airlines and almost 18 million passengers a year.