Proponents of P3s Get Boost with Chicago Midway Airport
The Midway Investment and Development Corporation (”MIDCo”), comprised of Citi Infrastructure Investors, Vancouver Airport Services (YVRAS) and John Hancock Life Insurance Company just announced that it has won a $2.5 billion, 99-year lease contract to operate and develop the first privatized major airport in the U.S. - Chicago Midway Airport. “This contract marks a milestone in the growth of our company, and is a clear example of how we can leverage our success at home to develop the best airports in the world,” said Larry Berg, President and Chief Executive Officer, Vancouver Airport Authority. George Casey, President and Chief Executive Officer for Vancouver Airport Services adds, “The experience we have in transitioning airports from government control to private sector management will benefit the operation at Chicago Midway Airport.”
These latest developments involving Chicago Midway Airport may serve to jump-start other public-private partnership (P3) projects in waiting, from Florida’s Alligator Alley to the Pennsylvania Turnpike…and most recently to New York’s Tappan Zee Bridge. Proponents of P3s say the lease approach could provide financial relief to state governments struggling with foreclosures, ballooning pension obligations and reduced tax bases, according to the WSJ. Since 2005, eight states have enacted legislation enabling officials to sell or lease highway or transit infrastructure, bringing the total to 25 states, according to the U.S. Department of Transportation.
Right now, infrastructure assets are luring investors around the world. The WSJ states, “As much as states need money to fix their roads and bridges, Wall Street firms are eager to supply it. With the industry’s core businesses in distress from the credit crisis, so-called infrastructure funds — which have already raised more than $160 billion, according to Morgan Stanley — have emerged as one of the most promising growth areas in years.”
Amid the growing trend, executive search firm, A.E. Feldman, says infrastructure finance jobs exist for candidates with backgrounds in investment banking as well as experience in analyzing and executing structured financings. The most sought after candidates are those with experience in infrastructure transactions and civic engineering. Additionally, legal jobs may open up for attorneys with expertise in global project development and complex financial transactions.
The lease of Chicago Midway Airport to The Midway Investment and Development Corporation could pave the road for more P3s in the U.S. Most recently, New York Transportation Commissioner, Astrid Glynn, announced an ambitious $16 billion plan to replace the 52-year-old, 3-mile long Tappan Zee Bridge which spans the Hudson River between South Nyack and Tarrytown.
According to The Journal News, the new bridge itself is projected to cost $6.4 billion, with the development of rapid-transit bus routes on each side of the Hudson to feed it estimated at $2.9 billion. An additional $6.7 billion would be used for commuter-rail improvements that would provide direct service across Rockland County, over the river and eventually to Grand Central Terminal. The report also states the Transportation Department plans to release a preliminary study on funding options in mid-October and hired Merrill Lynch to evaluate the possibilities.
The first place the Transportation Department plans to look is to the federal government, reports The Journal News. Congress is due to pass a new six-year plan to distribute highway and transit aid to the states next year. This year, the report adds, New York is getting about $3.1 billion in road and transit assistance from Washington. But given the current economic crisis, the hefty price tag of the new bridge and the New York’s overall debt of $52.5 billion (this highest of any state expects California), The Journal News quotes Glynn as saying the state must consider privatizing the bridge – “selling all or part of the ownership to a private company, which would use tolls to pay for the bridge construction and presumably make a profit.”
Meanwhile, in an effort to bride a funding gap of nearly $500 million per year in Pennsylvania’s transportation investment plan, the state’s Governor, Ed Rendell, is pushing for the lease of 500-miles of the PA Turnpike system. A consortium led by Spanish infrastructure company Abertis offered $12.8 billion back in May to lease the PA Turnpike for 75 years. Although the consortium had been named the winning bidder, the lease required the approval of the state Legislature, which did not act on the proposal before taking a summer recess. The group’s offer to lease the turnpike (which was extended to September 30th from July 20th) recently expired, reports the Pittsburgh Business Times. In response, Rendell says he remains committed to “pursuing legislation to allow a lease of the turnpike.” The Pittsburgh Business Times quotes Rendell as saying, “should such legislation be enacted, it would be my hope to execute a lease with the Abertis/Citi team.”
A.E. Feldman’s Project & Infrastructure Finance and Legal divisions are on top of global trends in infrastructure investment as well as the latest privatization efforts in the U.S. The recruiting firm invites both investors and companies that own or operate infrastructure assets to contact its President, Mitch Feldman, its CEO, Carol Schwam, and its highly specialized team of executive recruiters directly to open up a dialogue about the array of issues they face and those they anticipate in the future. Candidates seeking information about existing and future job opportunities in project and infrastructure finance are also encouraged to call or e-mail. According to Mitch Feldman, “Our lines of communication are open.” Contact Mitch Feldman, and the firm’s expert recruiting teams here.
