Asset sale could net Chicago Skyway investors $1 billion in profit

Canadian pension plans that control the Chicago Skyway are reportedly looking to sell their stakes at a handsome profit, thanks to drivers paying tolls that have risen steadily since the city leased it from private operators in 2005.

The Canada Pension Plan Investment Board and OMERS Infrastructure, which invests in a pension for Ontario municipal employees, are seeking buyers for their shares in Skyway, Bloomberg News reported Wednesday. Citing “persons with knowledge of the matter,” the report said the firms were hoping for a deal that would value the 99-year Skyway lease at $4 billion.

The companies and the Ontario Teachers’ Pension Plan bought the lease in 2015 for $2.8 billion and received approximately one-third of Skyway’s interest. The teachers’ pension fund reportedly plans to keep its share.

If the deal goes through, it would be another example of private investors benefiting from the sale of a public asset. The original investment group that acquired the Skyway lease paid the city $1.83 billion, only to sell it a decade later for a $1 billion profit while retaining the Skyway profits.

Former Mayor Richard M. Daley led the original sale of the 99-year lease in what became known at City Hall as the Great Chicago sell-off. The Skyway deal allowed operators to regularly increase tolls. The price for cars on the 7.8-mile shortcut from Chicago to Indiana is now $5.90, while prices for vehicles with more than two axles are much higher. Cars paid $2 in 2004.

The Canada Pension Plan Investment Board declined to comment, and the other companies did not respond to questions about the potential sale. The investors operate as Skyway Concession Co., whose CEO, Kristi Lafleur, did not respond to news.

The Skyway generated $114.3 million in toll revenue in 2021, up from $84.9 million in 2020 at the height of the pandemic, according to the latest audit for the city by accounting giant Deloitte & Touche Has. The Skyway investors distributed 36.3 million dollars among themselves last year.

The results of the most recent audits were provided to the Chicago Sun-Times by attorney Clint Krislov. As director of IIT Chicago-Kent’s Center for Open Government Legal Clinic, Krislov has reviewed dozens of transactions and produces an annual analysis of each year’s results.

To maintain his longstanding opposition to raising property taxes, Daley followed the Skyway deal by unloading Chicago parking meters and downtown garages.

Although parking meter rentals are the deal that councillors, and their constituents, love to hate, Krislov has argued that it “pales” in comparison to the Skyway deal.

If investors sell it now for anywhere near the $4 billion they hope to get, it would only add salt to the wound for Chicago taxpayers, Krislov said Wednesday.

“Just when you think it couldn’t get any worse, it gets worse. That’s really remarkable when you think about it. That’s another billion dollars in profit that the city didn’t get,” Krislov told the Sun-Times.

“It’s a lot worse [than the other asset sales]. This is a deal that has weathered COVID fairly well. The whole crossing from here to Indiana has remained a very lucrative toll bridge. Whether it’s due to COVID or lots of people moving to Indiana and coming to Chicago or going to the casino, this route has remained and will remain a very active and profitable tollway unless we stop using cars and trucks for transportation of people and things.”

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