Investors gave the city over $1.8 billion a decade back to lease the Chicago Skyway for 99 years, and now the rights for running the privatized highway and collection of tolls have been sold for $1 billion more than the real cost.
On Friday, a consortium of 3 main Canadian pension plans made an announcement that it has decided to fork over $2.8 billion to take over the company, holding the deal to run the Skyway until 2104.
As a result of the sale, the motorists, who use the 7.8-mile-long toll road on the South Side are not likely to see any alterations as the schedule of toll increases was laid out under the long-term lease deal that the City Council approved 10 years back.
As it was the first main privatization of a city asset, the administration of then-Mayor Richard M. Daley and aldermen passed the Skyway deal.
The original Skyway concession company was a joint venture of Spain’s Cintra Infraestructuras and Macquarie Group of Australia. The $1.83 billion payment done by them in January 2005 was about $1 billion more than the next highest proposal, prompting speculation that they were overpaid by investors.
With 89 years left on the contract, Cintra and Macquarie made an announcement in June that they were looking to sell out.
As per a joint statement from the 3 entities, the buyers are a consortium, including the Canadian Pension Plan Investment Board, the Ontario Municipal Employees Retirement System and the Ontario Teachers’ Pension Plan. In the Chicago deal, each will have a 33.33% stake.
The managing director and head of infrastructure for the Canada Pension Plan Investment Board, Cressida Hogg, said, “Skyway represents a rare opportunity for us to invest in a mature and significant toll road of this size in the US”.