A proposed airport south of Chicago is a risky idea because demand doesn’t justify the need, and the state’s own analysis of the project is “discouraging.”
Those aren’t warnings from opponents of the plan – the comments come from developers and financiers who are interested in building and running a new regional airport in Will County, in and near Peotone. What’s more, if an airport is built, the state needs to assume the risk if revenue doesn’t live up to expectations, private groups told state officials in documents obtained by the Better Government Association.
Last September, eight groups – made up of investment, construction and other firms – responded to an invitation by then-Gov. Pat Quinn to submit their ideas through a questionnaire about privately building and running a public airport south of Chicago.
They ended up raising a number of red flags about the project, albeit politely.
“We believe there is significant market appetite for infrastructure projects,” Spain-based investor Ferrovial Aeropuertos said to the Illinois Department of Transportation, the state agency that oversees Peotone planning and reports to the governor. “However, given the risks involved in this particular project, we believe reaching an optimal financial structure would be challenging.”
“We believe the process is in a very early stage to be able to have more opinions and comments on it,” Ferrovial corporate development project manager Ionut Doldor told the BGA via email.
The comments from Ferrovial and others may give weight to opponents who say there is not a need for the proposed airport and building it would be a waste of taxpayer money.
“What they’re saying is exactly what we’ve been saying for 25 years: There’s no demand,” said George Ochsenfeld, a longtime opponent and activist from Monee. “It’s never been a market-driven project. It’s been a politically driven project.”
Some politicians haven’t been shy about pushing the project to steal some of the economic thunder from O’Hare Airport and appeal to job-hungry voters.
Quinn and his transportation department spent tens of millions of dollars last year buying up additional property for the airport. While the airport is an idea that’s been around for decades, Quinn’s statements and actions suggested there was new momentum for the plan. He campaigned for re-election promising a Peotone airport would be built. He also said he believed private investors would line up to pay for it. Now Gov. Bruce Rauner’s administration is considering whether to go forward with airport plans.
After Quinn asked in August for ideas for developing the airport, the interested parties responded in writing, touting their expertise but also pointing out big hurdles for the plan. Multiple companies warned that the state needs to show that airlines are clamoring for a third major Chicago-area airport, something that Illinois transportation officials have been unable to do. In fact, the state needs to have written commitments from at least one airline to show that there is demand, one financial firm said.
“Will sufficient numbers of passengers travel through the airport to generate revenues and eventual equity returns for private sector investors?” investment bank William Blair & Co. responded in a document. “The approach of ‘build it and they will come’ has proven difficult in a number of airport developments around the U.S. and the world.”
We obtained the responses through an Illinois Freedom of Information Act request that we filed in October. IDOT officials argued for months that the documents were exempt from open-records laws because turning them over to the BGA may upset the procurement process. We argued that the documents are not proposals or bids for any contract. In late January, after Rauner took office, the department released the documents.
As we previously reported, major U.S. airlines, including American and United, have actively lobbied against a third airport because they say it would create unnecessary competition in the market.
One investment firm, Canada-based SNC-Lavalin, criticized the state transportation department’s own financial feasibility study. “This report is discouraging and IDOT should state how it will help ameliorate a non-market return on private sector investment,” the firm said. An SNC-Lavalin representative declined to elaborate.
Chicago-based Walsh Construction Co. is interested in building the airport but not operating it. “Walsh Investors, similar to many other experienced [public-private] developers, does not look to absorb demand risk,” the company said in its response to the state.
A joint response from Chicago-based Clark Construction Group and its affiliate Maryland-based Edgemoor Infrastructure & Real Estate also proposed a structure in which “the private party would not retain revenue risk from the airport.”
The other respondents included Pennsylvania-based Balfour Beatty Investments, Lansing (Illinois) Airport Development President Steven Leaven, and a group that includes A. Epstein and Sons of Chicago. Representatives for Epstein and Balfour Beatty didn’t return calls for comment, while Clark, Walsh and William Blair officials declined to comment.
Leaven, the only respondent to discuss the project with us, was by far the most enthusiastic about an airport’s prospects. Leaven said he believes there is demand for a freight-only airport at the Peotone site.
“Of course there’s risk in any project,” Leaven said. “I may sound very bullish on this because I have done the work” to research the plan. Leaven said he has potential investors for developing and operating an airport, though he’s not disclosing names.
While Peotone was championed by Quinn, Rauner has been more guarded about his intentions. All major construction projects are on hold after Rauner issued an executive order in January.
“We continue to review the [airport] responses and subsequent feedback and are sharing that information with the new administration,” a transportation department spokesman said. “The project remains under review at this time.”
Michael Boyd, a Colorado-based aviation consultant and longtime critic of the decades-old Peotone proposal, said the private-sector responses further show how Peotone is “an embarrassment for Illinois – it’s bad planning.”
This column – a regular feature called The Public Eye, appearing on the Chicago Sun-Times web site – was written and reported by the Better Government Association’s Brett Chase, who can be reached at firstname.lastname@example.org or (312) 821-9033.
Image credit: Residents opposed to an airport in the Will County village of Peotone display protest signs around the area. / Photo by Brett Chase, BGA