32nd Ward Press Release – O’Hare T5 Bid
Comparison of O’Hare Terminal 5 Concession Responses (Including Per Passenger Data)
T5 Lease Approved

32 Ward Alderman Scott Waguespack cautioned fellow aldermen not to “sell the city short” and approve the concession contracts for O’Hare Airport saying “the contract bidding process fails the most basic business standards.” On Thursday, July 28, the City Council voted to award the billion dollar concessions lease at O’Hare’s International Terminal No. 5 to Westfield Inc. of Australia.

Eight aldermen sent a letter on June 8, 2011 to the Aviation department and the Mayor’s office asking for an outside comparative review of the concessions contract and the bidding process before the Council vote, after several council members cried foul with the contract.

“The city’s record on long term leases of our assets has not been great, so the public needs to have the opportunity to evaluate whether the city is getting a good deal before long-term leases are approved,” says Alderman Waguespack. “Our letter specifically asked that official bids from all three bidders be made available to aldermen before the vote; however, it took repeated requests over the past 4 weeks to get critical documents that, when finally released, were illegible or incomplete. Only after additional requests were the documents released in full, just hours before the Aviation Committee was scheduled to vote on the contract. Unfortunately, the most important projections sections were blurred and unreadable.

Because the Aviation Department did not provide an independent analysis of the bids, and refused to release the bid for Westfield until the last possible moment, Waguespack and fellow alderman John Arena-45th Ward, completed their own review which is available online at www.ward32.org. “If Aviation had done a thorough analysis of the bids, they would find that Westfield is paying less in rent revenues to the city compared to the other bidders which will dramatically drive up costs to passengers and airlines flying out of T5.

“Using Westfields own projections, we have found that the other bidders would generate 20-50% more in revenue. We also found that Westfield is also offering only $29 per passenger that must pass through the terminal, far short of the other two bids and 45% less than the revenue they presently make at JFK’s international terminal. Our comparison of the total revenues shows that Westfield ranked third in terms of compensation to the city, yet was given the highest mark by the Aviation department. While the city is not required to pick the highest bidder, the Aviation Department needs to treat O’Hare as a revenue asset, and not shortchange the city in this lease.

“I don’t believe taxpayers think due diligence is ever a waste of time or money,” says Alderman Waguespack. The Alderman believes the Council should gave required an independent cost-benefit analysis and not sign a 20-year lease with only one opportunity to get out of the contract after ten years.” The 20-year lease, unheard of in airport concessions (ACI-NA 2010 report average concessions lease is 5-7 years despite amortized build out), will be the longest term lease in the U.S. if signed. The lease terms will undermine the City’s status in this highly demanding space and does not allow the city to capture appropriate revenue in the improving economy.

Waguespack concludes, “This city deserves transparent, responsible government, especially in a budget crisis and this is just not how a world class city should run a world class airport. The City missed an opportunity to maximize this public asset.

The Alderman suggests three things to prevent such leases from taking place in the future: passing his proposed Asset Lease Protection Ordinance to prevent losses of city assets, like the parking meters, the City Council Contract Oversight Ordinance to allow council members to review contracts, and create an independent budget office. These measures would ensure a thorough review process and safeguard against the city entering into shortsighted agreements.