Will port potential swell with private operator?
A rusted, unused ship sits near unused silos at the Illinois International Port District on Chicago's Southeast Side. The port's turnaround could help boost the local economy. (Nuccio DiNuzzo, Chicago Tribune)
The Port of Chicago's shipping berths and docks are crumbling, its piers outdated and underused, and large swaths of prime land sit vacant.
Nearly every long-term contract it has with tenants is vastly undervalued, and it has lost money in 10 of the past 11 years, in part because of alleged mismanagement, sloppy accounting and lack of oversight.
It employs just six people who are largely unable to make necessary repairs or adequately market the property to attract new customers.
Despite sitting on two prime parcels next to Lake Michigan, its location in the nation's third-largest city and having ready access to the largest rail hub in North America, the Port of Chicago has floundered and been treated like an afterthought for decades.
The Illinois International Port District "has fallen behind in its competitiveness, and we're very interested in revitalizing its place in the Great Lakes," said Rich Montgomery, vice president of development for the Broe Group.
Broe is the privately held Denver-based transportation and real estate company selected to take over the port's operations.
The Port of Chicago, Montgomery said in an interview last week, represents a "tremendous untapped opportunity."
In part, that might be because the port has been so poorly run, at least according to a scathing 155-page audit of the port released last week. In the report, the state auditor general detailed instances of widespread mismanagement, slipshod or nonexistent record-keeping, issuance of no-bid contracts for sizable purchases and generally poor supervision by the Illinois International Port District.
The Port District's relatively new chairman, Michael Forde, appointed by Chicago Mayor Rahm Emanuel, requested the audit, knowing it was likely to be critical.
"As the audit points out, the previous port board favored patronage over performance, and wasteful spending over profit," said Emanuel spokeswoman Sarah Hamilton. "That is no way to run a business and certainly no way to run and maintain a vital economic engine."
Many recommendations listed in the audit have been put in place by the new leadership at the port, Hamilton said.
Broe, which has operated a railroad at the port for 20 years, has experience running marine terminals and has international connections in transportation. If it gets the keys to the port and makes a sizable investment to upgrade facilities, it could turn a handsome profit in the years ahead, maritime experts say.
And though the Illinois International Port District, an agency run by appointees of the Chicago mayor and Illinois governor, stands to receive only a small percentage of that profit, handing over operation of the port for 62 years might be worth the risk for the economic spin off and jobs it could create, experts say.
Because the chronically underfunded Port District doesn't have the financial resources to make much-needed investments to the property, its options are limited.
Without a deep-pocketed partner willing to pour hundreds of millions of dollars into infrastructure and marketing, the Port of Chicago has little hope of reaching its potential, experts say.