705034308 BEFORE THE FEDERAL AVIATION ADMINISTRATION OFFICE OF THE ASSOCIATE ADMINISTRATOR FOR AIRPORTS WASHINGTON, DC

REVISED PRELIMINARY APPLICATION UNDER 49 U.S.C. §47134 FOR CHICAGO MIDWAY INTERNATIONAL AIRPORT

All correspondence with respect to this Revised Preliminary Application should be addressed to the following contacts: Lois Scott, Chief Financial Officer City of Chicago 33 North LaSalle Street, Suite 600 Chicago, IL 60602 (312) 744-8674705034308 SECTION 1 PARTIES TO THE TRANSACTION A. Airport Proposed to Be Leased Under the Pilot Program Chicago Midway International Airport (“Midway Airport”) B. Public Sponsor and Contact Information Public Sponsor: City of Chicago 121 North LaSalle Street Chicago, IL 60601

Contacts: Lois Scott, Chief Financial Officer City of Chicago 33 North LaSalle Street, Suite 600 Chicago, IL 60602 (312) 744-8674 lois.scott@cityofchicago.org Rosemarie Andolino, Commissioner Chicago Department of Aviation 10510 W. Zemke Circle Chicago, IL 60666 (773) 686-8060 rosemarie.andolino@cityofchicago.org

C. Proposed Private Operator To be provided in the Final Application. D. Private Operator Partnership/Joint Venture Information To be provided in the Final Application, to the extent applicable. E. Citizenship of Private Operator To be provided in the Final Application. F. Statement of City’s Authority to Lease Midway Airport

See Attachment Ato this Revised Preliminary Application.705034308 SECTION 2

CITY’S GOALS AND OBJECTIVES FOR PROPOSED TRANSACTION The City’s initiative to lease Midway Airport will be designed and implemented in a manner to achieve the following goals and objectives: Increased Operating Efficiencies; Improved Customer Amenities and Satisfaction: The proposed lease of Midway Airport will improve operating efficiency and provide for the highest levels of safety and security, through the ability to leverage the “best practices” knowledge and expertise of the Private Operator. In addition, the Private Operator will increase efficiency of airport operations and improve comfort and responsiveness for airport users. The experience and expertise that the selected Private Operator must possess will also allow it to make innovative and “best practices” business decisions regarding airport operations and management. Travelers’ Bill of Rights: The lease agreement and accompanying transaction documents will obligate the Private Operator to comply with a “Travelers’ Bill of Rights” specifying requirements for a “best in class” passenger experience. Labor and Employee Protections: The lease of Midway Airport will ensure fair and equitable treatment of all City airport employees. No collective bargaining agreement in effect on the effective date of the proposed long-term lease for Midway Airport will be abrogated. In addition, the City and the Private Operator will comply with all of the employee and labor protection provisions mandated by the Illinois General Assembly in Public Act 94-750 (a copy of which is included in Attachment A, the statement of the City’s authority to lease Midway Airport). Public Comment, Review and Evaluation: The City is committed to full transparency that will ensure that all aspects of the process for implementation of the proposed lease of Midway Airport, the terms of the lease agreement, and the qualifications of the proposed Private Operator are consistent with the interests City, its residents and taxpayers. A independent advisory panel will be established, with representatives from the City Council and labor, business and civic leaders. The advisory panel will be asked to select an independent advisor to review all aspects of the proposed transaction and to deliver a written report to the City Council and the public prior to Council consideration of any proposed lease of the Airport. The City will also provide additional opportunities for the general public to learn about and provide input and comment regarding the proposed transaction, including through access to a dedicated website containing information about the proposed transaction and the status of the solicitation and bidding process described above. In addition, the City will consult with, and provide information to, airport users about the proposed transaction throughout the solicitation and bidding process described above. The City expects that these various transparency and outreach efforts will complement the public comment and review process required by the FAA under the Pilot Program regulations.705034308

Any lease agreement that is executed by the City at the conclusion of solicitation and bidding process will be subject to the requirements of the City’s Asset Lease Agreement Disclosure Ordinance (Section 2-32-035 of the Municipal Code of Chicago). Oversight of Private Operator: The City will comply, and ensure that the Private Operator is required to comply, with all applicable provisions of Public Act 94-750 (a copy of which is included in Attachment A, the statement of the City’s authority to lease Midway Airport), specifically including the limitation on any expansion of airport property for runway purposes;the continued compliance with applicable ordinances governing contracting with minorityowned and women-owned businesses and prohibiting discrimination and requiring appropriate affirmative action; and requiring that any lease must be undertaken in accordance with all appropriate federal laws and regulations. In addition, the City is committed to ongoing and rigorous oversight of the Private Operator’s compliance with the terms and conditions of the lease agreement and will require regular operational and financial management audits of the Private Operator’s performance under the lease agreement. Safety and Security Requirements: Rigorous safety and security procedures will be maintained, in accordance with all applicable federal, state and local requirements. The Private Operator will be certified in accordance with Part 139 standards and all other applicable FAA and Transportation Security Administration (TSA) standards for airport operators and the TSA will be required to approve the Private Operator’s airport security program. Passenger and luggage screening will continue to be handled by TSA personnel. “Premises security” will continue to be provided by the Chicago Police Department and fire protection will continue be provided by the Chicago Fire Department, all in coordination with the City’s Office of Emergency Management and Communication.

Environmental Considerations: The City will require that the Private Operator acts to ensure that any adverse effects on the environment from airport operations are mitigated to the same extent as is currently required at Midway Airport. Further, the Private Operator will be responsible for other environmental sustainability initiatives, such as air and water quality, recycling and various LEEDs programs to ensure that Midway Airport remains a “green airport.” Economic Benefits for the City: The net proceeds derived by the City from the lease of Midway Airport will be allocated by the City for construction and maintenance of critical infrastructure projects within the City. As such, the proposed transaction will directly benefit the City and its residents in the form of increased capital expenditures for essential infrastructure needs, thereby enhancing its continued ability to provide essential City services. Future Capital Improvements: The Private Operator will be required to maintain, improve and modernize Midway Airport, in accordance with comprehensive standards that will be set forth in the transaction documents. Compliance with these requirements will actively be monitored by the City. Further, the City will obligate the Private Operator to satisfy detailed capital investment requirements set forth in the transaction documents. To assure compliance with these requirements, the Private Operator will be required regularly to submit detailed, multi-year capital improvement plans for Midway Airport to the City and the705034308

airlines using Midway Airport. The Private Operator will also be required to ensure that Midway Airport is always in full compliance with currently applicable safety and security standards, with a corresponding obligation to provide for necessary capital improvements to satisfy such standards. Public Use and Competition: The lease of Midway Airport will be implemented in a manner that ensures that it continues to be available for public use on reasonable terms and without unjust discrimination; the interests of general aviation users will not be adversely affected; and there will no unfair or deceptive trade practices or unfair methods of competition. The City will also require the Private Operator to comply with all obligations set forth in thecurrently approved Competition Plan for Midway, including continued adherence to the procompetition practices described in the Plan regarding “Domestic Gate Procedures” and “International Gate Procedures.” Pursuant to FAA requirements, the Private Operator will be required to file a update to the Competition Plan in respect of the execution of a new use agreement (as described below). New Rate-Setting Methodology; Certainty and Stability for Airlines: A key element of the proposed transaction will be a new use agreement between the Private Operator and the signatory airlines that will replace the current use agreement between the City and the signatory airlines. It will replace the residual rate setting arrangements currently in place at Midway Airport with a rate-setting methodology that will provide for long-term certainty and favorable levels of rates and charges. Such arrangements will improve the competitive position and growth prospects for Midway Airport, for the benefit of airlines, airline users and residents of the City and the Chicago Metropolitan Area.705034308 SECTION 3 PROCESS AND TIMETABLE The City’s proposed process and timetable for the lease of Midway Airport is summarized below. The City welcomes input, comment and suggestions from the FAA at each step in this process. New Use Agreement: Subsequent to the filing of this Preliminary Application, the City will expects to execute a memorandum of understanding with the airlines operating at Midway regarding the terms of a new use agreement that will become effective upon the closing of the proposed transaction. The City and the airlines will execute this new use agreement prior to beginning the formal bidding stage for the lease of the Airport. This new use agreement will include the agreement of the airlines to approve all necessary regulatory exemptions that are needed for the consummation of the transaction under the Pilot Program, subject to the Private Operator’s assumption of the terms of the new use agreement. Issuance of Request for Qualifications: The City expects to issue a Request for Qualifications (“RFQ”) on or about January 18, 2013. The RFQ will be posted on City websites and will be forwarded directly to potential bidders identified by the City’s financial advisers. The RFQ will also be forwarded to all interested parties upon request. Responses to RFQ; Determination of Qualified Respondents (First Quarter, 2013): The City will require that all responses to the RFQ be submitted within a set period after the issuance of the RFQ. After thorough review of all responses, the City will determine which of the respondents are qualified and will notify all respondents accordingly. Confidential Information Memorandum (First Quarter, 2013): Concurrent with the determination of qualified respondents, the City will make available to such qualified respondents a Confidential Information Memorandum containing detailed information about Midway Airport, its operations and finances and relevant legal and regulatory considerations. Information Meetings; Data Room (Second Quarter, 2013): A series of informational meetings will be scheduled with qualified respondents. At these meetings, City officials and advisers will provide details concerning the bidding process and expectations for submittals and a detailed briefing on Midway Airport. In addition, there will be a tour of airport facilities as well as more focused briefings on airport facilities, assets, operations and maintenance and finances as well as the applicable requirements for obtaining required regulatory approvals and certifications from the FAA and the Transportation Security Administration (“TSA”). The City would welcome FAA and TSA participation in these information meetings. In addition, a password-protected “virtual” data room with relevant financial, legal, contractual and historical reports and documents will be established. Draft Lease Agreement: After selection of qualified respondents to the RFQ, the City will make available, through the data room: a draft lease agreement, to be executed between the City and the Private Operator; and, when completed, the new use agreement for Midway Airport, to become effective upon consummation of the transaction. The City anticipates that the draft lease705034308

agreement will be revised in response to comments received from qualified respondents. The final version of the lease agreement will be circulated prior to the date for submission of bids. Selection of Winning Bidder (Third Quarter, 2013): The City anticipates selecting as the winning bidder the qualified respondent that proposes the highest value to the City for entering into the proposed lease agreement. All qualified respondents will be required to submit an acceptable business plan prior to final bidding. City Council Approval of Authorizing Ordinance (Fourth Quarter 2013): After selection of the winning bidder, the Chicago City Council will, acting under the City’s constitutional home rule powers, consider the proposed transaction that will include an ordinance authorizing the City to execute the lease agreement, as well as authorizing various collateral actions in connection with the proposed transaction. City Council review and evaluation of the proposed lease transaction will be undertaken in accordance with the requirements of Section 2-8-035 of the Municipal Code of Chicago. In addition, as noted in Section 2 above, an independent advisory panel will appoint an independent advisor to support the City Council in its review and evaluation of the proposed transaction. (The City will also obtain approvals as may be required pursuant to an interstate airport compact between the City and the City of Gary, Indiana.) Submit Final FAA Application (Fourth Quarter, 2013): The City will submit its Final Application, containing the information required in the FAA Application Procedures and together with any supplemental information requested by the FAA, promptly upon its selection of the successful bidder and approval by the Chicago City Council. The City expects that the winning bidder will work closely with the FAA and TSA to ensure that the winning bidder obtains all required regulatory approvals and certifications to operate Midway Airport. Receive Final FAA Approval: The City of Chicago would hope to receive FAA approval of the Final Application upon completion of the review and public comment process required under the Pilot Program regulations. Closing: The City expects to achieve financial closing for the transaction no later than the end of the first quarter of 2014.705034308 SECTION 4 AIRPORT PROPERTY DESCRIPTION Parcel Map Attached is a copy of the current Airport Layout Plan for Midway Airport. Midway Land Acquisition Summary The history of Midway Airport began in 1924 with a 40 acre private facility known Kemp’s Airstrip. Over the years the Airport has grown to its present expanse of approximately 750 acres. Attached is a graphic illustration of the evolution of the Airport over the years through 1991. The “Square-Mile” (Parcel MDW) was purchased by the City in 1982 from the Board of Education, transferring 635 acres of land to the Airport that had previously been leased. This property was acquired to guarantee compliance with FAA grant assurances for the Airport that were in jeopardy after expiration of the City’s lease in December 1980. Prior to the above major acquisition of the Square Mile, three events occurred between 1940 and 1960 that influenced prior expansion of the Airport. The first was the relocation of the Belt Railway Line in 1942. This resulted in nearly one square mile of uninterrupted property being available for Airport use. The second event was the initiation of a land acquisition program by theCity in 1948. The focus of the program was to acquire land adjacent to the northeast quadrant ofthe Square Mile for the relocation of Cicero Avenue and construction of an auto parking lot. The third event was demolition of Hale School in 1957. This allowed the City to lease the remaining 20 acres of land in the southwest quadrant from the Board of Education. By 1960, the City leased the entire Square Mile with the exception of the Illinois Army National Guard site and hadacquired nearly ten acres of land adjacent to the Square Mile. The acquired real property included Parcels A, B, C1-C20, 1-6, 8-11, 12A,B&C, 13, 16-18, and 20-23. In the early to mid 1980s, after acquisition of the Square-Mile, the City embarked on another land acquisition program. Consistent with the 1984 Master Plan recommendations and the requirements of the Southwest Transit Project, the City acquired an additional 73 acres of land between 1986 and 1991. This acquisition included Parcels 24, 26-30, 31A&B, 32-46, 48-49, 51- 53, 55-56, 59, and 61-62. These acquisitions included property necessary for the relocation of Cicero Avenue, implementation of the required terminal area envelope, and development of the CTA’s Midway Station of the Southwest Transit Project. In addition, properties voluntarily offered for sale and located adjacent to the Airport, were also acquired during this period. The next major acquisition of property began in the mid to late 1990s as the Airport began to acquire property for the Midway Airport Terminal Development Program. This included Parcels 69, 72-74, 77-78, 82, 85, 87-88, 91-92, 95-129. Since this time, the airport has acquired various properties located within the Runway Protection Zones at Midway.

Additional information can be found in the attached charts.705034308 SECTION 5 AIRPORT FINANCIAL STATEMENTS

2011 Audited Financial Statements705034308 SECTION 6 REQUEST FOR QUALIFICATIONS

See Section 3 for information about the timing of the issuance of the RFQ.