CHICAGO - Chicago is violating several federal statutes -- including anti-trust laws and interstate commerce regulations -- by charging tolls that raise money exceeding what is needed to maintain the Chicago Skyway and cover debt service, an attorney representing two skyway users argued before a federal appellate court panel Thursday.
The attorney for two skyway users made the arguments in an attempt to keep alive a federal lawsuit first lodged against the city in 1998 for charging what they contend is an "excessive" toll and using bond proceeds to pay for other transportation projects.
A federal court dismissed the case last year. A similar lawsuit filed by the skyway users in state court suffered a similar fate last year and is also currently under appeal. At the heart of the lawsuit is the city's use of $52 million from a $183 million skyway revenue bond issued in 1996 to finance non-skyway transportation projects.
The lawsuit claims the city impedes interstate commerce in violation of the U.S. Constitution because it charges an excessive rate beyond what is needed to maintain the road. "The city creates a tariff, an impediment to travel," attorney Lee Schwartz told the appellate panel in Chicago.
The lawsuit also claims the city violates anti-trust rules because the excessive charge interferes with competition among the various travel routes. The complaint also asserts that the city violates other federal laws that limit tolls on highways which have received federal funding assistance.
City attorney Julian Henriques Jr. challenged the anti-competitiveness charges, arguing that the skyway competes with several other highways and expressways in the area and that keeps the city from raising the rate to a figure that could be considered excessive.
"The city could not charge a $3 or $4 or $5 toll because it would lose all its ridership," Henriques said. The current toll for the 7.8-mile road that links the southeast side of the city to northwest Indiana is set at $2.
Henriques also argued that Chicago is not subject to interstate commerce laws in regards to the skyway because of its role as the operator, or proprietor, of the skyway, and not as a regulator. The city is therefore considered a "market participant" and commerce laws do not apply to governments when they serve in such a role.
The presentation of oral arguments comes as the city is preparing a new skyway bond issue, according to sources. Chicago's chief financial officer Walter Knorr said last week during in a speech at The Bond Buyer's Midwest Public Finance conference that he had financing "ideas" regarding skyway revenues.
The skyway generated about $20 million in excess revenues last year. That's a dramatic turnaround from the 1960s when Chicago defaulted on interest payments due to limited use. The city has seen travel on the road grow, especially since the opening of casino boats across the border in Indiana, and refunded the earlier skyway bonds in the early 1990s.
