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Council panel OKs Emanuel’s Infrastructure Trust plan

Mayor Rahm Emanuel answers reporter's questions  Thursday news conference. | Rich Hein~Sun-Times

Mayor Rahm Emanuel answers reporter's questions at a Thursday, news conference. | Rich Hein~Sun-Times

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Updated: May 18, 2012 9:48AM

Mayor Rahm Emanuel’s plan to have five financing giants bankroll $1.7 billion worth of infrastructure projects cleared its first legislative hurdle Monday amid fears that user fees would be needed to guarantee investment returns and that City Council powers would be shifted to an unelected board of mayoral appointees.

“Something has to be done. We can’t say, ‘There’s so many negatives here, let’s just hold off for 60 or 90 days.’ There’s an opportunity for Chicago to blaze a new path that could really help us,” said Ald. Richard Mell (33rd).

Aldermen who took a political beating for their quickie-approval of the 75-year, $1.15 billion deal that privatized Chicago parking meters did not relish the idea of doing it all again.

They repeatedly asked why the mayor was in such a hurry to set up the Infrastructure Trust and why approval couldn’t wait until more oversight guarantees were put in place.

But, after five hours of political venting, the Finance Committee approved the revolutionary change in the way the city funds public works projects by a relatively narrow vote of 11 to 7.

“I’m sorry that you have to wear the jacket of the parking meter [deal], but I remind my colleagues again that we were sold a bill of goods and, each year Jan. 1, we keep getting spanked with the same thing,” said Ald. Leslie Hairston (5th), referring to the steep schedule of rate hikes tied to the parking meter deal.

Hairston complained that City Council oversight is limited to transactions that include city assets, revenues or properties. If it’s a park, school or CTA project, aldermen would be powerless to stop it.

“You are diminishing the powers and responsibilities of the aldermen and giving it to the Trust,” she said.

Lecturing Chief Financial Officer Lois Scott, Hairston said, “You are not elected. ... I was elected to represent my constituency. So, I resent you diminishing my capacity, which is all you seem to be doing these days.”

Downtown Ald. Brendan Reilly (42nd) complained about the “leap of faith” aldermen were being asked to take.

“This might be the greatest idea on earth. I just have so many questions, I haven’t been able to figure out if it is,” Reilly said.

Under questioning about user fees, Scott stuck to the script and talked only about the $225 million in energy efficiency projects for government buildings expected to launch the trust and generate $20 million in energy savings that will be used to repay investors.

She refused to discuss what other projects the city wants to finance or what user fees would have to be imposed to make certain investors get their money back with interest.

“I can honestly say there’ve been no other projects we’ve talked about for the Trust. I can walk you back up to my office and let you poke through my papers there, too,” Scott said.

“We are focused on Retrofit Chicago. ... We need to take one project, do it correctly, then go back and see what the next project might be. But if we don’t do the first project well, there’s no reason we should be looking at five.”

But, she said, “The more risk we transfer to the private investor, the higher the rate we will pay. ... To the extent that they are taking risk, they deserve a higher return. Risk-reward always go together.”

The seven “no” votes were cast by Hairston, Reilly and Aldermen Pat Dowell (3rd); Lona Lane (18th); Willie Cochran (20th); Ricardo Munoz (22nd), and Scott Waguespack (32nd).

Monday’s vote came hours after a coalition of community groups denounced the Infrastructure Trust as the “Great Chicago Sell-off” and pleaded with aldermen to reject the idea.

“Rahm’s trust fund would require revenue streams to repay the big banks and financiers, which means higher user fees,” said Amisha Patel, executive director of the Grassroots Collaborative.

“The Infrastructure Trust would enable global financiers to lend Chicago millions of dollars in projects that would guarantee their profits while leaving Chicago working families on the hook.”

Scott has argued that the city’s inordinate level of debt makes it imperative to find other ways to rebuild Chicago’s crumbling infrastructure that do not require property tax increases.

“If we rely only on the tools we already have — our general obligation tax base — that puts more pressure on our [bond] ratings than if we can identify alternatives ways of getting these projects off the ground,” Scott said.

Patel agreed that “bold ideas” are needed. But, she said, “Aldermen cannot responsibly vote on an ordinance just because of its flash. The parking meter sell-off was flashy, too, and look where that got us? Chicago does not need another parking meter mayor.”

Beniamino Capelupo, an organizer for SEIU Local 73, added, “The lack of oversight is scary at best.”

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