Council overwhelmingly approves mayor’s city financing plan
BY FRAN SPIELMAN City Hall Reporter email@example.com April 24, 2012 9:50AM
Mayor Rahm Emanuel addresses the City Council before a vote on the Chicago Infrastructure Trust ordinance Tuesday, April 24, 2012, at City Hall in Chicago. | John J. Kim~Sun-Times
Updated: May 26, 2012 8:11AM
Brushing aside demands for more oversight and bitter memories of the parking meter deal, the City Council on Tuesday approved a revolutionary change that will allow private investors to pump $1.7 billion into “transformative” infrastructure projects the city cannot afford to build on its own.
“Cities that fail to invest in their infrastructure are cities in decline,” said Ald. Joe Moore (49th).
Arguing that Chicago is “drowning in debt” and needs an alternative to either raising property taxes or standing still, Moore said, “The only thing worse than trying this new approach is doing nothing at all.”
Ald. Pat Dowell (3rd) said none of her constituents are willing to pay higher property taxes to rebuild Chicago’s crumbling infrastructure.
“So, unless we have a money machine in the basement of this building,” it’s time to give private investors a try, Dowell said.
Six days after Mayor Rahm Emanuel preemptively put the brakes on his own Infrastructure Trust, Chicago aldermen approved the public-private partnership by a vote of 41 to 7.
The seven dissenters were Aldermen: Bob Fioretti (2nd); Leslie Hairston (5th); Toni Foulkes (15th); Ricardo Munoz (22nd); Scott Waguespack (32nd); Brendan Reilly (42nd) and John Arena (45th).
The vote came after the mayor’s forces buried a pair of alternative ordinances that would have required City Council approval of all Trust-funded projects and empowered Inspector General Joe Ferguson to investigate the Trust, among other safeguards.
“This is creating a vehicle that can come back to haunt us,” Munoz said. Hairston added, “It’s not free money. It’s gonna come to us in user fees and taxes.”
Foulkes said residents of her impoverished Englewood community — saddled with 210 home foreclosures every square mile — don’t trust the Trust.
“We’ve been asked over and over again to trust and we’ve been let down and now, we’re fearful,” Foulkes said.
“What terrifies people is the investment. Nobody invests money who doesn’t get returns — and they expect big returns.”
Ald. Rey Colon (35th) talked about the political elephant in the room: the 75-year, $1.15 billion deal that privatized Chicago parking meters and locked in a steep schedule of rate hikes.
“We’ve been suffering from something called ‘parking meter trauma,’ ” Colon said.
Emanuel jokingly replied, “There’s medication for that.”
Addressing aldermen from the rostrum prior to the final vote, the mayor acknowledged that debate on the Trust has been correctly “colored” by the parking meter deal. But, there’s a big difference, he said.
That deal pushed by then Mayor Richard Daley “was introduced on one day and, four days later, you voted on it. This has been over six weeks. … You made no changes [on the parking meter deal]. Sixteen were made here. …You leased a city asset for numbers of decades. Here, we own the public asset and will continue to own it,” the mayor said.
“At every level — process and substance — this is different. I appreciate why it colored the debate. You’re supposed to learn from mistakes. ... And I understand why people want to use the parking meters for political purposes to scare everybody. But I want you to step back and think about it. Contrast.”
The mayor noted that the concept of an infrastructure bank or trust has been kicking around Washington for the last decade.
“It’s like Ground Hog Day. They’re still debating it. I will not tie the city’s future to that dysfunction,” Emanuel said.
“We have a tool here that takes some of the pressure off taxpayers. That’s what we’re doing here. Use somebody else’s money for a change, rather than theirs.”
Under intense pressure from Emanuel, most aldermen overcame their fears about the need for user fees to guarantee investment returns, a shortage of oversight and about shifting City Council powers to an unelected board of mayoral appointees.
Tuesday’s vote paves the way for a five-member board to oversee a $1.7 billion fund that will help Chicago build, what the mayor has called “transformative” infrastructure projects the city could not afford to build on its own.
The money is expected to come from five financing giants, the largest chunk from the Spanish-Australian consortium that paid $1.83 billion to lease the Chicago Skyway for 99 years in exchange for pocketing tolls and continuing to raise them.
Aldermen will have one of their own on the five-member board, but 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.
The Trust will launch with $225 million in energy efficiency projects for government buildings expected to generate $20 million in energy savings that will be used to repay investors.
On the day he unveiled the Trust, Emanuel made it a point to mention a bus rapid transit system as an example of the “transformative” projects that might be financed by the Trust.
Since then, the mayor and his chief financial officer have repeatedly 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.
Asked Tuesday whether CTA riders would be asked to pay higher fares for faster rides, Emanuel said somewhat ominously, “That’s an idea that people can look at. ... We’re gonna see. People will talk about it. That’s an idea that people can kick around. The first project and the only project that I will propose right now will be retrofit and weatherization.”
Tuesday’s high-stakes vote was preceded by dueling news conferences in the hallway outside the City Council chambers featuring supporters and opponents of the mayor’s plan.
Labor leaders, the unemployed construction workers they represent and businesses that stand to benefit from the gravy train of construction contracts lined up to support the Infrastructure Trust.
When opponents shouted, “No!” and, “Chicago is not for sale,” a beefy union member screamed, “Knock it off!”
Ald. Pat O’Connor (40th), the mayor’s City Council floor leader, sounded like he was reading a script written by the mayor’s office when he told the crowd of the 16 changes proposed by aldermen and adopted by Emanuel to strengthen oversight over the Trust.
“If it needs to be changed [even more] — if it needs to be tweaked, we’re all gonna be here for another several years. … But, to delay this — to stop until you have the perfect thing, I’ll be grayer and have less hair. So, let’s get this thing moving,” said O’Connor, whose hair is already white.
Tuesday’s vote follows a now-familiar Emanuel pattern of proposing bold initiatives — often without public input — then throwing opponents a few bones without compromising the overall goal.
It happened on the budget, on speed cameras, on his signature plan for a longer school day and, now, on the Infrastructure Trust.
“I had the good fortune of being elected to Congress, which is the legislative branch. And I had the good fortune of working in the executive branch for two great presidents. So, I’ve sat on both sides … It gives me a unique perspective,” the mayor said.
“As the executive, you set goals — clear distinct goals and a way to achieve `em. You work with the legislative branch on what is the consensus on [those] goals.”