Why do Chicago taxpayers pay this man more than the mayor?

By TIM NOVAK Staff Reporter tnovak@suntimes.com November 5, 2012 12:37AM

James McConnell is paid more by Chicago taxpayers than Mayor Rahm Emanuel or anyone else City Hall.

James McConnell is paid more by Chicago taxpayers than Mayor Rahm Emanuel or anyone else at City Hall.

Updated: December 6, 2012 6:04AM

A s the man responsible for overseeing construction of Chicago’s new schools, libraries, police stations and even a new harbor along the lakefront, James McConnell commands a salary from Chicago taxpayers higher than anyone at City Hall makes.

That includes Mayor Rahm Emanuel, who recently agreed to extend to a fifth year the lucrative no-bid contract that will pay the politically connected construction-management firm where McConnell is executive vice president more than $95 million by the time it runs out next year.

McConnell’s taxpayer-paid salary: $275,000 a year. Emanuel’s: $216,210.

And that’s not all. Add to that the overhead costs that the Emanuel-controlled Public Building Commission of Chicago has agreed to cover, and the amount that taxpayers pay for McConnell rises to more than $645,000 a year, a Chicago Sun-Times examination of the obscure government agency and the private contractor that’s taken over many of its responsibilities has found.

The Public Building Commission says the arrangement with the Rise Group — whose president, Jack Hartman, was a top city official under former Mayor Richard M. Daley — has saved taxpayers millions of dollars. Its top official, Erin Lavin Cabonargi, notes that other public projects often end up costing more than originally projected, while those overseen by the Rise Group have been completed by an average of 8 percent less than what was budgeted. She points to the construction of Millennium Park, Daley’s crown jewel, which ended up costing $475 million — three times its orginal budget.

“They’ve put in the controls that have allowed us to execute projects on time and under budget,” Cabonargi, the agency’s executive director, says of the Rise Group. “There were no Millennium Park cost overruns.”

But in the only case in which a direct comparison can be drawn, the cost of building a project through the commission and its private contractor was higher. That involved the construction of a new residential treatment unit at the Cook County Jail. Cook County Board President Toni Preckwinkle decided the county could build it cheaper — a move she says saved taxpayers $1.3 million in management fees that she says are too high.

“It’s been more expensive to put things out through the Public Building Commission,” says Owen Kilmer, a spokesman for Preckwinkle, who, as the head of the Cook County Board, also is one of the 11 members of the Public Building Commission’s board.

Government agencies in Chicago aren’t required by law to work through the Public Building Commission, which hires the architects, engineers and building contractors. But Daley decided construction should be handled through the agency and the Rise Group. That means agencies controlled by the mayor’s office — including Chicago Public Schools, the Chicago Public Library system and the Chicago Park District — have had no choice but to use the Public Building Commission, which built and owns the Daley Center as well as its iconic Picasso statue.

Among the Sun-Times’ findings:

◆ The Rise Group had 95 people working under contract with the Public Building Commission as of last year, the latest figure available. That outnumbered the 62 on the government agency’s own payroll. Both staffs work side by side. In many cases, though, the private contractor’s staff has higher salaries. McConnell, 59, of Winnetka, a retired U.S. Navy officer who was commander of a construction regiment, is the highest-paid of the Rise Group contingent, making about 65 percent more than Cabonargi’s $165,928 salary, government records show. The private firm had six other employees working for the government agency last year who were paid more than Cabonargi. The commission acknowledes that employees for private contractors including the Rise Group generally are paid more than government employees.

◆ The Rise Group has been paid more than $65.4 million between the start of its contract in July 2008 and last December — a cost that’s passed along to the agencies that use the Public Building Commission to oversee construction. The city school system, for example, has paid the Rise Group more than $20.9 million for oversight on the construction of 20 new schools. The contractor’s fees have amounted to as much as 9.9 percent of an individual project’s total construction cost, but the commission says its average fee is lower — 2.91 percent.

◆ Under the contract, the commission pays the Rise Group 2.35 times the amount charged for salaries. That’s to cover “overhead, burden profit and the cost of furnishing employees with consumables (including cellphones, personal computers and office supplies).” That’s how, for instance, the amount budgeted for McConnell’s government-paid salary — $275,000 — actually ends up costing taxpayers $646,235.

◆ In addition, the contractor bills the commission for expenses including car leases, taxis, parking and, again, office supplies. The commission, for example, covers the Rise Group’s eight car leases, which cost $5,115 a month.

◆ Beyond that, the Rise Group is allowed to hire consultants on the taxpayers’ dime. It has a $216,000 consulting contract with Westrec Marina, which manages the city’s lakefront marinas. The Rise Group hired Westrec to review the construction plans for the 31st Street marina and to supervise the installation of docks, utilities and an ice-suppression system, all costs that will eventually be paid by the Chicago Park District.

◆ The Public Building Commission requires its contractors to hire women-owned and minority-owned subcontractors. As a result, 40 of the 95 people the Rise Group has working for the commission aren’t on the firm’s own payroll but come instead from subcontractors owned by women and minorities. Yet many of the 40 workers are white men, according to Sun-Times interviews — including two of the three workers the Rise Group brought in through R.M. Chin and Associates, a minority-owned construction-management firm. Mike Witte — the second highest-paid employee under the Rise Group’s contract — is one of those two. The Rise Group bills the commission $16,898 a week for Chin’s three employees.

◆ Even as the Rise Group has taken over more of the commission’s responsibilities and seen its total fees rise, the government agency’s own payroll has gone up, too — 14 percent in the past four years, its records show. When the Rise Group’s contract began four years ago, the commission had 61 employees on staff, paid a total of $4.4 million a year. Last year, with 62 employees, the government agency’s payroll was up to $5 million.

In 2007, Daley was chairman of the commission when it determined that outside help was needed to oversee a massive new-schools construction program called “Modern Schools Across Chicago.”

The staff of the Public Building Commission wasn’t big enough to handle that, according to Cabonargi, the agency’s executive director.

The choice, she says, was to hire more people, knowing that the building boom wouldn’t last, or bring in outside help.

The commission opted to go outside. At first, in 2007, it brought in a company called Parson Commercial Technology, which was paid $13.4 million before being dumped the following year as a result of its “inability to deliver a slate of key personnel and program-control systems . . . that met the needs of the PBC program,” Cabonargi says.

The agency received 16 proposals from companies wanting to replace Parson. It chose the Rise Group, headed by Hartman, who had been Daley’s deputy commissioner of aviation and CTA vice president, as well as director of the Illinois State Toll Highway Authority under then-Gov. Rod Blagojevich.

Hartman — whose firm would not comment for this story — was a Daley loyalist. About a year earlier, he’d contributed $4,500 to the mayor’s campaign fund. And four months before getting the Public Building Commission contract, Hartman had been given the Irish Fellowship Club of Chicago’s Richard J. Daley Award. The mayor and his three brothers — Cook County Commissioner John Daley, businessman William Daley and attorney Michael Daley — presented the award to him.

The mayor and the rest of the Public Building Commission decided that Hartman’s firm was best-qualified to get the no-bid contract, which originally was for three months but quickly grew into a four-year deal worth $47.5 million.

Since then, the contract has been amended six times — the last two times under Emanuel, who has received $4,500 in campaign contributions from Hartman and two other Rise Group executives.

On Aug. 14, the commission — now chaired by Emanuel — extended the contract through 2013, bringing the total value of what’s now a five-year deal to $95.6 million.

But that is the last extension, according to Cabonargi and the mayor’s office. They say the Rise Group will be out at that point. It’s not because of its costs, they say, but because local government agencies are strapped for cash and can’t afford many new buildings. And McConnell will leave at the end of this year, according to the commission, when most of the major school construction is finished.

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