Emanuel on ‘Infrastructure Trust:’ Trust me
BY FRAN SPIELMAN City Hall Reporter firstname.lastname@example.org March 5, 2012 2:18PM
Mayor Rahm Emanuel listens during a forum on education at American University in Washington last week.. (AP Photo/Jacquelyn Martin)
Updated: March 5, 2012 5:18PM
Mayor Rahm Emanuel said Monday his proposal to create a $1.7 billion “Infrastructure Trust” is not a license to either lease city assets or cherry pick projects to finance behind a veil of secrecy.
Because the trust would be set up as a 501 C-3, the tax designation for not-for-profit organizations, concerns have been raised about how transparent the selection process will be.
The Freedom of Information Act does not apply to non-profits. Neither does the Open Meetings Act or purchasing laws that require most construction contracts to be awarded to the low-bidder.
Others are concerned that the potential for a $1 billion investment from Macquarie Infrastructure and Real Assets, Inc, the Spanish-Australian consortium that paid $1.83 billion to lease the Chicago Skyway for 99 years, raises the possibility of selling off even more city assets.
That’s been a sore thumb ever since the 75-year, $1.15 billion deal that privatized Chicago’s 36,000 parking meters and set the stage for steep rate hikes and a disastrous transition to private control.
Emanuel campaigned on a promise not to revive the $2.5 billion privatization of Midway Airport that collapsed for lack of financing.
On Monday, the mayor tried to put those privatization concerns to rest before what he hopes will be a City Council vote on the issue next week.
“Nothing we’re doing changes running a transparent process. Second, the type of investments we’re gonna make are key for the city’s economic future and its competitiveness. Third, I’m gonna make sure this is just a [financing] vehicle,” the mayor said.
“Financing key infrastructure is usually either done by grants or by issuing more debt. This allows other people to invest and see a return while we continue to own all our investments. We will own all the schools that get new HVAC systems. We will own the Cultural Center in the future, which will get a new energy efficient policy that will pay back the investment. That’s all that’s changing.”
He added, “We’re getting a set of dollars that has been sitting on the sidelines now open to investing in our critical infrastructure. The ordinance ... will make sure there’s a transparent process in [choosing] the investments we’re gonna make. The first will be on energy efficiency throughout our public facilities. Anything we do has to meet the fundamental test that it is economically transformative for the city’s future.”
Last week, five financing giants including Macquarie made preliminary commitments to provide as much as $1.7 billion in “initial investment capacity.”
The Infrastructure Trust is expected to launch with $225 million in energy efficiency projects for government buildings, including the Cultural Center, the 911 center, the Woodlawn health clinic and Morgan Park High School.
In the case of “Retrofit Chicago,” it’s apparent how investors would get their return. By retrofitting 127 government buildings, the city expects to reduce its $170 million annual tab for energy consumption by more than $20 million while creating nearly 2,000 construction jobs.
But, many of the other projects the city is looking to finance will need to have their own financing streams.
That’s why the mayor specifically mentioned bus-rapid transit, where passengers could be asked to pay higher fares for faster rides.
On Monday, Emanuel shed no additional light on which projects he has in mind or what new user fees would need to be imposed to make certain investors get an attractive enough return.