Emanuel to put ‘Infrastructure Trust’ rules in writing
BY FRAN SPIELMAN City Hall Reporter firstname.lastname@example.org March 8, 2012 11:30PM
Updated: March 8, 2012 11:32PM
Mayor Rahm Emanuel isn’t just saying, “Trust me,” about his promise not to use his $1.7 billion “Infrastructure Trust” as license to either lease city assets or cherrypick projects behind a veil of secrecy. He’s putting it in writing.
The potential for a $1 billion commitment from Macquarie Infrastructure and Real Assets, Inc, the Spanish-Australian consortium that paid $1.83 billion to lease the Chicago Skyway for 99 years, has raised concerns that the trust might be a vehicle to continue the Great Chicago sell-off that began under former Mayor Richard M. Daley.
To put those fears to rest, the ordinance Emanuel will introduce at next week’s City Council meeting would prohibit the trust from leasing or selling public 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.
“The trust is set up to build new assets that benefit taxpayers, not sell old ones,” according to a briefing paper prepared by the mayor’s office.
A top mayoral aide, who asked to remain anonymous, added, “The infrastructure trust is simply a financing tool. They won’t have any control over city assets. They won’t be able to lease or sell. ... They’re only there to put together financing for projects we and the City Council decide to do.”
Because the trust would be set up for tax purposes as a not-for-profit, concerns have also 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.
To address those concerns, the ordinance will subject the trust to the Open Meetings Act, FOI requests and ongoing oversight by the City Council.
City Council approval would be required for $10 million in seed money from the city to get the trust up and running. Projects that require additional financial support from Chicago taxpayers would also need aldermanic approval.
The trust would be governed by a five-member board of directors appointed by the mayor and confirmed by aldermen to serve staggered, three-year terms.
And any transaction involving an asset or revenue stream owned by the other local government agencies would require approval by the Council or the “sister agency” board, the ordinance states.
Last week, five financing giants 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.
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 Thursday, the Emanuel administration shed no additional light on which “transformative infrastructure projects” it intends to fund or what new user fees would need to be imposed to make certain investors get their money back with interest.
But, a briefing paper to be distributed to aldermen clearly states that: no project would be “secured by the city’s general obligation,” meaning property taxes and that “no future taxpayer money would be at risk.”
“We need to find big, transformative projects complex enough that we haven’t funded them yet, but that also meet our threshold to save taxpayers money and pay for themselves,” the mayoral aide said.
“We’re setting up a mechanism to leverage money we couldn’t leverage before”— including investment funds, labor and pension funds, foundation grants and non-municipal bonds—“to invest in a wide array of infrastructure projects we don’t even know about yet,” the mayoral aide said.