Chicago Council Approves $1.7 Billion ‘Infrastructure Trust’
Chicagoans are about to learn if Mayor Rahm Emanuel’s Chicago Infrastructure Trust is worthy of the name.
Forty-one of the city’s 50 aldermen voted for the $1.7 billion plan in late April even though the city’s inspector general, several aldermen and neighborhood groups expressed doubts about trustworthiness before the vote. The plan had been introduced just a few weeks earlier and the amended version that was voted on just days earlier.
Emanuel says the trust is needed to fund badly needed projects including improvements to city streets, sewers, water lines, and parks. The idea is to bring in private investors to put up money for such projects. Emanuel expects up to $1.7 billion of investments could be funded through the trust.
‘Nothing More Crucial’
“Nothing is more crucial to our long-term competitiveness and job creation than infrastructure,” Emanuel said in announcing the plan. “The Chicago Infrastructure Trust will bring additional resources to stimulate public and private investment in our infrastructure, create thousands of jobs for Chicagoans, and ensure that our residents have a world-class quality of life.”
Emanuel has said the city cannot afford to add to the more than $7 billion of debt it already has to do major projects. He also does not want to raise city taxes. Emanuel said private financing for each project could be tailored to specific needs using taxable or tax-exempt debt, equity investments, grants, and other forms of support. Each project is supposed to pay back the trust and investors, raising concerns that city user fees for services such as sewer and water could climb.
Citibank, Citi Infrastructure Investors, Macquarie Infrastructure, JP Morgan Asset Management Infrastructure Investment Group, and union-backed insurer Ullico all signed letters in support of the fund. Local labor unions also backed the plan.
The trust would be operated by a board made up of private financiers and one alderman appointed by the mayor. It would not be considered a public body and therefore might not be subject to open meeting or freedom of information laws, according to Chicago Inspector General Joseph Ferguson.
‘Open, Undefined, Unspecified’
“This is a very, very open, undefined, unspecified, nonprocess-specific ordinance,” Ferguson said during an appearance on Chicago Public Television’s Chicago Tonight program the night before the vote.
“What we have . . . is something that creates a great deal of ambiguity and almost inevitably is going to create confusion, legal disputes, and possibly even lawsuits,” said Ferguson. “With respect to the Inspector General’s office itself, right now the city’s position is we can’t even defend our own jurisdiction, we can’t even enforce our own subpoenas.”
Chicagoans have bitter memories of a rushed lease deal for 36,000 parking meters the city entered into in 2008 during the administration of Richard M. Daley. That lease with a Morgan Stanley-managed firm lasts 75 years and brought the city $1.16 billion in an upfront payment.
Almost immediately after Chicago Parking Meter LLC took over the meters, parking prices soared, and many meters did not work. Problems grew worse when frustrated motorists vandalized parking meters in protest. The problems have been fixed and animosity has died down, but critics say the city should have received more money from such a deal.
Groups on Guard
Amisha Patel, executive director of the Grassroots Collaborative of Chicago, made up of 11 organizations representing lower-income families in the Chicago region, said the experience with the parking meter lease has her and other members of the group on guard.
“There’s been lots of interest [in the infrastructure trust] because of the parking meters,” she said. “That experience is relevant. There was no need to rush this. They could have made this as tight and responsible as possible. Instead, everything the city has said has been so vague. We understand there’s a need for jobs, and for infrastructure, but let’s do it right. We need more clarity.”
But Alderman Joe Moore rejected likening the trust to the parking meter lease. He opened discussion before the vote with a speech in defense of the trust that lasted approximately 15 minutes.
“The trust is not about the privatization of city assets,” Moore said. “This not another parking meter deal.”
He closed saying, “As with any new and untried approach, there are risks and no guarantee of success, but the only thing worse than trying this new approach is to try nothing at all.”