PI Original Matthew Blake Friday January 18th, 2013, 5:52pm

No Movement On Chicago Infrastructure Trust, Yet

Proposed by Mayor Rahm Emanuel last March and approved by the Chicago City Council in April, the Infrastructure Trust outlined a way to finance infrastructure projects in the city during a time of prolonged federal and state budget crises and near absolute political aversion to tax increases. Its polarizing central concept of private companies investing in public infrastructure and then receiving some undefined return on their investment was alternately seen as a revolutionary way to improve Chicago and a nefarious step towards private investors opaquely dictating public policy. We take a look at what has come of the controversial Trust thus far.

Proposed by Mayor Rahm Emanuel last March and approved by the Chicago City Council in a 41-7 vote in April, the Infrastructure Trust outlined a way to finance infrastructure projects in the city during a time of prolonged federal and state budget crises and near absolute political aversion to tax increases.

Its polarizing central concept of private companies investing in public infrastructure and then receiving some undefined return on their investment was alternately seen as a revolutionary way to improve Chicago and a nefarious step towards  private investors opaquely dictating public policy.

Emanuel’s proposal included no specific infrastructure projects save a plan to make city buildings more energy efficient. The mayor did, however, attract five finance titans willing to put an initial $1.7 billion into the Trust.

But despite its perceived importance by both supporters and foes, the Trust has thus far done basically nothing. 

“I’m a little surprised they haven’t rushed through anything,” says Ald. Scott Waguespack (32nd), who voted against the Trust citing transparency issues. “The board is unsure of their own status and their own capabilities.”

“There doesn’t seem to be a whole lot of public notice of movement around the Trust, which is actually a little disconcerting, considering that there was $1.7 billion in private capital lined up to back these deals,” says Hailey Witt, field director of Illinois PIRG.

The main transparency question is still the Trust’s pending federal application for non-profit tax status.

As a non-profit, the Trust would not have to follow the open meetings and public records laws required of city and state government agencies. The five-member board has written its own bylaws stating that the organization will act “in accordance” with Illinois open meetings laws.

But city Inspector General Joseph Ferguson’s office has highlighted the fact that federal laws governing non-profits trump any bylaws. If their non-profit status is granted, the Trust is free to, for example, stop holding public meetings or cooperate with certain Freedom of Information Act requests.

Waguespack attempted to head off this issue last April when he proposed to make the body a subsidiary of the city of Chicago. But the city council tabled Waguespack’s amendment by a vote of 39-9.

The majority of aldermen decided transparency concerns had been adequately addressed because council members would approve some, though not all, of the Trust's projects and a council member would sit on the Trust board. Emanuel subsequently appointed Ald. John Pope (10th), an unabashed Trust supporter, to the board. Earlier this month, Emanuel named Ald. Latasha Thomas (17th) as one of six advisory members to the board.

During the floor debate last April, aldermen echoed Emanuel’s vision of the Trust as not just improving the daily lives of Chicagoans but making the Windy City a leader in forward-looking public policy. The Trust would finance “the kind of projects that make Chicago important and relevant,” Ald. Will Burns (4th) said at the time.

But no one will say what are these projects, exactly, besides the energy retrofit. “The city has flat out denied that there are any other projects on the table,” Waguespack says.

Messages to Emanuel’s office for this article were referred to the Infrastructure Trust board Web site, and a message with the board and messages to individual board members, were not returned. Emanuel, city officials, and board members have not even provided hypothetical examples of Trust projects. Aldermen and agencies independent of the city budget, such as the Chicago Public Schools, have also not stepped forward with project proposals.

One tangible proposal was unveiled in June by the community organization Action Now. Their proposal called on private developers to work with the city in turning vacant properties into affordable rental homes. 

Dan Kleinman, policy director of Action Now met with Emanuel’s office this summer, but Kleinman says his organization has “successfully shifted gears.” Action Now has instead cast its lot with the Cook County land bank, which was approved by the Cook County Board this week.

Asked why he moved away from the Trust, Kleinman declined to criticize the entity, citing instead the greater number of vacant properties on the county level.

Even the energy retrofit plan, which has precedents in other cities and is generally seen as a feasible initiative, has barely gotten off the ground. Board members announced at a December 6 meeting that they would start soliciting bids in 2013 for companies that would put up money to make city and Board of Education buildings more energy efficient. The savings from lower utility costs would then be passed on to these companies.

Left unanswered, though, is when a winning bid would be announced, what the split in cost savings would be between the private investors and the public, and even the most basic question of what buildings the city wants to retrofit. Moreover, the city quietly scaled back the retrofit from an initial plan to seek $225 million in private investments to $50 million.

Perhaps the energy retrofit and the overall Trust will get off the ground later this year when the body’s tax status is confirmed and a process for soliciting private investors is developed.

Moreover, many Trust skeptics wonder if major deals are already being hatched behind closed doors. “It is clear that the real substantial conversations are not happening in public,” says Amisha Patel, executive director for the Grassroots Collaborative.

That may be the case. Another possible theory is that the Trust is turning out to be a cumbersome mechanism for city projects.

“I think that the city can develop infrastructure without this vehicle,” says Woods Bowman, a professor of public service at DePaul University. “General obligation bonds are usually the least costly methods of long-term financing and Chicago has a very good bond rating.”

Bowman is skeptical of the Trust not so much because of transparency concerns, but what it can do that existing mechanisms and city agencies, such as the Public Building Commission, cannot accomplish.

Witt of Illinois PIRG also wonders if “private investment will get taxpayers a better deal than traditional bond measures would have.”

The Trust was arguably the most talked about Emanuel proposal of 2012. But its relevancy in future years is uncertain.  

Comments

Login or register to post comments

We don't need to keep spending money we don't have. It doesn't matter how we get the money, it isn't free and we're continuing to spend money that we don't have!

Will the politicians ever learn that? Is that the only way they can get re-elected?

Let the roads crumble and bridges be shut down until we have a way to pay for them, or until we're satisfied with the reduction in traffic and reduced cars on the road.

We have to quit looking for these quick fixes.

Bob Kastigar
IBEW Local 1220, Chicago

Recent content

Thu
4.17.14
Wed
4.16.14
Tue
4.15.14