PI Original Ellyn Fortino Monday May 16th, 2016, 6:34pm

Chicago Finance Committee Approves Debt Transparency Measure, $600 Million Borrowing Plan

Progress Illinois rounds up highlights from Monday's Chicago City Council Finance Committee meeting, during which aldermen approved a $600 million borrowing plan, a debt transactions "transparency and accountability" ordinance, police misconduct payouts and more. A proposal was also introduced to create a "mental health critical response unit" within the Chicago Police Department. 

The Chicago City Council's Finance Committee advanced a proposed ordinance Monday aimed at strengthening the city's financial transparency and accountability, the same day it authorized $600 million in new borrowing.

Members of the Progressive Reform Caucus worked on the "debt transactions accountability ordinance" in partnership with the Emanuel administration. The measure, which could go up for a full city council vote Wednesday, would require the city to provide extended public notice and hold special hearings before entering into non-fixed rate debt transactions, like the controversial interest rate swap agreements.

"A lot of aldermen say they don't have time, they don't have ample opportunity to look at these deals," Progressive Caucus Chair Scott Waguespack (32nd) told reporters. "And what we're proposing here, for hopeful passage on Wednesday, is that the additional meetings that are specifically focused on that particular transaction will allow them to stay focused on that, instead of it falling into this morass of other things that we look at."

Before the Chicago City Council considers any such debt transactions, the proposal requires the city's Chief Financial Officer to produce a report prepared by an independent registered municipal advisor evaluating each proposed transaction's cost and associated risks. The report would also have to evaluate whether the proposed transaction is in the best financial interest of the city and taxpayers. Under the ordinance, the City Council Office of Financial Analysis would have to present a similar report to aldermen.

CFO Carole Brown said the ordinance would provide the Chicago City Council with greater "transparency and [the] enhanced deliberative process it needs when we contemplate new financing structures, or structures that the council views as riskier for Chicago's taxpayers like variable rate debt."

Brown also announced Monday that the city was successful last week in completing its conversion of variable rate water revenue bonds into fixed rate debt.

"I wanted to let you know that we converted the final piece of variable rate debt to fixed rate debt," she told aldermen. "We eliminated the associated swaps, completing the work of the financial reforms that the mayor laid out last April."

The city's corporate, water and waste water fund debt is now 100 percent fixed rate, according to Brown. The city reportedly saved about $3 million in negotiating its interest rate swap termination fees. 

"We have had many conversations about why converting the variable rate debt was the right thing to do at this time, and the transparency and accountability ordinance provides for more opportunities for debate around specific transactions prior to the city entering into a deal," Brown told aldermen. 

Under the ordinance, certain proposed debt transactions covered would be required to go before two special city council hearings, including one before the Finance Committee and another held specifically to gather public input.

Progressive Ald. John Arena (45th) said the measure would apply to any non-fixed rate financial product.

"Like a swap, if you will," he said, adding that the ordinance would also cover general obligation bonds with variable rates.

In the past, such transactions were "voted on without any kind of input from the different actors," Waguespack said.

If passed, the ordinance is meant to prevent the city from entering into future "bad debt deals."

"This ordinance acknowledges that we can't continue to pass the buck on our debts with toxic swaps and scoop and toss deals," Progressive Caucus member Ald. Toni Foulkes (16th) said in a statement. "We must take responsibility for our city's financial health, and we must start by insisting on transparency and accountability in all economic decisions made with taxpayer dollars."

Read Progress Illinois' past reporting on how interest rate swaps work and their impact on the finances of the state of Illinois, city of Chicago and Chicago Public Schools system.

Finance Committee OK's $600 Million Borrowing Package

The committee also authorized a $600 million borrowing package to cover the city's capital program in 2016 and 2017. The borrowing plan still requires approval by the full city council.

Of that $600 million in borrowing, which would be repaid from property tax funds, $100 million would be allocated over both years for city settlements and judgments. City Budget Director Alex Holt said the mayor has a target of ending the practice of borrowing for police settlements by 2019.

As part of the borrowing proposal, bond proceeds would be put toward sidewalks, bridge repairs, police safety vehicles, fire department bunker gear and the 2017 aldermanic menu program, among other equipment and capital projects. The city plans to issue the bonds during the third quarter of 2016. The deal's senior manager is Goldman Sachs.

If the bonds were sold today, Brown said the interest rate could be less than 5 percent. The borrowing package would have a maximum allowable interest rate of 10 percent. 

The Finance Committee approved the borrowing proposal as the financial markets watch to see what will happen with Chicago pension legislation currently awaiting action by Illinois Gov. Bruce Rauner. The measure would give the city more time to make its police and fire pension payments. Also, Chicago Mayor Rahm Emanuel has not yet detailed his backup pension plan to replace the one recently struck down by the Illinois Supreme Court. Emanuel's measure sought to overhaul the city's municipal and laborers pension funds. 

Settlements Approved For Cases Involving Alleged Police Misconduct

Also on Monday, the Finance Committee authorized $3.2 million in payments to settle two cases involving alleged police misconduct.

The committee authorized a $2.2 million settlement for the family of Emmanuel Lopez, 23, who was fatally shot by Chicago police in 2005 in the city's Brighton Park community. Police shot Lopez, who was unarmed, 16 times after he allegedly ran over an officer with his vehicle after a chase. Investigators initially deemed the shooting justified. 

Plaintiffs in the case argue that Lopez's shooting was unjustified, claiming in part that police fabricated the story of an officer being run over by the man.

A separate $1 million settlement was authorized for the family of Ryan Rogers, 27. He was fatally shot by Chicago police in March 2013 in Hazel Crest. Rogers was reportedly under surveillance in the south suburb for his alleged connection to a string of cell phone robberies. Rogers was shot after he allegedly slammed into a police car with his vehicle, according to police. The officer who fired his weapon reportedly feared that he was going to be hit by the suspect's vehicle.

But the plaintiffs in the case argue that police shot Rogers after he pulled away in an effort to stop his escape, rather than prevent an officer from being harmed. 

Other Police-Related Proposals

In other police-related matters, Finance Committee members approved an ordinance involving the deaths of suspects in CPD custody. The proposal would require the Chicago Police Department to "promptly notify" the Cook County State's Attorney of "all officer-involved death incidents."

"By codifying these directives into law, I believe that we will send a clear message that the city council views the investigating of such cases as a top priority," Ald. Carrie Austin (34th) said in a statement. 

Austin introduced the legislation with other council members, including Finance Committee Chairman Ald. Ed Burke (14th), who proposed another measure Monday that would create a specialized police unit focused on the department's response to mental health crises.

Under the measure, the Chicago Police Department would establish a "mental health critical response unit" responsible for officer training, support and other functions for responding to mental health incidents. The proposal piggybacks off recommendations from the mayor's Police Accountability Task Force.

The unit would contain no less than eight full-time sworn police department members, mental health service providers, a "full-time data analyst" and the department's critical response unit, according to the proposal. 

"It is our aim that the hallmarks of this unit will be a high degree of specialized training and compassion," Burke said in a statement. "It is our hope that the mentally ill will be connected through their contact with the police to the proper medical treatment and intervention that they require."

Burke added, "If this unit is successful, the long-term result may be fewer people with mental illness having repeat contacts with the police and less contact with the justice system."

Comments

Log in or register to post comments

Recent content

Fri
7.22.16
Thu
7.21.16
Wed
7.20.16
Tue
7.19.16
Mon
7.18.16