PI Original Matthew Blake Monday April 16th, 2012, 9:37pm

Finance Committee Scrutinizes, Then Passes, Emanuel's Infrastructure Trust

Chicago aldermen spent five hours raising questions that went unanswered about Mayor Rahm Emanuel’s “Infrastructure Trust” ordinance, particularly whether it would benefit investors on the backs of taxpayers. Nonetheless, the Finance Committee passed the ordinance with a divided 11-7 vote.

Chicago aldermen spent five hours raising questions that went unanswered about Mayor Rahm Emanuel’s “Infrastructure Trust” ordinance, particularly whether it would benefit investors on the backs of taxpayers. Nonetheless, the Finance Committee passed the ordinance with a divided 11-7 vote.

The City Council is expected to vote Wednesday on the Trust, for which five private investment groups would work on public infrastructure projects selected by a mayor-appointed Infrastructure Board.

Representing the city at today's committee hearing was Chief Financial Officer Lois Scott, who spoke broadly of rescuing Chicago infrastructure and making the city more economically competitive.

“To be blunt, here in Chicago we cannot afford to wait,” Scott said. “We need to consider ambitious and transformative projects.” The Trust was introduced last month and revised last Friday.

The latest version of the ordinance gives the City Council more powers such as having a member on the five-person Infrastructure Board, and the power to approve projects that fall under the city budget process. The revised ordinance also states that the Trust must follow Freedom of Information Act laws, but this remains controversial: As a proposed non-profit entity, the Trust is not legally bound to follow FOIA.

Most progressive aldermen on the finance committee spoke out or voted against the Trust - and may opt to delay the Wednesday vote.

Ald. Scott Waguespack (32nd), one of the seven ‘no’ votes, drafted a substitute ordinance with Ald. John Arena (45th). However, Waguespack chose not to introduce it today, saying that the ordinance only partly addresses the many questions raised by aldermen.

Among the concerns:

* What will the projects be – and how much will taxpayers be on the hook for?

The city has listed just one specific project in the Tust – an energy retrofit of city buildings, where taxpayers and investors are both supposed to save money in the long run through lower energy bills.

Aldermen repeatedly asked Scott what other projects the Tust might consider. She repeatedly replied what the city has said for a month – there are no other planned projects.

“I was hoping you could enlighten us with some examples, but I see that you can’t,” said Ald. Pat Dowell (3rd).

Investors presumably will not put money toward a project in which there is not a clear way to get a financial return.

Given this, and the city’s embarrassing experience with parking meter privatization, the subsequent question – the “elephant in the room” as Ald. Joe Moreno (1st) put it – is whether the public will pay for projects via user fees.

As with Parking Meters LLC, a private investor could recoup money by passing along the costs to users, or taxpayers, to fulfill a contractual guarantee on their investment. Moreno gave an example of charging fees for using city pools.

Scott did not answer this question, instead telling Moreno that he gave a poor example, since the Trust would be about creating new infrastructure, not privatizing existing infrastructure.

Otherwise, Scott avoided discussing user fees – or other eventual costs – as part of a testimony that largely declined to speculate on Trust projects.

Community groups testified that user fees could particularly hurt vulnerable populations. “We have strong concerns about equity issues – how that hits communities of color,” testified Amisha Patel, executive director of Grassroots Collaborative, a coalition of labor and community organizations.

* What oversight will the city council have?

 The revised ordinance outlines that the Chicago City Council must approve projects that fall under the purview of agencies that are part of the city budget process.

But many big infrastructure projects involve schools, parks, transportation, and housing – projects that would be controlled by “sister agencies”, like the Chicago Public Schools, the Chicago Park District, the Chicago Transit Authority, and the Chicago Housing Authority.

Projects, in other words, outside the budget process – and outside aldermanic approval.

“Won’t the bulk of the projects actually go through sister agencies?” asked Ald. Brendan Reilly (42nd), who voted against the ordinance.

“We don’t know that,” Scott replied.

Also unclear is what say these sister agencies would have. None of the agencies are part of the proposed board or mentioned in the ordinance.

* Can’t Trust members just benefit themselves?

The ordinance contains no conflict of interest laws to prevent a Trust board member from going to work for the very private company that gets a deal under the Trust.

City law prohibits municipal officials and employees from going to work for companies that get city contracts. But Jeff Levine, attorney for the Chicago Law Department, testified that such prohibitions would not be “logically applicable” since “each side is in it to benefit.”

The Waguespack-Arena substitute does propose a two-year moratorium on board members representing a company that receives a deal under the Trust.

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