By Steve Rhodes
Here’s an idea for a new Chicago motto: Fool me once, shame on you. Fool me over and over and over again and we’ll make you king.
So while the mayor takes a victory lap over passage of his infrastructure bank proposal, let us jump once more unto the breach of lies, obfuscation and spin, my friends, where we will also find astonishingly simple questions still lying in wait.
1. “Mayor Rahm Emanuel talked up his Infrastructure Trust proposal during a Marketplace Morning Report radio interview that aired on WBEZ three weeks ago today,” Deanna Isaacs writes for the Reader.
When asked how the Trust would differ from Mayor Daley’s infamous parking meter deal, he responded with a specific example:
“The Cultural Center, it’s 100 years old – when we’re done, we’re going to save about $30,000 a year in energy costs. But we still own the Cultural Center. We’re not privatizing it, we’re just literally using private money to build out the energy efficiency.
After that broadcast I tried to find out exactly what work is planned for the Cultural Center. Here’s the response from the Mayor’s Office and the Department of Cultural Affairs and Special Events:
“There are no specifics, nothing has been approved . . . the mayor was merely using the building as an example.”
Paging Mike Daisey!
There isn’t a single rational listener in the world who would have taken Rahm’s example as anything other than established fact. It turns out, however, that he was just fibbing. He made it up. Or there’s a secret plan whose existence he’s already denied.
Either way, add it to the list of Rahm’s lies. (See item Rahm’s Pants Still Aflame.)
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But let us suppose the city does save $30,000 retrofitting the cultural center. How much of that must then be returned to investors to give them an adequate return? Not much left over, is there?
“There’s about $1 million worth of energy savings work to be done that will pay out $100,000 a year in savings of energy costs,” Rahm said in the interview.
So once investors get their cut of that $100,000 in annual savings, well, there’s not much left over for the city, is there?
And is the city really incapable of retrofitting its buildings for energy efficiency itself? At least we’ll know whose responsible for the inevitable boondoggles and cost overruns. Sure, the risk (supposedly) lies with the investors; they just don’t get their money back. But what if the city is stuck with a damaged building or an environmental hazard or a half-finished project? Who will pay the legal bills?
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Now let’s look further at that Marketplace interview.
Jeremy Hobson: What does $7 billion buy these days? Well, Rahm Emanuel – the former White House chief of staff and now Mayor of Chicago – hopes it’ll buy a total makeover for his city. That includes a new runway at O’Hare Airport, upgrades to rail and bus service, and a rebuilding of the city’s water and sewer system. Some of the $7 billion will come from new fees, some from cost savings, and some from a new public-private infrastructure bank.
Specifically, $1.7 billion will come from the infrastructure bank. So the city has the wherewithal to fund $5.3 billion of infrastructure the old-fashioned way?
Emanuel: It’s 30,000 jobs in the next three years. And as I like to say, whether it’s from the street lights above or to the sewage lines below, and everything in between, we’re literally going to build a new Chicago. All paid for – but none of it includes a sales tax increase or a property tax increase.
No, you’re not literally going to build a new Chicago. And fixing the street lights and sewage lines is an ongoing process – much of Rahm’s “rebuild” plan was in the pipeline before he even took office.
And you’re being disingenuous about taxes. First, you doubled water and sewer fees. Second, you already raised property taxes.
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Emanuel: You learn a lot from all different types of mayors who are doing different things. Literally some of the retro fit we’re doing is an idea that your mayor in L.A. gave me, and the mayor of Vancouver gave me. All of us learn from each other.
Maybe so, but the projects in L.A. and Vancouver are very different from what Rahm is proposing here.
“The City of Los Angeles has been allocated $37 million from President Obama’s American Recovery and Reinvestment Act’s Department of Energy’s Energy Efficiency and Conservation Block Grants, with the first $14 million to fund this program,” the Los Angeles Sentinel reported last year.
Mayor Antonio Villaraigosa also wheeled out Bill Clinton and Mike Bloomberg just as Rahm did here to announce it was retrofitting commercial buildings through funding from the federal recovery act as well.
Also:
“One of Villaraigosa’s policy centerpieces has been Measure R, a voter-approved tax that will raise $40 billion over 30 years to fund transportation infrastructure,” ThinkProgress reports. “Almost half of the money will go to mass transit.”
And:
Vancouver’s program is a three-year pilot that retrofits furnaces, windows and water tanks in people’s homes. Further, the city is putting up $500,000 in taxpayer money to back bad loans (and also has $1 million in foundation funding).
2. Ald. Joe Moore said during the city council meeting on Tuesday that it was time to separate fact from fiction – instructing his colleagues and constituents that they shouldn’t believe what every editorial and good government association says.
Wow.
I’m sure if Moore would like to ask Crain’s, the Tribune, the Sun-Times and the Better Government Association for corrections they’d be happy to listen to his arguments.
But so far City Hall has proven to be the entity among all those that is the least faithful to the facts.
Moore pulled the same stunt during debate over the mayor’s Sit Down and Shut Up ordinance.
3. The six-day delay on the infrastructure proposal was used more for mayoral arm-twisting than improving the ordinance, which passed just as it was. (Ald. Joe Moreno slammed dissident aldermen who actually used the time to come up with a new and improved ordinance, which was sort of the point of delaying the vote.)
According to Chicago Tonight’s report on Tuesday, Ald. Brendan Reilly had a “very heated meeting with the mayor.” He voted No. (That’s right: Reilly voted No and Moore voted Yes.)
Ald. Michele Smith, who co-authored with nine other aldermen a letter to the mayor with 32 (!) questions about the trust, laughed and looked away and then tried to compose herself when asked about her meeting with the boss in a way that indicated she was about to give us a very polite version of how things went.
“We had full and robust discussions,” she finally allowed.
Smith voted in favor of hearing the alternative bill but after that was tabled she voted Yes on the mayor’s plan.
4. Can anyone truthfully argue that the alternative plan put forth isn’t a better plan than the one that passed? And that we truly didn’t have time to consider it?
5. Rahm says that street and traffic lights will be included in the retrofit plan. That’s new to me; I thought it was only about buildings. Further, I thought Rahm kept telling us the new bank would only be used for new infrastructure. Don’t see why that has to be, though it probably has to do with assuring people that new (private) revenue streams won’t be attached to existing public assets.
Then again, I guess the light bulbs will technically be new.
6. Ald. Brendan Reilly considers himself one mayor’s strongest supporters in the council, but explained to his constituents in his e-mail newsletter on Monday why he voted against the trust:
“First, I thought it important to codify the commitment the Mayor expressed in his Executive Order requiring a detailed independent financial analysis be conducted for every project that includes a risk assessment, cost analysis and determination of economic benefit to the City of Chicago or its coordinating units of government. I believe that the Mayor’s commitment, made via Executive Order, should have been integrated into the text of the Infrastructure Trust Ordinance.
“Second, I agree with the Better Government Association and others that Trust obligations should not confer any obligation to the City or the City’s sister agencies (CTA, CHA, CPS and Park District) not expressly stated in a grant agreement. It is important that all obligations be fully disclosed in grant agreements before the Trust approves the funding for these large projects.
“My third and greatest concern about the Trust proposal focused on accountability to Chicago taxpayers. I believe it is critical for the City Council to review each project proposed to be funded by the Trust – whether it is a City of Chicago initiative or a project benefitting one of our sister agencies.
“By requiring the City Council to review and approve each Trust project, the Trust’s Board would be expected to package the deal and present it before the City Council for a simple ‘Yea’ or ‘Nay’ vote to ratify the project – with no opportunity for Council amendments or other changes to the original proposal.
“I acknowledge the fact that the City Council has no appropriation authority over sister agencies like the Public Schools, CTA or Park District. However, I believe the Council, by voting to create the Trust and its related governance structure would be essentially endorsing the creation of a relatively untested new financial vehicle – the bulk of which would be used to fund projects approved by appointed boards at sister agencies, not by elected officials who are directly accountable to voting Chicago taxpayers. This was a very serious problem for me.”
7. “Ald. Joe Moore’s theory is that the Infrastructure Trust could fund the modernization of the CTA’s Red and Purple lines and the extension of the Red Line to 130th Street,” Mark Brown writes for the Sun-Times.
“Moore, who represents the lakefront’s 49th Ward, is someone who for most of his career could have been counted upon to cast a skeptical eye on such a proposal. But he was the leadoff cheerleader for the mayor’s plan, offering such a detailed rebuttal to the critics you might have thought he was trying to curry favor with someone. ‘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,’ he said.”
Were those really the only options? Trust or bust?
Of course not.
And does Moore sincerely believe Rahm’s ordinance was superior to the amended ordinance offered by the dissenting aldermen? I’d say the answer is No because I don’t think Moore sincerely believes anything anymore.
“Moore said the Infrastructure Trust is needed because city government is drowning in debt and can’t expect either Washington or Springfield to provide the funding for its infrastructure needs – such as the billions of dollars needed to rebuild the CTA lines, which he called the ‘lifeblood’ of his ward.”
First, the line about Washington and Springfield is straight from Rahm’s talking points, which were probably market-tested before being handed out to compliant aldermen.
Second, well, let’s let Brown handle the second point.
I asked Moore after the vote how he expected the Trust might pay back such an investment if private funding were used to fund CTA improvements.
At first, he demurred, saying he “just threw that out” as an example his constituents could understand, but when I pressed, he offered: ‘Potentially, you could pay for it through the fare box.’
Meaning a fare increase?
“Possibly,” Moore said.
That would take an awfully big increase in fares to pay back investors, but hey, privatizing public assets separates the wheat from the wretched chaff.
8. Let’s take a closer look at Joe Moore’s statement in support of the trust – in particular, the section he calls “Separating Fact From Fiction.”
Quite.
Moore’s Fact No. 1 is that the city council retains the right to approve the expenditure of any city funds but notes that the council does not have authority over sister agencies, so therefore isn’t giving up any authority.
Of course, it’s giving up the authority to have legally-binding access to the work of the trust, which would ordinarily exist within the council, among other things. But even more so, Moore is disingenuous to the hilt when he says this:
“Some of our City Council colleagues have proposed amendments to the proposed Infrastructure Trust Ordinance that would give us final approval authority over the projects of the sister agencies. Others purport to extend the authority of the City of Chicago’s Inspector General over those agencies. My friends, let’s be honest with our constituents and tell them the truth. We can’t do what the law clearly prevents us from doing.”
Not quite. Reilly, for example, noted to his constituents that the infrastructure trust ordinance could require that the city invest a nominal amount of dollars into any sister agency project, therefore giving the council authority. Problem solved.
Moore’s Fact No. 2: “The Trust is not about the privatization of city assets. This is not another parking meter deal. In fact, it’s the antithesis of the parking meter deal.”
Another Rahm talking point. Another lie.
The central part of the trust’s equation is that private investors will profit handsomely from an ongoing revenue derived from a public asset. That is exactly the nature of the parking meter deal. The fact that the parking meters are leased and, say, a CTA line extension would not be leased but increased fares would go into private hands is hardly the antithesis; it’s frighteningly similar.
Moore’s Fact No. 3: “Municipal bonds do not always provide the best value for taxpayers.”
You can never say always, just as you can never say never. But historically, Moore is simply wrong.
Finally, Moore is flat out wrong in his characterization of city lawyer Steve Patton’s responses to his queries about ethics and transparency issues.
9. Similarly, Ald. James Cappleman is fuzzy on the concept.
“We must find a way to fund and repair our decaying infrastructure while lowering our risk for tax increases,” he wrote to his constituents.
I repeat: The trust isn’t designed to be a piggy bank to repair our decaying infrastructure. It’s intended to be used for limited, innovative projects which can provide a revenue stream for investors. The vast majority of Chicago’s infrastructure will have to be repaired the old-fashioned way.
But if Cappleman wants to sit around waiting for a five-person board to field offers to fix the sewers in his ward, he’s welcome to do it. Maybe Morgan Stanley will charge per flush.
11. “Finance Committee Chairman Edward Burke (14th) wrapped up the cheerleading for Emanuel’s plan with his own take on trusting the Trust,” the Sun-Times reported.
“I think what we’re really being asked today is to trust Chicago’s people.”
To keep electing you despite treating us like chumps?
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“We have a tool here that takes some of the pressure off taxpayers,” Emanuel said. “That’s what we’re doing here. Use somebody else’s money for a change, rather than theirs.”
It’s not free money!
“We’ve been asked over and over again to trust and we’ve been let down and now, we’re fearful,” Ald. Toni Foulkes said. “What terrifies people is the investment. Nobody invests money who doesn’t get returns – and they expect big returns.”
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Previously:
* No free toasters.
* Aldermen behaving dumbly.
* The Infrastructure Bank Has A New Villain
* The [Infrastructure Bank] Papers
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Comments welcome.
Posted on May 8, 2012