The trust fund mayor 

Rahm Emanuel has big plans for rebuilding Chicago's infrastructure. Wish we knew what they were.

Paying for new infrastructure? We'll cross that bridge when we come to it.

Paying for new infrastructure? We'll cross that bridge when we come to it.

Sam Kalda

Everybody's talking about Mayor Emanuel's proposal to create a "trust fund" that would use private money to build infrastructure, though nobody seems to understand how it would actually work. But that's not stopping aldermen from getting ready to approve it as soon as next week.

Of course, utter ignorance has never kept the City Council from adopting sweeping policies at the mayor's behest. Remember the parking meter sell-off?

In case you've somehow forgotten, the parking meter deal gave private investors control of our streets and untold billions in future revenue for a bundle of cash up-front. Aldermen signed off even though they hadn't read the information about it that Mayor Daley gave them a couple hours before they voted.

The difference with the infrastructure trust fund is that Mayor Emanuel has provided virtually no information for the aldermen to avoid reading. In Chicago, that's called reform.

Let's review what we know—or think we know—about the trust, and what no one has been willing or able to explain.

WHAT WE KNOW: Chicago's infrastructure is crumbling. And if it's not fixed, we'll slip into the lake. On that everyone agrees.

WHAT WE DON'T KNOW: Why Mayor Emanuel didn't start by conducting and sharing a formal analysis of what needs to be fixed, how much it will cost, and what are the best ways to pay for it—you know, to make sure it's done fairly and efficiently and all that.

WHAT WE KNOW: The city's going to have to borrow money to finance projects to fix the infrastructure.

WHAT WE DON'T KNOW: How the mayor's going raise the money to fix the infrastructure, who will profit, and what's to stop the taxpayers from getting soaked.

WHAT WE KNOW: Emanuel has proposed a pool of money to be raised by private investors and managed by a nonprofit organization overseen by five mayoral appointees, one of whom would be James A. Bell, the retiring chief financial officer of Boeing. In addition, we know that the mayor would use $2.7 million in city funds to help set up the trust. Boeing, by the way, has received about $24 million in tax breaks and subsidies over the last decade.

WHAT WE DON'T KNOW: Who the investors or board members will be—though we can safely assume they will not include the authors of this article or any other skeptics, should they be found.

WHAT WE KNOW: Since the trust will receive public funding and oversee public infrastructure projects, Mayor Emanuel has guaranteed it will operate with "transparency."

WHAT WE DON'T KNOW: What he means by "transparency." The trust will be a nonprofit entity that's not technically subject to freedom of information and open meetings laws that government bodies have to follow.

WHAT WE KNOW: The mayor who's pledged to run the "most transparent government Chicago has ever seen" has a penchant for privatizing the policy-making process by relying on shadow oversight groups accountable only to him. For instance, he handed organizing and fund-raising authority for the upcoming NATO summit to World Business Chicago, whose board is appointed by the mayor. The organization doesn't have to comply with open government rules.

WHAT WE DON'T KNOW: Whether the trust will be able to cut billions of dollars of deals and dole out contracts without public hearings or releasing crucial documents.

WHAT WE KNOW: The mayor's proposal has already been a public relations triumph, winning him media attention across the country, as with this New York Times headline: "$7 billion public-private plan in Chicago aims to fix transit, schools and parks."

WHAT WE DON'T KNOW: What transit, schools, and parks he'll be fixing, if any, since he hasn't specified.

WHAT WE KNOW: The mayor confused everybody by discussing the trust fund at two press conferences, one of which highlighted the aforementioned plans to spend $7 billion.

WHAT WE DON'T KNOW: What the trust fund has to do with the $7 billion of projects, most of which were already in the pipeline and have different funding schemes.

WHAT WE KNOW: With all of his press conferences and news releases, Emanuel has creatively blurred the lines so that no one really knows what he's up to. For instance, in briefings with aldermen, mayoral aides said the trust fund is needed to help pay for water and sewer infrastructure—even though the council rubber-stamped a tax hike for that very purpose just last fall.

In fact, a certain Reader writer whose first name is Ben and last name is Joravsky just saw his water-sewer bill go up 18 percent to pay for all those pipe replacements. Not that he has anything else to spend his money on.

WHAT WE DON'T KNOW: Why we would need money raised by the trust to pay for water and sewer works that the mayor already jacked up taxes to pay for—unless of course he's going to continue to take water and sewer taxes and use them to pay for things that have nothing to do with water or sewers.

WHAT WE KNOW: Emanuel's advisers claim the trust fund will be "a bridge between where capital exists and where the projects exist," to use the words of Lois Scott, the city's chief financial officer. Scott was previously president of Scott Balice Strategies, a financial advisory firm that worked with other governments to privatize their parking systems.

WHAT WE DON'T KNOW: What Scott's actually saying.

WHAT WE KNOW: For generations, Chicago—like almost every other local government—financed public works projects by selling bonds and then paying them off with property tax dollars or other fees. For instance, the 911 center was built 17 years ago in large part with a tax on telephone bills. Airport construction was paid for with passenger fees. School construction was funded by low-interest bonds paid off with property taxes.

WHAT WE DON'T KNOW: Why the city can't do it the way it always has. The city's bond rating is stable, and the trust fund will still require borrowing from investors—in a way that hasn't been tested and will likely cost more.

WHAT WE KNOW: Mayor Emanuel says the trust will let him "restore Chicago's core" with billions of dollars of projects—while somehow not raising taxes or selling off assets.

WHAT WE DON'T KNOW: How it's possible to get something for nothing.

WHAT WE KNOW: The one project Emanuel has publicly put on the table is retrofitting government buildings, like the 911 center, to save energy costs. Investors would put up money to retrofit the buildings and make it back from what's saved on future energy bills.

WHAT WE DON'T KNOW: What happens if retrofitting doesn't end up saving money—say, if energy costs skyrocket. Nor do we know what share of the money the investors would be entitled to. "The devil's in the details," says Ron Baiman, an economist for the Center for Tax and Budget Accountability, a think tank. "We need to know who's assuming the risk. We won't know that until they actually sign a deal."

WHAT WE KNOW: Emanuel says he'd follow the same approach for other projects—instead of traditional interest fees he'll finance these deals by turning over the savings or revenue streams that they create. For instance, instead of selling bonds to pay for extending the Red Line, he might increase fares and turn over some of the money to the investors—which isn't that different from what Daley did with the parking meter system.

WHAT WE DON'T KNOW: How Emanuel could use this scheme to raise money to construct schools, pave streets, or build anything else that doesn't immediately generate revenues—unless, of course, he's going to create new user fees.

WHAT WE KNOW: Five companies have written letters to the city indicating their interest in the trust: Citibank, which received $45 billion in federal bailout money in 2008; Citi Infrastructure Investors, which has a stake in privately run toll roads, airports, and water systems around the world; Macquarie Infrastructure, one of the firms that leased the Skyway from the city in 2005; J.P. Morgan Asset Management Infrastructure Investment Group, an investor in airport privatization; and Ullico, a financial services company operated by the AFL-CIO and other unions.

WHAT WE DON'T KNOW: If they're the only firms who will get a slice of this pie. Or how they got involved the first place. The mayor's office didn't respond to our questions.

WHAT WE KNOW: The letters of interest these five companies sent to the mayor are almost word-for-word the same: "[INSERT NAME] believes a local infrastructure bank merits serious consideration . . ."

WHAT WE DON'T KNOW: If that means the mayor and/or his aides wrote them or if it's just one of those odd coincidences that happens from time to time in major city financial deals—like when the company that came up with the idea of selling the parking meter system wound up analyzing and structuring the deal as well.

WHAT WE KNOW: Mayor Emanuel wants to rush his detail-free proposal though the City Council by April 18. In fact, the mayor has already mapped out a timetable for consummating these yet-to-be-disclosed deals—his aides shared it in their closed-door presentations to aldermen. He wants the trust plan approved this month so deals can be made, paperwork completed, and projects underway, undoubtedly to great fanfare, by September.

WHAT WE STILL DON'T KNOW: What those projects and deals are.

WHAT WE KNOW: Aldermen don't know any more than we do, though that hasn't stopped many of them from voicing their support.

WHAT WE DON'T KNOW: What it would take to get aldermen to say no to something—anything—that the mayor—any mayor—proposes.

WHAT WE KNOW: The trust will give Mayor Emanuel more power, more control, more publicity, and less oversight, and a potential source of campaign contributions from investors lining up to feed from the trust.

WHAT WE DON'T KNOW: How much we're going to pay.

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