About 50 area residents gathered at Lazo’s Tacos Restaurant (2009 N. Western) Tuesday for a meeting to hear Ald. Proco ‘Joe’ Moreno (1st) and City of Chicago Chief Financial Officer Lois Scott explain their support of the city’s newly approved Chicago Infrastructure Trust.
Moreno and Scott both gave opening statements about why they supported the 41-7 city council approved legislation creating it. Moreno and Scott explained the nature of the trust, why they supported it, and why it will be beneficial in their eyes to the city.
Moreno and Scott both said the purpose of the meeting was to provide additional information on the legislation, and to clarify the purpose of the trust. Attendees submitted written questions, which were interchangeably answered by Moreno and Scott.
The structure of the meeting provided for few follow-ups from the quiet crowd, but many direct questions from attendees were addressed, including those regarding transparency, privatization, and the financial implications of risk raised by the trust.
With the trust, the city of Chicago relies in part on private investment companies to fund infrastructure projects, which officials, including Scott, say are too financially unfeasible for the city to undertake on its own.
Such projects include improvements to city parks, train stations, and, most notably, the city’s water system, the privatization of which has been cautiously championed by Mayor Rahm Emanuel. (An idea that has been strongly opposed.)
The $7 billion trust is a non-profit overseen by a five-member board of directors. The mayor, with approval of the city council, appoints the directors governing the trust. One member must be an alderman, and others must have expertise in finance, infrastructure and city planning.
The trust is then charged with finding projects that are financially feasible for the city of Chicago and its sister agencies—in Scott’s words, “schools, the CTA, the park district, the CHA, etc.
“Those projects might be projects that have been sitting on the drawing board for CTA, or schools, for many years, or haven’t been financed for lack of funding,” Scott said. “Or they may be new, and involve a technology risk the public sector might not be ready for.”
Scott cited common citywide problems, including late trains, bumpy, pothole-riddled roads, and schools in ill-repair, as examples of types of problems the Infrastructure Trust was made to address.
The trust has been subject to controversy about how transparent the process of which projects will be funded, city government to ensure no bias will oversee how projects funded by the trust, and how the private interests the city would work with can be held accountable to taxpayers.
In this regard, opponents of the trust who attended Tuesday’s meeting compared it to the city’s controversial parking meter deal, which involved the selling of public meters to a private company, for a loss.
The deal is widely lambasted by both aldermen and citizens alike. Both Moreno and Scott took pains to condemn it, yet also insisted that the Infrastructure Trust was a successful variant of a similarly private interest-minded plan.
“The parking meter deal—that deal sold a public asset to a private company for a generation,” Moreno said. “OK? That is not what this trust is doing. We’re not making a decision to give the skyway away.”
Moreno assured residents the revised trust—which underwent several amendments before ultimately being decided on—would grant the council a strong oversight.
However, Chicago Inspector General Joe Ferguson wrote an aldermanic letter explaining that the trust, as it currently exists, “will only lead to legal disagreement and conflict down the road that will undermine public confidence in the integrity of this potentially beneficial program.”
Additionally, Moreno asserted during the meeting that Freedom of Information Act requests would apply to documents gathered by the trust. As of recently, they do not.
After the meeting, two Chicago residents and political activists, Dr. Lora Chamberlain and Rachel Goodstein, brought up the recent bailouts of the financial industry as examples of how the government lends help to private sector at the expense of the public sector.
Chamberlain brought up public banks in San Francisco as a counter example to public-private partnerships, arguing that wholly public enterprises are better for cities in the long term.
“Ours is the populist way,” Chamberlain said. “Theirs is the high finance way.”
Another resident, Enrique Martinez, spoke highly of public-private partnerships, based on his own experiences working in the city’s Sewer Department.
“[Private interests] hold these people accountable,” Martinez said. “Best thing to happen to the city, going private.”
Goodstein spoke more negatively about them.
“Who are they looking out for?” Goodstein said, speaking generally of private interests. “We are always on the hook. Taxpayers are always on the hook. They burned us to the tune of their own greed. We need to invest in ourselves.”
Both Moreno and Scott said in the meeting that the risk of the trust would fall solely on the private investors, though no projects have been yet approved, and project approvals would take more than a year to implement.
Chamberlain was skeptical of that argument.
“Chicago taxpayers have been soaked enough by public-private partnerships,” Chamberlain said after the meeting.
By Jon Graef