April 23, 2012
Dear Aldermen:I have had the opportunity to review the ordinance for the Chicago Infrastructure Trust, and relateddocuments and articles. While I can say that the concept is innovative and shows promise, I respectfullyrequest that you vote against the measure as presented by Mayor Rahm Emanuel on April 11, 2012. Ialso request that you work collaboratively with the
Mayor and Inspector General
to strengthen theordinance and underlying program such that the City can create a triple-win situation in which the Citycan expand its access to capital and provide sound governance over the Trust; the residents of Chicagocan enjoy an enhanced quality of life brought about by infrastructure enhancements and serviceefficiencies, and investors can receive a return on investment commensurate with the risks they take. Ihave outlined below some of my concerns with the ordinance, and ways that it may be strengthened.Newspaper articles have indicated that the Trust will provide a combination of debt, equity, and grantsto infrastructure projects, while the City maintains control of its assets. There should be clarifyinglanguage to indicate whether control is actual ownership of the assets, or through other contractualmeans, and whether or not any investors will actually be managing any of the assets under separatearrangements. It may be helpful to have a definition section in the ordinance, and include a list of thevarious types of debt and equity instruments the Trust is allowed to invest in, as well as a list of prohibited instruments. There should be language to indicate the mechanics of the equity investment,and how the City maintains control of the asset while allowing equity investors to have an ownershipstake.The Ordinance provides that infrastructure investments made by the Trust will not be a generalobligation of the City and will not be secured by the City's full faith and credit. This gives the impressionthat taxpayers are not assuming any default risk, which may or may not be accurate. There should beclarifying language that indicates that investments may be secured by dedicated revenue streams, andoutline mechanisms for repayment in the event that that revenues are insufficient to repay investors. If there are, or may be, any guarantees by any entity, that should be outlined.The Mayor has provided very few details regarding how the day to day operations of the Trust will bestructured, and has promised to provide details after the Ordinance is approved. This makes it difficult for City Council to make informed judgments as to whether or not to lend their support. It also makes it difficult for the Inspector General to give an accurate opinion as to the limits of his authority in regardsto the Trust. Perhaps it would be wise to require the Trust to do a business plan before making anyinvestments. This would help the City to better quantify and articulate the need for the Trust, identifythe financing gaps the trust can fill and demonstrate how it can be used in tandem with the City'sexisting general obligation borrowing program. It would also help the Inspectors General of Chicago andSister Agencies to clarify their roles.
Valerie F. Leonard •
4111 West 21st Place • Chicago,
3137 • Fax: 773
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