GRASSROOTS COLLABORATIVE

637 S. DEARBORN, THIRD FLOOR CHICAGO, IL 60605

TEL 312.427.0510 FAX 312.427.4171 www.thegrassrootscollaborative.org

SIX REASONS TO VOTE NO TO THE INFRASTRUCTURE TRUST ORDINANCE

1) This will create a fast-track for deals like the parking meter deal all over again, but much larger. Mayor Emanuel wants to create an entity that will essentially cut deals with private investors in order to fund public infrastructure projects. Mayor Daley entered into a similar agreement in 2008 with Morgan Stanley, Abu Dhabi Investment Authority, and Allianz Capital Partners1. The only difference is that Daleys plan leased an existing asset, while Emanuel proposes to lease unlimited future assets. Though Emanuel insists his plan is different from the parking meter lease, James Hooke, Macquerie's chief operating officer, contradicted this clearly: "All of these schemes, whatever label you put on it, involve some sort of asset being sold over for a period of time so the private investor can get a return on their investment." 2 These deals always favor investors over taxpayers because they promise higher returns for large sums of money invested quickly. The real consequences of the parking meter deal are more than enough to vote against this Infrastructure Ordinance: Chicago drivers will pay a Morgan Stanley-led partnership at least $11.6 billion to park at city meters over the next 75 years, 10 times what Mayor Richard Daley got when he leased the system to investors in 2008. 3 2) The burden of user fees will disproportionately impact low and middle income Chicagoans. Just as any rise in fees or cost of living disproportionately affects low and middle income Chicagoans, and particularly minority communities, the same will apply to the consequences of any risky deals entered into by this Infrastructure Trust. The Emanuel Administration stated an example of how the trust would work in the case of the long overdue extension of the Red Line to 130th Street. The city offered as a potential solution the creation of a distance-based fare system to pay for the costs.4 This poses the most troubling aspect of the plan. After struggling for decades without train service, low-income Black residents on the Far South Side finally may get it, but will have to pay the price. All fees or taxes based on usage always impact middle and low-income residents hardest. To use the new service available to them, those residents will have to pay more. Meanwhile, those who live near city center, primarily higher income Chicagoans with more transit options, will continue to enjoy lower fares that come with the privilege of living near downtown. 3) There is no guarantee that the poorest neighborhoods will benefit from this Trust. In fact there is more of a guarantee that the poorest neighborhoods such as Roseland, Englewood, and Brighton Park will not see any benefits from this Trust because projects in these areas cannot guarantee high enough returns to

1 2

Morgan Stanley Groups $11 Billion Makes Chicago Taxpayers Cry, Bloomberg, 8 August 2010 Emanuel to Push for Trust on Projects, Chicago Tribune, 9 March 2012 3 Bloomberg 4 Emanuel, Clinton Announce $1.7 Billion Trust for Chicago Projects, Chicago Sun-Times, 1 March 2012
Action Now, American Friends Service Committee- Great Lakes Region, Bickerdike Redevelopment Corporation, Brighton Park Neighborhood Council, Chicago Coalition for the Homeless , Chicago Te achers Union, Enlace Chicag o, Illinois Hunger Coalition S e r v ic e Em p lo ye e s I n te rn atio na l U n io n Lo c a l 7 3 , S e rv ic e E m p loy ee s I n te r n a tion a l Un io n Healthcare Illinois Indiana, Southsiders Organized for Unity and Liberation

GRASSROOTS COLLABORATIVE
637 S. DEARBORN, THIRD FLOOR CHICAGO, IL 60605
TEL 312.427.0510 FAX 312.427.4171 www.thegrassrootscollaborative.org entice investors. This continues the pattern of neighborhood disinvestment that has created stark disparities in quality of life for Black and Latino communities in our city. The priority for infrastructure projects must be based on the areas of the City that need them most, NOT based on those which would ensure the highest returns. 4) It will give Mayor Emanuel close to unlimited powers to gamble with taxpayer money. Debt is debt. Mayor Emanuel spins it as investment, but we all know that these corporations invest expecting high returns. This ordinance allows for the Mayor to do any and all things necessary (Section 9) to pay back investors. Emanuel can enter into risky agreements with billion-dollar corporations that will contribute to the Trust, and then do whatever it takes to pay them back- whether it is more than doubling our taxes several years from now (like he did with the water bills already)5, or raising CTA fares (as was proposed by his Chief Financial Officer Lois Scott)6. These corporations are investing because they expect higher returns than they would yield through the typical bonding process. Giving Mayor Emanuel the power to do any and all things necessary to pay back investors is not good for Chicago taxpayers. It would leave working families of Chicago, already struggling to keep up with bills and taxes, even more vulnerable. 5) It takes power away from the people and City Council, and gives it to the Mayor. The infrastructure trust ordinance will essentially replace the City Councils oversight and votes over billions of dollars worth of infrastructure projects. The board will be entirely appointed by the Mayor (Section 2). Once projects get to the Council, so much will have already been put in motion that it will be very difficult for Aldermen to suggest changes, much less halt any projects.

6) It enables corporate control over Chicagos public assets, allowing privatizers to reap enormous potential returns The Infrastructure Trust would be overseen by 5 mayor-appointed Board members, chaired by the CFO of Boeing Airlines, who is also a member of Emanuels World Business Chicago. It enables a direct avenue for the citys private sector to have enormous control over public assets, with a complete lack of disclosure. Mayor Emanuel has personal and political ties to a majority of investors in Chicago, raising serious concerns around independence and accountability. Emanuel touts Macquarie, the lease owners of Chicago Skyway, as a key partner in the infrastructure trust.

Macquarie has averaged gross internal rates of return of more than 20 percent in its North American infrastructure investments.7 No wonder they are excited.
Investors need the terms of this ordinance more than Chicago does. Making profits on Wall Street apparently isnt enough now they want to use working Chicagoans as their piggy bank. Chicago working families cant afford yet another parking meter boondoggle.

5 6

Emanuels Budget Unanimously Approved, Chicago Tribune, 16 November 2011 Sun-Times 7 Exclusive: Macquarie eyes $2 billion infrastructure fund-sources, Reuters, 2 April 2012
Action Now, American Friends Service Committee- Great Lakes Region, Bickerdike Redevelopment Corporation, Brighton Park Neighborhood Council, Chicago Coalition for the Homeless , Chicago Te achers Union, Enlace Chicag o, Illinois Hunger Coalition S e r v ic e Em p lo ye e s I n te rn atio na l U n io n Lo c a l 7 3 , S e rv ic e E m p loy ee s I n te r n a tion a l Un io n Healthcare Illinois Indiana, Southsiders Organized for Unity and Liberation