An ambitious plan to convert 85 percent of Chicago’s outdoor lights to LED technology got the green light Thursday amid concern about how it would be financed.
Mayor Rahm Emanuel once hoped to use his slow-starting Infrastructure Trust to attract private investors to bankroll the costly conversion of 270,000 outdoor lights along the lakefront and in streets, alleys, viaducts and pathways.
Since the LED lights will replace an outdated infrastructure that has higher built-in energy costs, the overhaul was supposed to save enough money to cover conversion costs and still give those investors an attractive enough return on their money.
Why, then, is the $160 million “smart” lighting project approved by the City Council’s Budget Committee Thursday being financed the old-fashioned way: by city general obligation bond issues over the next four years and by tax-increment financing?
“It would have been a lot more expensive to use private financing,” said Leslie Darling, executive director of the Infrastructure Trust.
Private financing would have meant “significant reductions to critical elements,” Darling added. “Private investors were very interested. But the city was not interested in privatizing a critical public safety asset.”
Transportation Commissioner Rebekah Scheinfeld said the estimated, $10 million in annual energy savings would be “leveraged to pay for this capital investment,” reducing the cost to Chicago taxpayers. The rest will come from the city’s “general capital program,” she said.
“The Budget Department will be working on an ongoing basis to identify available TIF or bond proceeds, additional operating dollars or other funding sources that will go toward this each year,” Scheinfeld said.
That explanation was not enough to satisfy Ald. Scott Waguespack (32nd), chairman of the City Council’s Progressive Caucus.
“I’m finding it hard to believe that we sat there with all of these people in the Infrastructure Trust and no one can give us a specific breakdown of TIF, bonded out dollars and other resources that are specifically going to be pegged to this contract for the next four or five years so that we know how to budget for it and it’s not sort of, let’s play it by ear and see what happens next year depending on, either the savings or how many light fixtures we put up,” Waguespack said.
“When you do a $160 million contract, there’s got to be a breakdown somewhere more specifically of how much out of TIF, which TIF is it coming from? And how much, generally, are we talking about bonding out? Is it $5 million out of TIF, $10 million out of bonds?”
Downtown Ald. Brendan Reilly (42nd) tried to pin Scheinfeld down on how long it would take for the lighting project to pay for itself.
He wants to avoid a situation where Chicago ends up with a “paid-for system that we have to go back and replace.”
The commissioner would only say that, depending on available rebates, it would take ten years to pay for the “fixture itself.” If you add in the technology that “adds more years to it,” she said.
The project approved Thursday includes a $150 million contract with Ameresco and a $10 million contract with a yet-to-be-identified construction manager.
Roughly $87.2 million will be spent on brighter LED lights, with the installation beginning this summer in South and West Side neighborhoods where violent crime is highest. Twelve arterial streets will get new lighting during Year One to make certain that all parts of the city are touched, officials said.
Another $37.2 million will be spent on infrastructure repairs, although Scheinfeld warned that, “Not every pole and every set of wiring will be touched.”
It also includes another $30 million for a “management system” that will allow the city to monitor and control lighting levels from a central point and alert the city when lights go out, shortening the time between outages. That’s why the system is called “smart.”
“Right now, we don’t know if a light is out unless someone sees it,” Scheinfeld said.
Despite the murky financing scheme, Ald. Michael Scott (24th) was all for the idea of shining a brighter light on Chicago streets.
“Lawndale and Englewood — these high-crime areas. Being able to go in there first and make sure that light is bright [will be great]. People are safer,” he said.