Determined not to re-live the parking meter nightmare — or at least not be blamed for it — the City Council on Wednesday established rules of the road for the sale of city assets and services amid concern that the ordinance is not strong enough.
“I can safely say that we will not have another parking meter deal in this city again because of this,” said Ald. Roderick Sawyer (6th), chairman of the City Council’s Black Caucus and chief sponsor of the ordinance.
Mayor Rahm Emanuel promised a privatization ordinance during his re-election campaign and delivered, only after shelving his plan to privatize Chicago’s 311 non-emergency system.
“Under my tenure, we obviously looked at [privatizing] Midway and rejected it. What this ordinance does do is establish what we did at Midway, which is a process that worked well for this city, to now make it not something that you do by whim, but exists for the test of time,” Emanuel told aldermen.
“All of us, collectively, will be on the line to make [decisions] with our eyes open.”
The mayor pointed to the Great Chicago sell-off that saw former Mayor Richard M. Daley sell off the Chicago Skyway, downtown parking garages, parking meters and attempt to sell Midway Airport.
“At no time did the city ever have a structure in place to make an educated judgment and decision,” the mayor said.
The new ground rules are tailor-made to give aldermen more lead time and an independent analysis before decisions are made. It would apply to privatization of city assets valued at a minimum of $400 million with terms that last at least 20 years.
That’s what concerns Ald. John Arena (45th). It’s too high a threshold that would not have covered Emanuel’s lucrative digital billboard deal with a value pegged at $155 million.
“The billboard deal was a horrible deal for us. I would have loved to have seen a true financial analysis outside of these four walls with enough time to review it — and we didn’t see that. That could have been a much more lucrative deal for us,” Arena said, after Wednesday’s joint-committee vote.
“Can you create legislation that prepares for every eventuality? No. But, we have a very good base here. Alderman Sawyer did a great job defending the fundamental principles of what we’re trying to do.”
Arena said he is also concerned about the part of the ordinance tailor-made to prevent a repeat of former Mayor Richard M. Daley’s decision to spend most of the proceeds to balance his last few budgets without raising taxes.
It would require the city to invest 10 percent of the proceeds from future assets sales “not used for investment earnings, expenses, debt service, public infrastructure, or pension payments” into an “intergenerational fairness fund” to be invested by the city treasurer.
The fund could not be touched until the lease was half over or by a three-fourths vote by the City Council. The asset would have to be returned to the city at the end of the lease in a “state of good repair.”
“I’d like to see that a little bit higher. If we’re at 25 percent for TIF surplusing, let’s use that as a standard. Let’s make sure we keep some money in the vault for us. I mean — 10 percent of $400 million is only $40 million. That seems like a little bit compared to the scope of what we’re doing,” Arena said.
Sawyer started pushing for a privatization ordinance in 2012, when aldermen were blindsided to discover that the Water Management call center was being out-sourced.
On Wednesday, Sawyer acknowledged that the ordinance he joined the mayor in co-sponsoring is not perfect and might need to be tweaked. He specifically mentioned including interest payments in the set-aside fund.
But, Sawyer said the rules will go a long way toward preventing a repeat of the parking meter debacle.
“I don’t know what’s the horizon [for privatization], but I do hope that this ordinance will shine the light on deals that have been done in the dark over many, many years. Had we had this ordinance in place, I don’t think we would have had a parking meter deal, quite honestly,” Sawyer said.
Sawyer acknowledged that the ordinance won’t prevent Emanuel from resurrecting his controversial plan to privatize 311 or revive his failed plan to privatize the International Port District.
But, he said, “The light will be on us as Council members to make sure we’re protecting the interests of the citizens of Chicago. If we do allow something to happen that’s not benefiting Chicago, shame on us. And we should be held accountable.”
Earlier this week, Ald. Tom Tunney (44th) noted that there was an independent analysis prior to the parking meter deal, but it was dead-wrong about what constituted fair value.
“We brought in outside people and this was a unique asset sale that had not happened so there weren’t a lot of comparisons. There were comparisons about parking garage values, but not the public way. Value was based on a set of assumptions where we, as aldermen, were misled — especially when it comes to handicapped parking and that affected the valued immensely by interpretation on page 400 and something,” Tunney said.
“Maybe with more scrutiny or more time to evaluate that [the assessment would be more accurate]. But fair value, in my opinion, is not necessarily as objective as you might think.”
On Wednesday, Finance Committee Chairman Edward Burke (14th) countered, “You can make out any kind of scenario you want. But, nobody every talks about the success of the Chicago Skyway deal, which was one of the most successful deals every passed for the benefit of the taxpayers.”
Burke said he’s not concerned by the fact that the Skyway was sold last week to Canadian pension funds for $1 billion more than the city was paid a decade ago.
“That’s a long time. A lot of things have changed in the world of finance over that period of time,” he said.