The City Council’s Progressive Caucus is demanding that an ordinance creating Mayor Rahm Emanuel’s $100 million “Catalyst Fund” include an ironclad guarantee that the money will be invested in neighborhoods truly in need.

The all-purpose revenue ordinance that Emanuel introduced at Tuesday’s City Council meeting falls far short of that demand.

It states that “priority would be given to investment funds” that put their money into projects “located in census tracts eligible for Community Reinvestment Act credit.”

“It’s another one of those Rahm Emanuel attempts to say, `Trust me,’ ” Ald. Ricardo Munoz (22nd) said.

“I’m a no vote on this Catalyst Fund if they don’t change that,” Munoz said. “If he in his own speech said this fund is being created to be a catalyst in communities of need, then that needs to be codified. Folks are not gonna accept language that says it is a `priority.’ Because it’s also a priority to prevent crime. And it’s not happening.”

Without ironclad language mandating that the money be invested in communities truly in need, Munoz said history will repeat itself.

“It’ll end up acting like a bank and just become a slush fund for economic development that the administration prefers that might or might not qualify under” the Community Reinvestment Act, Munoz said.

“Look at TIFs. TIFs are supposed to be a priority for blighted neighborhoods and we’ve TIFed neighborhoods that are not blighted.”

Ald. Pat O’Connor (40th), the mayor’s City Council floor leader, said there’s a good reason why the language of the mayor’s ordinance includes no requirement that the money be spent in neighborhoods of need.

“I don’t think it would be constitutionally acceptable. . . . You run a risk of missing opportunities and not having an ordinance that could withstand a challenge,” O’Connor said.

“You have a board that’s basically making loans. You can’t red-line loans. A bank is encouraged to invest in areas that are low- and moderate-income census tracts,” he said. “But just like they can’t say, `We’re not going there,’ I don’t think you can deny somebody who otherwise qualifies for a loan that they can’t get that loan because you’re in an area that isn’t low and moderate.”

City Treasurer Kurt Summers conceived the idea of a Catalyst Fund — or Fund 77 for the number of neighborhoods in Chicago — and sold it to the mayor who appointed him.

Summers has assured aldermen that the intent is to invest in impoverished Chicago neighborhoods otherwise denied access to capital.

“It’s not that there’s additional real risk. It’s . . . perceived risk. There is a perception issue that, in certain communities, to make an investment is a riskier investment . . . [and] you need to be compensated more for that,” Summers told aldermen during a budget hearing last week.

“The reality is, if you look at just the sale of the Mariano’s in Bronzeville [this week] at 39th and King Drive — the liquidity that created for those developers who took the `additional risk’ of developing in that marketplace and then immediately sold it — that tells you that, when you have the courage to see through what is a traditional underwriting [and] investment bias in those communities, you can be rewarded,” Summers said.

The city’s $100 million in seed money would be matched by three times that much in outside capital. No more than 20 percent would go to any one project. A seven-member board that includes the treasurer would select private managers.

Summers has maintained there are big difference differences between the new “fund of funds” administered by outside money managers who make investment decisions and the Infrastructure Trust he chairs that has been slow to get off the ground.

The Catalyst Fund would have its own capital, with the city contributing $35 million both this year and next and $30 million in 2018. It would invest in taxable private projects with a mandate to turn a profit.

The Infrastructure Trust depends on tax-exempt deals and is limited to government-related projects. Under Summers’ leadership, the Trust is about to embark on “the biggest lighting program in North America” after what he calls a “three-year slow start.”

The $100 million in seed money would come from funds generated by the treasurers’ ability to double investment returns on the city’s $7 billion investment portfolio. But there’s a familiar fallback: money generated by former Mayor Richard M. Daley’s decision to sell off city assets.

“We have an additional backstop of potential monies from the Skyway and parking meters that were never invested in human and neighborhood infrastructure as they were intended. We can use that, if for some reason we don’t continue to exceed returns,” Summers has said.

If the Catalyst Fund works, it could help Emanuel conquer his image as “Mayor 1 percent” with downtown-centric development that has left neighborhoods behind.