Two years ago, Mayor Rahm Emanuel touted his Chicago Infrastructure Trust as a “breakout strategy. ” Two years later, it’s been anything but.
Originally touted as a $1.7 billion pool of private financing for “transformative” public works projects, it “has evolved into a low-budget broker of new ideas and interagency cooperation,” Crain’s reports.
Even that’s a bit of a stretch. So far most of the trust’s “new ideas” have already been widely deployed in other cities, without the convoluted financing schemes.
When it was created in 2012, the trust’s first project was to be a $225 million energy retrofit program which would create 2,000 jobs. When the trust finally approved the project, it was down to $25 million. By time a bid was accepted in January, it was just $13 million, with job creation pegged at around 120.
According to the Tribune, the work was scaled back due to “lack of interest from investors.”
Back in 2012, when City Council members sought a 30-day delay to consider the ordinance creating the trust, Emanuel gave them six. “In the time that we wait, we have costs going out the window literally at these old facilities that need to be weather-proofed and retro-fitted,” Emanuel said, arguing for the urgency of approving the trust. “And people who could be going to work who aren’t going to work. ”
As it turns out, it would have been far quicker for the city to issue a bond to finance the project — the way other cities have done — and it would have been cheaper too, Ald. John Arena (45th Ward) told the Daily Whale.
But cost savings and jobs were apparently secondary priorities. The urgent matter, the big challenge, is to prove the trust’s relevance and viability.
Now on tap, along with such transformative projects as energy retrofits for swimming pools and wi-fi upgrades for CTA subways, is a program in which commercial landlords can pay for energy improvements with a property tax surcharge. Theoretically their overall costs will go down in the process.
This is not exactly a new idea either. Thirty-one states, including Illinois, have passed enabling legislation for Property Assessed Clean Energy programs, and 260 cities and regions have projects underway, according to the nonprofit PaceNow. According to PaceNow, the process is straightforward: enabling legislation is passed, property owners are signed up, and “the municipality provides financing for the project, typically by selling bonds secured solely by payments made from participating property owners. ”
Financing can be public or private. In Ann Arbor, the city is planning to issue a bond for its PACE program; in Milwaukee, federal funds are being used; in St. Louis, a private bank is providing financing through the St. Louis Clean Energy Development Board. Of course, public financing through tax-exempt bonds is cheaper than private financing.
The idea is not even particularly new for Chicago. In 2012, in the first version of “Retrofit Chicago,” Emanuel announced a commercial buildings initiative which provided technical assistance to help landlords install energy upgrades. The Building Owners and Managers Association was a partner in that initiative; in Crain’s this week, a BOMA lobbyist expressed skepticism about the new program, in which landlords would sign up for property tax increases.
It’s not clear what the Chicago Infrastructure Trust brings to the table in these projects, besides giving private equity funds a chance to get in on the action.