Mayor Rahm Emanuel provided an interesting defense of his controversial public-private infrastructure trust in an interview with Bloomberg Businessweek. The interview was conducted during one of Emanuel’s L rides to work. (He says he takes the train to City Hall an average of twice a week.) It also covered public transit, education and crime. (The mayor promises “we are going to turn the corner on the shootings.”) But the longest passage was about the trust, which would invite private businesses to construct public buildings, then lease them to the city. Projects involving parks, school and public transit would be exempt from City Council oversight.
The trust passed the Council in April, 41-7. Aldermen who objected still felt burned by the mortgage lending crisis and the parking meter deal, which made them unwilling to put faith in the public or the private half of the partnership.
“We trusted people to invest when we bought homes, and they let us down,” Ald. Toni Foulkes. “They pushed us in sub-prime homes because they knew they were going to make more money and the interest rates would be high. I think what terrifies people, which terrifies me, is that the investment, nobody invests money to not get a return. And they expect big returns.”
Emanuel’s argument: depending only on public funding for public projects is socialist and un-American. Here’s the exchange.
Talk about your public-private infrastructure trust and why you decided to finance a lot of this stuff this way.
OK, let me say this. All the water investments [used a] traditional methodology, method of financing. Airport, federal funds, local financing. All the roads, traditional. Community colleges, we cut the central office and we saved $120 million, and we’re plowing it into one new campus and we got state funding for another new campus. Then we’re doing a lot of what I would call maintenance/upgrades at all the others.
That is, of the $7.3 billion in capital in the next three years, $7.2 billion of it is traditional, meaning cuts, redirected. The trust is going to be used for what I call transformative [projects]. It hasn’t even done anything yet, and the first one will be for retrofitting older city buildings.
That will put about 1,000 people to work, save us citywide about a million, million and a half a month in energy-loss costs. [The public-private trust is] not going to finance the CTA’s bus facility. That’s not what it’s for. It’s for looking at transformative investments that really change the economic opportunity for the city. Remember, Washington finally passed, after 10 years, an infrastructure highway bill, but it’s only for 18 months. Nobody can make a plan in 18 months.
On the trust, the local press really went after you, and continues to, over the transparency issue. What’s your response to that?
It will fully comply with all the laws that are on the books. It’ll be totally transparent. Every reform, every change, every amendment I adopted, all dealt with governance. I understand people’s concerns based on past actions that they all participated in. [Chicago gave up billions of dollars in revenue in 2008 under then-Mayor Daley when it leased its parking meters to a partnership led by Morgan Stanley (MS).] And the states of California, Washington, and Oregon are now looking at doing exactly what we’re doing. You would agree we’re the most capitalist system—economy—in the world?
We’re the only economy that still does its infrastructure on a socialist model, state-owned. I mean, the Canadians came in here—do you know there are 147 different projects that are all public-private in Canada, just north of us? It’s a tool. It’s not an end.
This month, Ward Room blogger Edward McClelland’s Young Mr. Obama: Chicago and the Making of a Black President will be available on Kindle for $2.99. Tracing Obama’s career in Chicago from his arrival as a community organizer to his election to the U.S. Senate, Young Mr. Obama tells the story of how a callow, presumptuous young man became a master politician, and of why only Chicago could have produced our first black president.