“There is tremendous interest in doing something different — people aren’t waiting for the federal government to raise the gasoline tax or pass the carbon tax and have money raining down,” [Robert Puentes of the Brookings Institution] said. He cited successful campaigns in “can-do states” that include Colorado, Washington, Arizona and Virginia to finance economic development projects with public-private partnerships, and Los Angeles’ vote in support of a major transportation referendum in 2008…
In the speech, to be delivered at the Chicagoland Laborers’ Training and Apprentice Center, Mr. Emanuel will describe the financing for the sprawling plan. Some of it will come from the newly created Chicago Infrastructure Trust, an initiative announced this month by Mayor Emanuel and former President Bill Clinton, who has long had an interest in infrastructure and energy efficiency. The fund, a nonprofit corporation, pools outside investment and applies it to a wide range of possible projects.
Other funds will come from cost cutting, some from the savings in energy and water use from retrofitting buildings, and some from user fees, but “none of these funds will come from an increase in property or sales taxes,” according to the speech. A copy was provided to The New York Times through the mayor’s office. Depending on the project, some of the investment would be paid back through interest on loans, others through profit sharing.
Still, economic development efforts in the past have tended to disappoint, Mr. Puentes noted, because they tended to pay businesses to relocate or threw money into projects like stadiums. Some public-private partnership projects have been criticized as giveaways to the private businesses that take them over — including two prominent cases in Chicago itself, the privatized Chicago Skyway and the city’s parking meter system, which obligate the city to leases that span generations. Mr. Emanuel says that the city has learned an important lesson, and that “I am not leasing anything,” or selling off the city’s assets, he said in an interview. “I’m using private capital to improve a public entity that stays public.”
This sounds bold on several levels:
1. The high cost of the project. Chicago has some large budget issues (a projected deficit of $635 million for 2012) as do some other local taxing bodies like the Chicago Public Schools who have a projected $700 million shortfall for next year. The cost itself, however funded, will be a difficult sell to some.
2. Infrastructure itself can be difficult to sell to the public. However, this is a growing issue for many cities that are working with decades-old infrastructure yet wanting to be part of the 21st century. At some point, these problems will have to be fixed and a good case can be made that cities (and the country) should be more proactive rather than waiting for bigger issues to arise.
3. I think the key here is the idea of a public-private partnership to fund infrastructure. Can this truly work on a large scale? Will the public believe that they won’t end up being on the hook if the private funding doesn’t work out? Can the process be fairly transparent and not done in the shadows? This idea is a big part of Emanuel’s plans for Chicago; a recent plan for Chicago’s business future was heavily dependent on the World Business Chicago group. As I’ve suggested before, if Emanuel can leverage the business community in areas like successful infrastructure improvements, he will likely get a lot of accolades.