Emanuel's debt plan gets City Council nod despite some protests

Thursday, 12 October 2017, 05:34:50 PM. Mayor Rahm Emanuel's plan to save money on borrowing with new debt tool passes City Council.

Mayor ’s plan to try to save tens of millions of dollars on borrowing passed the City Council easily Wednesday, but not before both opponents and supporters of the deal invoked boogeymen to try to bolster their cases.

The handful of aldermen who stood against the new debt “securitization” structure likened it during council debate to the widely despised 2008 lease of city parking meters to a private firm, a vote critics have used for years to pillory aldermen for their shortsightedness and lack of independence.

Supporters — including Emanuel — countered by saying Republican Gov. didn’t want to grant Chicago this power to restructure its debt to potentially get lower interest rates, so therefore it must be good for the city.

“This was not a gift. The governor did not want to do this,” Emanuel said in remarks to aldermen after the ordinance to issue bonds worth up to $3 billion under the new rules passed the council 43-5. “He was specific he did not want to do this.”

Under the setup, a portion of the city's share of state sales taxes would go directly to the borrowing structure. That would allow the city to get lower interest rates for bonds backed by the structure, according to Emanuel and other backers of the plan. It would also move the bond holders to the front of the line to get that sales tax money.

During an hourlong debate, opponents repeatedly brought up the reviled 75-year, $1.15 billion lease of city parking meters to Chicago Parking Meters LLC that aldermen voted for 40-5 at the behest of then-Mayor . That agreement has looked increasingly worse as the city quickly spent the money and the company continued to hike rates for parking on public streets.

“We are setting ourselves up for a long-term loss for a short-term gain,” Ald. Carlos Ramirez-Rosa, 35th, said Wednesday. “When we privatized the parking meter deal, yeah, we got a lot of money. And yes, if we move forward with this, we’ll get a $3 billion credit line. But we will lose $660 million per year in sales tax receipts.”

Backers of the Emanuel plan pushed back against that characterization.

“At the end of the day, we’re trying to compare apples and oranges,” said Ald. , 28th. “The parking meter deal, yes, was not in the best interest of everybody after we’ve gone through that. And there are protections in place today to prevent us from creating another parking meter fiasco. But this particular point here, in its purest form, is a revenue bond.”

Speaking to reporters after the council meeting, Emanuel acknowledged the long shadow cast by the meter deal. But he added, “I totally reject the simile or comparison” between the ordinances, he said.

“The governor was opposed to helping Chicago get this tool — it’s a tool — to fix your fiscal position, did not want Chicago to have it,” Emanuel said. “Now he’s talking about getting it for the state. So I think that should tell you something all along. You are right, there’s a shadow. There’s a chance to learn.”

Also looming over the back-and-forth was the fact the council will need to pass a 2018 city budget in the next few months, and Emanuel is counting on the money saved by borrowing at a lower interest rate to help close a budget shortfall that hovers around $200 million. Aldermen are not eager to find another source of revenue, especially with Cook County commissioners rolling back County Board President Toni Preckwinkle’s soda tax Wednesday in the face of widespread taxpayer anger.

Ervin framed the debate using one of his favorite catchphrases for situations when he feels his colleagues are loath to take a tough vote: “Everybody wants to get to heaven, nobody wants to die.”

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Article Emanuel's debt plan gets City Council nod despite some protests compiled by www.chicagotribune.com