The New Wall Street Racket Looting Your City, One Block at a Time
New schemes hold the public hostage to private finance
By Matt Reichel (May 7, 2012)

When Mayor Rahm Emanuel introduced a “new and innovative” financing tool last month to help Chicago renovate failing infrastructure without precipitating another budget crisis, many in the city were understandably critical.

Chicagoans have already endured the notorious 75-year lease of their parking meters to a consortium headed by Morgan Stanley. That sale promulgated a system wherein the public is held hostage by private finance, due largely to the inclusion of arcane legal stipulations like “non-compete clauses” and “compensation events” in the language of the contract.

Ellen Danin, writing in the Northwestern Journal of Law and Social Policy relates that: “Chicagoans learned about compensation events when CBS reported that the city’s parking meter contract required reimbursement for events like repairing streets. Public records showed that in the first quarter of 2009, the city was liable to the parking meter contractor for more than $106,000 in lost income during the slow months for street repair and street closings for festivals, parades, and holidays, as well as repairs and maintenance. At that rate, it is not unreasonable to predict that Chicago will owe roughly $500,000 a year to the private contractor.”

The city essentially acts as an insurer for the meter merchants, with the return being a one-time injection of roughly a billion dollars that the previous mayor, Daley the Second, haphazardly exhausted on closing budget deficits in the waning years of his two-decade tour at the helm.

With the current infrastructure deal, Emanuel has repeatedly claimed that this is not privatization: This is not like the parking meter deal. Can the public believe him?

Here is how the “infrastructure trust” works: the city pays for upgrades to its roads, rail or schools with dollars pooled by Emanuel’s friends from the banking and investment world. Meanwhile, the city retains “ownership” of the infrastructure, though this comes at the cost of having to ensure a revenue stream for the fund. Emanuel’s favorite example is his $225 million pet project to green-retrofit some of the city’s older buildings. The savings on energy usage stemming from the renovations are then extracted and used to pay off investors. Of course, the city could also sell municipal bonds to raise necessary funds, and then use the savings in energy costs to pay the loan back at a much lower cost to taxpayers. But then Emanuel’s friends (and campaign donors) would not be the richer for it.

While the mayor bills his plan as “bold” and “innovative,” the reality could not be further from the truth. Public-private partnerships (PPPs) have been around for decades in various forms and their track record is replete with delays, cost overruns and prolonged legal battles. What’s more, the beneficiaries of these investment mechanisms are the same rapacious Morgan Stanleys and Goldman Sachs that gave us the mortgage-backed securities scandal and the ensuing recession. Using the economic malaise they created as cause, they have ratcheted up their advocacy of PPPs as a means of helping cash-starved public entities finance capital-intensive projects.

Complete article & con't at http://www.alternet.org/story/155276/the_new_wall_street_racket_looting_your_city%2C_one_block_at_a_time

Didn't Portland steal it's motto, "The City That Works," from Chicago?

Puh-leeze, Chicago sells its future income to feed the beast today and it comes back to bite them. I feel real bad for them.

There was probably a borther-in-law of some councilman that made pretty good coin off it though.

Rahm "my dad was a terrorist" Emanuel is just another in a long line of criminals from Chicago.

The plan has been in place for a while, stress out municipal budgets with too much spending - then sell off the assets to the banking crooks.

Odd how all those "upgrades" to parking meters always seem to end with corruption, self dealing, conflict of interest and criminal activity.

Remember seeing Vera Katz talk with glee about public-private partnerships.

Do I remember Vera's glee! And Sam's too!

The ZIP/Smart Car and other proliferations of our public streets being used for private rental company vehicles should be explored like the parking meter scandals. I'd like to see an honest accounting and weigh the costs with what the public truly gets in return. Without the hype.

Vera, Sam and lets not forget, Charlie was there too, quite the trio!

In my opinion, only diehard followers, those who believe his clever words,
and newcomers would let the fox in the hen house again.