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Chicago infrastructure trust – and water privatization?

A new report on private equity takeovers of public infrastructure focused on privatization of water services highlights Chicago’s infrastructure trust and warns of higher costs, degraded service, and diminished accountability.

“The infrastructure trust makes us more vulnerable to a public-private partnership” either to finance water system repairs and upgrades or for an operation-and-maintenance contract, said Emily Carroll of Food and Water Watch, which released the report.  “Taxpayers should be wary of getting a raw deal,” she said.

Mayor Emanuel has said he opposes the sale of Chicago’s water system, but the infrastructure trust is set up specifically to foster public-private partnerships, which Food and Water Watch considers a form of privatization, Carroll said.  In so-called P3s, public control over infrastructure is lost and ratepayers are on the hook for private financing costs, she said.

She points to the experience of Atlanta, which canceled a contract with a private corporation for water system operation in 2002 after huge problems with repairs, including emergency responses, and inflated charges for work done.  When only half the promised savings were realized and revenues fell short, the city requested the company’s billing records and was refused, according to FWW.

Water rates

And while Emanuel recently raised water rates to pay for repairs and upgrades, he could later come back and say more money is needed – and the higher rates would make the system more attractive to private investors, Carroll said.

In investment industry surveys, water systems are rated among the most desirable kinds of infrastructure, according to the report.  One of the Chicago trust’s participants, Macquairie Infrastructure and Real Assets, spent $578 million to purchase a private water company in 2007 – the largest private equity water service deal listed by FWW.

The report cites a trade publication describing Chicago’s $1 billion infrastructure trust as “an industry-backed deal to establish PPPs as a politically and financially viable business.”

Currently “private equity vehicles are armed with over $100 billion” seeking highly profitable investments in public infrastructure around the world, in an attempt “to exploit the lagging recovery of the public sector,” according to the report.

About Chicago it says:  “The city’s primary motivation appeared to be the desire to take debt off city books to give the illusion of reducing its liabilities.  ‘We have a tool here that takes some of the pressure off taxpayers,’ Emanuel claimed.  ‘Use somebody else’s money for a change, rather than theirs.’

“In the real world, however, banks do not provide free lunches.  Chicago will have to repay the private capital investment with interest through user fees.

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Protest to target River Point, LaSalle Central TIF

The news that the LaSalle Central TIF district took in no new revenue last year adds urgency to the demand of community groups that the TIF be shut down, said Eric Tellez of the Grassroots Collaborative.

On Tuesday, community activists will protest the newest LaSalle Central TIF subsidy, $30 million going to finance a plaza inside the planned River Point office development at Lake and Canal.

Starting at 11 a.m. (Tuesday, August 7), they’ll march from Merchandise Mart to the LaSalle Street district for a press conference and rally, and they’ll leaflet at a business owned by one of River Point’s developers.

They say “giving property tax dollars to wealthy developers to build in prosperous areas is not an effective strategy” for economic development – especially when basic services are being cut in the city’s neighborhoods.

In July, the annual TIF report from County Clerk David Orr revealed that annual TIF revenue in Cook County has declined 18 percent since the housing crash in 2007, and that LaSalle Central was among nine TIF districts with no revenue last year.

If that trend were to continue, the city could be forced to transfer funds from other TIF districts to pay for existing commitments downtown.  LaSalle Central TIF agreements involve multimillion-dollar subsidies to corporations including Miller-Coors, Ziegler Co., Accretive Health Inc., NAVTEQ, and United Airlines, which is collecting a $24 million handout.

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It’s Rahm’s strike

If there’s a teacher’s strike in Chicago this fall, it will be the result of Rahm Emanuel’s approach to implementing the longer school day.

And the simplest – and perhaps only – way to avert a strike will require Emanuel to take another look at the plan.

That’s the clear implication of the fact-finder’s report issued last week by mediator Edwin Benn (and rejected by CPS and the CTU).

Emanuel isn’t mentioned by name in Benn’s report, but since he controls the school board, every option Benn outlines for the board is one that will ultimately be decided by Emanuel.

In comments on the report, the mayor did not seem inclined to consider its suggestions for settling the dispute.

According to Benn, the board “has a very straightforward option” to reduce the monetary impact of recommendations to pay teachers for the longer day and year, which he calls “the major flashpoint” of the dispute: it “can simply reduce the length of the school day and/or the school year from its stated expansion.”

Although the media has downplayed this dynamic – and the Chicago Tribune has editorialized against compromising on the longer day (or on charter expansion) — parent groups involved in the issue are picking up on it.

Can we afford it?

In an analysis of the fact-finding report, Raise Your Hand points to the longstanding failure to address school funding issues and says, “RYH does not believe we can afford a seven-hour day that comes with a 14.5 percent raise at this time.

“A 6.5-hour day that works by moving the teacher lunch [break] to the middle of the day would be affordable,” RYH argues.  “If you can’t afford something, don’t do it.”

A 6.5-hour day “is a ‘full day'” and is in fact the national average, RYH adds.  And “longer or shorter, CPS has still not sufficiently addressed the issues of quality in the school day – class size, fine and performing arts, violence prevention, foreign language, physical education, etc.”

Finally, “until we get real about the state of education funding and do something to change it, we won’t make real improvements in the school day.”

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Action Now: Don’t demolish – rebuild

A community group is taking issue with Mayor Emanuel’s new plan to demolish vacant buildings that serve as gang havens.

Action Now is proposing an alternative strategy:  use the Chicago Infrastructure Trust to finance rehab of the buildings into affordable rentals.

Emanuel says his “message to gang members” is that “you will no longer find shelter in the city of Chicago.”

But according to Michelle Young, president of Action Now, “He’s really saying that working families will no longer find shelter in the city of Chicago.”

On Monday, Emanuel said the city has identified 200 buildings for possible demolition due to their “location in high-crime areas.”  His initiative covers Englewood, Lawndale, Grand Crossing, Garfield Park, and Little Village.

“All over the city there are blocks full of vacant homes,” Young said in a release. “Our neighborhoods have become ghost towns. The mayor is going in the wrong direction.

“The solution to the vacant property problem is not creating more destruction by demolishing buildings,” she said. “We must rebuild our communities by transforming vacant buildings into homes for families once again.”

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Contract talks should include classroom issues, parents say

A parent group is calling on Mayor Emanuel to expand negotiations with the Chicago Teachers Union to include class size and other issues which CPS has so far refused to consider.

A new petition by Raise Your Hand (available here) calls on the city “to open up talks beyond pay and benefits and find ways to compromise with our teachers on issues that are critical to our schools.”

“We believe that the only way to come to a decent contract and avoid a strike is to give the teachers a contractual voice in some of the work-rules that impact their day and profession,” said RYH in a recent statement.

In negotiations under way since last November, CPS has refused to consider issues it is not legally required to negotiate, including subcontracting, layoff procedures, class size, staffing and assignment, and —  with passage of SB7 last year – the length of the school day and year.

It’s the first time CPS has ruled those issues off the table.

CPS’s refusal to negotiate on non-economic issues is a big reason teachers voted overwhelmingly to authorize a strike, said teacher and union activist Xian Barrett.  “We would never have gotten a 98 percent ‘yes’ vote if it had only been about pay and benefits,” he said.

“If you ask teachers what how they would improve their jobs, they don’t start with better pay, they start with class size, they start with wanting an administration and leadership that works with teachers instead of dictating to them,” Barrett said.

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Big money in Wisconsin, Chicago

The day after huge infusions of political money helped save Governor Scott Walker from recall in Wisconsin, big-money interests were buying media to influence public perceptions of the Chicago Teachers Union’s strike authorization vote.

(Ken Davis points this out at the top of this week’s Chicago Newsroom on CAN-TV, where I was a guest with Lorraine Forte of Catalyst Chicago.  You can watch it here.)

In either case, of course, the goal is to shape the narrative.

It worked in Wisconsin, where a governor who’s fallen far short on his promises of economic revival – Wisconsin is at the back of the pack in terms of job creation over the past year – was recast as a tough, courageous leader turning the state around.

The real story in Wisconsin is that union busting and cutting public spending has failed to get the economy going.  It’s really a case study of how austerity doesn’t work.  Now it’s also a case study on how to sell austerity, even when it’s not working.

In Chicago the goal is to take a situation where teachers are under attack and fighting back and paint it as one where they are being reckless and irresponsible.

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Teachers show their strength

Anyone witnessing the CTU rally and march Wednesday had to be amazed by the incredible level of solidarity and militancy – and wonder whether Mayor Emanuel may have taken on more than he can handle when he chose teachers as the enemy against whom he would prove his toughness.

Emanuel “pretends he has a new approach, but we have seen it before and it doesn’t work,” said CTU activist Jennifer Johnson at the overflow rally across from the Auditorium Theater.  “Starving and closing schools doesn’t work, driving veteran teachers out of schools doesn’t work, putting education in the hands of private corporate providers doesn’t work, and disrespecting the people who do the work of educating children helps no one.”

And she put it in a national context:

“Educators across the country are facing the same corporate-driven policies; educators across the country are fighting for the resources they need and the respect they deserve.  But people are paying attention to Chicago, because the CTU is standing up.  We have become the epicenter of this struggle.”

Could Chicago be this year’s Madison, with Rahm Emanuel playing Scott Walker’s role?  It looks possible.

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Not NATO’s kind of town

Mayor Emanuel is congratulating himself for a successful NATO summit – successful mainly because no disasters occurred, though the only real threats seem to have been those manufactured by police.

No doubt the black bloc is also congratulating itself that day-after front pages carried pictures of scuffles with police, rather than veterans returning their medals with members of Afghans For Peace looking on, certainly the most moving and meaningful drama of the weekend.

What would a real accounting of the summit’s costs and benefits look like?

“Obama projects desired image,” the Sun-Times titles one story, but the summit itself had some signal failures.  Two major goals – getting commitments from member states to fund the next phase of the war in Afghanistan, and reopening supply routes through Pakistan – did not pan out.

The protests cast a long shadow over Obama’s attempt to play the summit as a withdrawal from Afghanistan for the domestic audience (while lining up support from other countries for continuing operations).

Unfortunately for Emanuel’s legacy, the “Chicago Accord” that he was boasting last week would be signed at the summit – an agreement on how to proceed on Afghanistan – wasn’t to be, Rick Rozoff of Stop NATO points out.

Even the summit’s biggest actual accomplishment – the announcement that NATO’s missile defense system is going online – comes with no noticeable benefit and at great cost: major tensions with Russia, whose cooperation is needed for the alternative supply route to Afghanistan, Rozoff says.

He points out that the announcement included new plans for satellite technology, which he calls a fulfillment of Ronald Reagan’s Star Wars dreams, and a dangerous and costly step toward the militarization of space.

Largest anti-NATO protest ever

Meanwhile, NATO was subject to a great deal of negative attention – and Chicago hosted the largest anti-NATO demonstration in the entire history of the alliance, Rozoff said.

(Four city blocks – a half mile – of marchers filling four lanes of State Street probably amounts to two or three times the police/media estimate of 3,000 protestors.)

And there’s renewed attention to the obscene amounts the U.S. and NATO nations spend on armaments.  This at a time when suffering from a lingering economic crisis continues to grow, when cities and states are mired in crisis and slashing public services – and while Obama’s defense secretary is opposing relatively minor spending cuts agreed to in last year’s budget deal.

The media tends to see the protestors as bearing a confusing mish-mash of causes.  But listen to them and you see that they are all connected on a fundamental level. At the Grant Park rally on Sunday, speaker after speaker tied issue after issue to the question of war and militarization.

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        By Stephen Franklin Community Media Workshop   A 3-year-old child died on a plane from Chicago to Poland. This, Magdalena Pantelis instantly knew, was a story her readers would care about. But she needed more detail to write about it for the Polish Daily News, the nation’s oldest daily newspaper in Polish, founded Jan. […]
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