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North Siders protest SRO closings

Lakeview residents will protest the loss of over 700 SRO units over the past year — and demand that elected officials join their efforts to convince a new landlord to discuss ways of preserving affordable housing — in a march and rally Sunday, February 10, starting at 1:20 p.m. at Wellington United Church, 615 W. Wellington.

Current and former SRO residents will join supporters from the Lakeview Action Coalition seeking a meeting with Jamie Purcell of BJB Properties, and calling on Aldermen James Cappelman (46th Ward), Tom Tunney (44th Ward) and Scott Waguespack (32nd) to step up on behalf of residents in their wards.

BJB has acquired five SROs in Lakeview over the past year, several of which have been emptied, rehabbed, and re-rented at double their previous rents, said Mary Tarullo of LAC.  At some properties, BJB gave 13-hour eviction notices to tenants, she said.

Most recently, on January 31 residents at the Chateau, 3838 N. Broadway, were given 30-day lease termination notices.  Five days later their hot water was turned off, and remained off for five days.  Residents say they were given no explanation for the loss of hot water.

Cappelman suggested residents contact the city for information on getting into homeless shelters, residents say.  “We think that’s an egregious misuse of city resources — to be assisting a landlord in displacing tenants from his buildings,” Tarullo commented.

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Lathrop plans: little preservation, big TIF

Three new plans for redeveloping Lathrop Homes fall far short of the project’s stated goal of historic preservation – to the point that developers will pass up tens of millions of dollars in federal historic preservation tax credits.

Instead, they plan to ask for $30 million or more from a new TIF district.

The plans have garnered widespread local opposition due to heavy increases in density and congestion.

CHA and Lathrop Community Partners will present three scenarios at open houses (Thursday, November 15, 3 to 8 p.m., and Saturday, November 17, 12 to 4 p.m.) at New Life Community Church, 2958 N. Damen.

At 4:15 p.m. on Thursday, Lathrop residents and neighbors will hold a press conference to denounce all the scenarios and the lack of any meaningful community engagement.

Already thirteen neighborhood associations have signed onto a letter to CHA from Ald. Scott Waguespack (32nd) calling for rejection of all three plans due to excessive density and lack of public participation.

And Tuesday, Ald. Proco Joe Moreno (1st) sent an e-mail blast announcing the open houses and saying, “I do not believe that any of the individual scenarios on the table are an acceptable plan to move Lathrop Homes forward.”

Total demolition

In fact, one of the scenarios would almost certainly fail to win regulatory approval.

Dubbed the “Delta Greenscapes” scenario, it calls for demolition of all of Lathrop’s low-rise, historic buildings.

But since Lathrop was named to the National Register of Historic Places in April, any demolition involving federal funds must be approved by the Illinois Historic Preservation Agency and the Advisory Council for Historic Preservation.  And CHA will use federal funds to cover the costs of rehabbing and operating public housing at Lathrop.

“Clearly, demolishing everything would not meet preservation guidelines and would rarely be an  approveable action under the federal program,” said Michael Jackson, chief architect for preservation services at IHPA, who notes that nothing has been submitted to his agency.

Approval might be forthcoming in cases involving extreme deterioration and functional obsolescence, but “I can’t see that logic applying here,” he said. “The essence of the Lathrop project is historic preservation.  It’s been identified as a historic property, and the development team has been given that direction.”

Indeed, the RFQ under which LCP was selected states that the developer “shall consider preservation one of the priorities of the revitalization.”

“What they’re pulling is a typical developer’s trick,” said Jonathan Fine of Preservation Chicago.  “We’re going to show you something so god-awful that when we walk it back to something slightly less god-awful, the community will think it’s won something.”

Developers prefer TIF

Despite the RFQ’s request for developers with experience using historic tax credits, none of the plans are likely to qualify for the credits, which cover 20 percent of a project’s costs – in this case, tens of millions of dollars.  That’s what developers told aldermen in August, said Paul Sajovek, Waguespack’s chief of staff.

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Forum on water privatization

Leasing the city’s water system to a private company would provide a quick infusion of cash, but Chicagoans would pay for it for decades – not only with higher rates but with reduced service, as the company cuts staffing levels in order to bolster its bottom line, according to a new analysis from Food and Water Watch.

Over a 20-year period, consumers would pay two to three dollars for every dollar the city receives in an up-front payment, FWW estimates.  The city could save 20 to 50 percent of capital costs by using municipal bond financing instead of private financing with a lease deal, according to the analysis.

It was released in conjunction with a public forum Monday night which attracted a standing-room-only crowd at the Chopin Theater (see previous post re. nonprofits’ views — and suburban experiences — on the issue).

Ald. Scott Waguespack (32nd Ward) warned that although the city isn’t talking publicly about a water deal, “these things happen fast” so “we’ve got to be on our game.”

He recalled asking if he could see the city’s economic analysis before the December 2008 parking meter lease vote in the City Council.  “They said no, you can’t.  That made it an easy ‘no’ vote.”

He urged audience members to contact their aldermen about an ordinance he’s proposed to add transparency and taxpayer protections to asset leases by the city.

Waguespack said he first became aware of water issues while serving with the Peace Corps in Kenya.  “I saw what happened when private interests control water,” he said.  “Here in the U.S., rates go up, but in African they can just shut the water off.”

Rachel Weber, an urban planning professor at UIC, said private infrastructure investment funds grew dramatically with the end of the last decade’s economic boom, as investors became skittish about other markets and long-term, stable revenue-producing assets became more attractive.  At the same time, fiscally strained cities and states grew desperate for cash infusions.

“The process for privatizing assets is often not transparent,” she said, and “investment firms often serve as both advisers and financiers.”  The potential for undervaluing assets is great, she said.

Often investment banks advising cities on such deals are paid success fees, giving them an incentive to push a deal, so they “aren’t always a fair arbiter,” said Jon Keesecker of Food and Water Watch.

In many cases revenue streams from asset leases are securitized and sold off in bond markets, said Phineas Baxandall of U.S. PIRG.

Asset lease deals often involve “clear conflicts of interest,” while the efficiencies that privatization is supposed to bring “often turn out to be illusory,” he said.

Keesecker said a lease of the water system would involve a loss of local control, including the ability to decide where to build water lines and whether to sell water to other communities – or to water bottlers.  Such activities could be restricted, but that would make the asset less valuable and reduce the city’s concession fee, he said.

The panel was moderated by Abigail Singer, a new organizer focused on water privatization with Little Village Environmental Justice Organization.  It was co-sponsored by Illinois PIRG.

Speaking from the audience, Kathy Cummings urged concerned residents to get in touch with a new group, Citizens Act to Protect Our Water.

 

Related:

Chicago water for sale?

Chicago water for sale?

With Chicago facing a half-billion-dollar shortfall – and Mayor Daley ruling out increases in taxes, fees, and fines – could the city which has pioneered the leasing of major public assets be looking into a long-term lease of its water system?

“The City of Chicago Department of Water Management is said to be considering a lease of its water and wastewater system,” reported the Public Works Financing newsletter in April.

A water department spokesman didn’t confirm or deny the report, but was dismissive. “I hear these rumors periodically, but so far there hasn’t been anything to it,” said Tom LaPorte.

Such a move wouldn’t come without opposition – first of all from the union representing rank-and-file workers in the water department.

“In general privatization is a bad idea,” said Anders Lindall of AFSCME Council 31. “It places a middleman between taxpayers and the government that serves them, a private-sector middleman whose concern isn’t good quality public services but profit.”

Using upfront payments from the sale or lease of assets to pay for operational costs “is the road to fiscal ruin,” he said. “It’s like burning your furniture to heat your house.”

Akron, Milwaukee say ‘no’

Other cities in the region, contending with their own fiscal crises, have recently struggled with the issue. In Akron last November, voters defeated a ballot initiative to approve the long-term lease of the city’s water system by a two-to-one margin. By a similar margin they passed another initiative requiring voter approval for any future sale, lease or transfer of a public asset.

In a city hard-hit by the foreclosure crisis, “people are already so stretched, and the prospect of having to pay higher rates for water and sewer services hit home pretty strongly,” said Greg Coleridge of Northeast Ohio AFSC. He worked with labor and community groups to organize the Citizens to Save Our Sewers and Water, which educated residents about the costs of water privatization and passed petitions to get the issue on the ballot.

Coleridge said early education was crucial — including community screenings of a number of documentaries on water privatization — “so when the big p.r. machine comes along, people already have a deeper understanding, and they won’t be so easily fooled.”

In Milwaukee, the Common Council voted in June to put on hold the hiring of consultants to solicit bids for a 99-year lease of the city’s water system, after a coalition of labor, community, and environmental groups came together to oppose the proposal.

Keep Public Our Water “came together really fast,” said organizer Corinne Rosen. People were concerned about water rates going up and water quality going down, as well as fiscal responsibility and the secrecy of the decision-making process, she said. And while the idea is down it may not be out; KPOW is keeping an eye on things — and pushing for a council resolution against privatizing the city’s water works.

Private operation of municipal water systems often means frequent rate hikes, with private utilities charging as much as 80 more than municipalities for water, as well as lower quality service, with deferred maintenance and backlogged service requests, according to a recent report from Food and Water Watch. The group opposes corporate control of food and water resources, and assists local organizing efforts around the world (including those in Akron and Milwaukee) to keep water in public hands.

The report deals with two types of privatization, explains FWW organizer Jon Keesecker, management and operation contracts, where cities hire private companies, and leases or sales, where companies pay municipalities so they can collect user fees themselves.

People’s first concern about such deals is often rate hikes, he said, along with water and service quality. Beyond that, though, “with something as essential as water, people really want the accountability of public control,” he said.

Indianapolis considers sale, Fort Wayne buys back

In Indianapolis, a private company has operated the water system since 2002; the deal included a five-year rate freeze. Five years later, rates went up 29 percent, and this April they went up an additional 12 percent (after the water company requested a 17 percent hike). In September another rate hike request was submitted – this time for 35 percent. Also in September, Mayor Greg Ballard proposed selling off the water and sewer utilities to outside operators; part of his argument is that it could bring rates down.

Meanwhile, state and federal authorities are investigating environmental violations by the Indianapolis water company, and residents sued last year charging the company systematically overbilled 250,000 customers. (A judge ruled they lacked standing; the city is the company’s only customer.)

This month the Illinois Commerce Commission is holding hearings on a request for rate hikes ranging from 28 to 50 percent by Illinois American Water Company, which serves 317,000 customers from Chicago’s southwest and western suburbs to southern Illinois. It’s the latest of a steady string of rate hikes. (American Water bought up local private water utilities in the area starting in the 1980s.)

In Homer Glen and Orland Hills, where water rates are dramatically higher than in neighboring towns that draw the same Lake Michigan water through municipally-owned systems, officials are considering using eminent domain to take back their water systems, according to the Southtown Star. Other municipalities, including Peoria and Pekin, have mounted similar efforts over the years, but American Water has beaten them back.

Sometimes cities win. After a six-year legal battle, Fort Wayne, Indiana, last year won control of water services that had belonged to a Aqua America. According to FWW, a typical household’s bill dropped by over a third, while water quality and service improved significantly. “It’s been quite successful,” said Keesecker.

Paris says ‘non’

If Chicago were to consider water privatization, one prime prospective buyer would be Veolia Water, part of the North American subsidiary of the French multinational Veolia Environnement, the largest private water company in the world. Veolia Environnement NA moved its headquarters to the Aon building in August 2008. At the time, chief executive Michele Gourvennec noted that “the city of Chicago’s many environmental initiatives mirror…our interest in providing leading-edge environmental programs for our municipal, industrial, and commercial customers.”

Veolia operates the Indianapolis water system (now called Veolia Water Indianapolis) under a 20-year, $1.5 billion contract. In 2008 Veolia took over a $400 million contract to operate the Metropolitan Milwaukee Sewerage District, and it was listed as one of three multinationals that would have the capacity to bid on a water system takeover there.

Veolia’s “vision” is of “a future where the entire planet’s increasingly scarce supply of water fit for human consumption is controlled as a commodity to be bought, sold, traded, marketed, managed and priced for the highest possible corporate profit,” according to a 2005 corporate profile by Public Citizen. (The group argues that as a “natural monopoly,” water resources are best kept in public hands.)

Public Citizen charges that “corruption appears to be part of their corporate culture,” noting bribery convictions of company executives in New Orleans as well as France and Italy, and the jailing of mayors in Bridgeport, Connecticut, and Angoulene, France, for taking bribes from company representatives. (In New Orleans in 2002, after faith, labor, community and environmental groups organized against privatization, bids were rejected by the water and sewer board — and a referendum was passed requiring voter approval of any privatization contract.)

Reviewing the corporation’s operations in Africa, Asia, Europe, and Latin America, Public Citizen charges that Veolia has “a global track record of corruption, broken promises, environmental degradation, price-gouging, obfuscation, misdirection, and secrecy.” Nonetheless, “the world’s largest water company continues to enjoy substantial support within powerful pockets of financial and political circles.”

Founded in 1853 as Compagnie Generale des Eaux (by decree of Napolean III), Veolia took over the water system of Paris in 1861. Last year Paris decided it will not renew Veolia’s contract for water services in the city, which expires on December 31, Inter Press Service reports.

“We want to offer better service, at a better price,” said Paris Mayor Bertrand Delanoe.

A new model for Chicago

Chicago has led the nation in putting major public assets up for long-term lease. Its 2005 Skyway lease to a European consortium was the first such deal for an existing tollroad in the U.S.; its attempt to privatize Midway Airport (which could be revived if economic conditions improve) would have been the first of its kind too.

A recent Illinois PIRG report looks at all of Chicago’s privatization deals, including downtown parking garages and the city’s parking meters, and finds that all include contract terms limiting concessionaire’s risk. In the parking meter deal, the city is barred from issuing permits for parking facilities that charge less than three times nearby meter rates, which would seem to remove any competitive pressure to keep rates down.

In no case has there been any independent financial analysis of asset value or public interest impacts, Illinois PIRG found; the deals are developed and cut in secret, with no opportunity for public input; huge fees for lawyers and financial consultants cut into the value of deals, and sometimes raise conflict-of-interest concerns; and multigenerational leases limit options for cancelling deals and saddle future generations with rising costs and limited options.

The longer the timeframe, the harder it is to accurately gauge an asset’s value, said Brian Imus of Illinois PIRG, and it’s virtually impossible to predict changes in technology and demographics in the long run.

The report was issued in conjunction with an ordinance sponsored by Alderman Scott Waguespack, who called the parking meter debacle “a wake-up call for the City Council to strengthen the tools they have to make sound fiscal and policy decisions.”

The ordinance would require notification of aldermen whenever a public asset lease was under consideration; a public hearing at least a month before a council vote on putting out a bid; independent third-party review of asset values, public-interest concerns (which are particularly relevant in core operations like parking meters), consideration of other options; and a 30-year limit on leases of assets worth over $1 million.

“There need to be policies in place to protect the interests of the public and taxpayers,” said Imus. “We don’t have that in Chicago.”

He expects a push for hearings on the ordinance next month. A previous council effort to impose a 30-day “waiting period” was whittled down to 15 days under administration pressure. It’s not the time period itself but the independent review it provides for that’s important, says Paul Sajovek, Waguespack’s chief of staff. (In Akron voters won a 90-day review period — and the requirement that voters approve any lease of public assets.)

Imus believes it’s possible that some privatization deals could benefit the public. And while some would agree with Lindall that privatization is a bad idea generally, it’s likely many would agree with Keesecker that water services should be kept public.



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