Chicago Infrastructure Trust Aldermanic Briefings April 2, 2012 1
Funding Chicago’s InfrastructureHistoric Approach General Obligation (GO) bonds Revenue bonds Pay-as-you-go fundingProblem with Historical Approach Limited resources due to property tax and revenue constraints creates significant backlog of projects Taxpayers assigned most of the risk – cost overruns, underperformance, etc. Current funding mechanism has many competing interests – Getting a project funded can take years to become a priorityLooking for New Alternatives With increasingly limited resources andin infrastructure Engage community partners to invest budgetary pressure, cities worldwide continue to look for efficient and effective financing opportunities that allow them to maintain and build infrastructure Our economy depends on quality infrastructure 2
Potential Project Candidates Energy Conservation (City and Sister Agencies) Street Improvements (City) Public Transportation (CTA) Airports (City) Schools (CPS) Water and Sewer Projects (City) Parks and Harbors (CPD) Examples of Leveraging Private Investment for Infrastructure Improvements • Water and Wastewater Systems in the 1800’s • New York City Subway System in the 1900’s • New York City Schools Infrastructure Fund in the 2000s’ 3
Selecting the Right ProjectsProject Selection Criteria Transformative impact on communities we serve and how we serve them Immediate and long term reductions in the cost of government services Economic gains to the City anticipated from investment (e.g., savings $ and %) Service and quality improvements for City residents Ability to accelerate modernization of government services and practices Payback period and savings percentage for recovering the investment Job development impact Contribution to public safety and quality of life Shovel readiness Project Selection Process Oversight Cost savings, 5 voting members of governing board, Revenue generation and appointed by the Mayor Service improvements Advisory board Strong infrastructure, marketing and finance backgrounds Aldermanic representation Project ideas can be generated by the Oversight Board, Sister Agencies, City Council and the public through a transparent vetting process 4
Flow of Funds for the TrustHow does it work? Equity Investors Equity Contribution Equity Return on Investment (Based on risks borne) Debt Contribution City / Sister Contribution Chicago (Leveraging savings) (energy savings) Infrastructure Debt Agency Trust Investors Contribution (501c3) Annual Debt Payment Project Funding Project Savings ($100MM est. energy retrofit project) (TBD project-by-project) Project 2 Retrofit Chicago Each project separately financed • City/Sister Agency retains control of the project • Any City contribution has to receive additional authorization by City Council 5
Retrofit Chicago Selection and ImplementationRetrofit Chicago is phase one of the Infrastructure Trust and consists of energy conservation projectsTypes of Projects to Target Achieve cost savings, revenue gains, or service improvements – Energy savings > Total cost: GO – Energy savings + operational savings > Total cost: Probable – Energy savings + operational savings < Total cost: Possible • Final decision on these types of projects may be based on service improvements and/or if other funding sources foundImplementation TimelineApril 2012 May 2012 June 2012 July 2012 August 2012 September 2012Pass enabling Submit Evaluate Draft loan Finalize Begin projectordinance, application and select agreements documentation constructiondevelop projects between project and receiveprogram departments and fundingguidelines and trustcirculateapplication• Based on size and scope, projects can be funded as stand-alone or as pools with other similar deals • Other projects within the Infrastructure Trust would follow a similar timeline as described • Depending on the complexity of the deal, a longer timeline may be needed 6
Creating 30,000 Jobs Over The Next Three Years. Investing More Than $7 Billion In Our City’s Infrastructure.Parks • In five years, every Chicagoan will be within a ten-minute walk to an improved park. • Building 100 basketball courts, 20 new playgrounds, and 12 new parks. • 180 acres of new parkland, six new community buildings and eight new artificial turf fields. • Completing the 31st Street Harbor and the Bloomingdale trail. • Four new boathouses along the Chicago River will offer canoeing, skulling, and kayaking.Water and Roads • A quarter of our water infrastructure is more than a century old. We will save 170 billion gallons of clean water by improving the system. • Replacing 900 miles of water mains that are over 100 years old. • Repairing 750 miles of sewer line and 160,000 catch-basins. • Repaving 2,000 miles of streets over the next decade through water and roadway projects – nearly half of all of the road miles in Chicago. • Building new bridges, improving intersections, and making our walkways and sidewalks more accessible to the disabled.Schools • Expanding schools to ease overcrowding. Building new laboratories and gymnasiums. • Replacing old roofs and windows and building tech-ready classrooms. • Building a new facilities for Malcolm X College and Olive Harvey College to better train students for careers in healthcare, transportation and logistics.CTA • Fixing 26 miles of slow zones throughout the system over the next decade. • Upgrading and repairing more than 100 CTA stations in the next three years. • The CTA moves more passengers monthly than Amtrak does annually – improving stations and service will improve our communities.Airports • Adding two new runways at O’Hare by 2015 to handle the newest generation of aircraft. • Reducing delays at O’Hare by 80% and increase the airport’s capacity by 300,000 passengers per year by 2015.
2012-2014 Infrastructure Investment: Funding and Job Creation Projections 2012 2012 2013 2013 2014 2014 Total TotalAGENCY ($MM) Jobs ($MM) Jobs ($MM) Jobs ($MM) JobsWater 348 1,450 465 1,935 556 2,316 1,369 5,701CTA 340 1,416 598 2,491 190 792 1,128 4,699CDOT 622 2,592 485 2,020 433 1,803 1,540 6,414CPS 660 2,750 - - - - 660 2,750PBC 229 955 72 300 7 30 308 1,285CCC 479 1,996 - - - - 479 1,996Aviation 589 2,452 483 2,013 337 1,406 1,409 5,871CPD 80 333 85 354 55 229 220 917Retrofit 225 938 - - - - 225 938TOTAL 3,572 14,882 2,188 9,113 1,578 6,576 7,338 30,571 The 2012 data for CPS, CCC and Retrofit Chicago reflects announced multi-year capital plans with construction occurring between 2012-2014. All other agency data reflects cash flow projections.