Chicago’s Opportunity to Shape Equitable Infrastructure Finance
Infrastructure serves as the backbone of communities across the nation. However, decades of underinvestment are now resulting in failing bridges, leaking pipes, and crumbling schools. Estimates for necessary repairs and upgrades have reached trillions of dollars. To address this funding gap, state and local governments are experimenting with innovative financing programs in hopes of activating private investors and speeding infrastructure development. The Chicago Infrastructure Trust is one example.
On July 20, our partners at the Center for American Progress hosted a discussion with Chicago Mayor Rahm Emanuel on infrastructure investment and its potential to aid in job growth. Since taking office in May 2011, Emanuel has championed infrastructure investment as a way to build a foundation for the city that supports its workforce. In fact, unemployment in Chicago has fallen more since May 2011 than in any other major U.S. city. Emanuel credited the city’s efforts to expand O’Hare Airport, revamp two-thirds of its “El” train stations, repair its community colleges, and replace miles of water delivery systems for much of the job growth.
Next on Emanuel’s agenda is the Chicago Infrastructure Trust, which will rely on private investors to fund public works projects in the city. Emanuel called the initiative a “breakout strategy” that will add another tool to finance Chicago’s infrastructure, but will also free the city of the slow appropriations processes at the state and federal level. The trust’s first undertaking will be energy efficiency improvements to city buildings, with a group of investors—including a labor union pension—making a $225 million investment. Private investors will take on the risk of cost overruns rather than taxpayers, while Chicago will maintain control over the assets. The project is estimated to save the city $20 million annually, part of which will be used to repay investors.
In our recent publication, America’s Tomorrow, we have lifted up local innovations in infrastructure that have helped to advance economic and social equity through job creation and improved quality of life. While Emanuel’s plan will serve as an important infusion of capital, it has thus far not addressed the following issues of equitable infrastructure investment:
- The trust will focus its efforts on large-scale projects, but communities on the city’s south and west sides continue to lack basic infrastructure such as safe streets and accessible transit.
- Emanuel’s plan has been questioned for whether it will benefit private investors more than the public—investors may increase fees or avoid plans in low-income neighborhoods in order to maximize profits.
- The initiative lacks a linkage to workforce development in disadvantaged communities, which could be solved through targeted job training or local sourcing of contractors.
If Mayor Emanuel can better address these equity issues, the Chicago Infrastructure Trust could become a model for infrastructure investment that can be used to expand opportunities for marginalized workers and communities across the nation.