Chicago Infrastructure Trust

Aldermanic Briefings

April 2, 2012

1

Funding Chicago’s Infrastructure

Historic Approach

General Obligation (GO) bonds

Revenue bonds

Pay-as-you-go funding

Problem 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 priority

Looking for New Alternatives

Engage community partners to invest in infrastructure

2

With increasingly limited resources and 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

3

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’

Selecting the Right Projects

Project 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

4

Project ideas can be generated by the Oversight Board, Sister Agencies, City Council and the public

through a transparent vetting process

Project Selection Process

Cost savings,

Revenue generation and

Service improvements

Oversight

5 voting members of governing board,

appointed by the Mayor

Advisory board

Strong infrastructure, marketing and

finance backgrounds

Aldermanic representation

Flow of Funds for the Trust

How does it work?

5

Equity

Investors

City / Sister

Agency

Contribution

Equity Return on Investment

(Based on risks borne)

Contribution

(energy savings)

Chicago

Infrastructure

Trust (501c3)

Equity Contribution

• City/Sister Agency retains control of the project

• Any City contribution has to receive additional authorization by City Council

Debt

Investors

Annual Debt Payment

Debt Contribution

(Leveraging savings)

Retrofit Chicago

Project Funding

($100MM est. energy retrofit project) Project Savings

(TBD project-by-project)

Project 2 Each project separately

financed

Retrofit Chicago Selection and Implementation

6

May 2012

Submit application

April 2012

Pass enabling ordinance, develop program guidelines and circulate application

June 2012

Evaluate and select projects

July 2012

Draft loan agreements between project departments and trust

August 2012

Finalize documentation and receive funding

September 2012

Begin project construction

• 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

Retrofit Chicago is phase one of the Infrastructure Trust and consists of energy conservation projects

Types 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 found

Implementation Timeline

• AddingtwonewrunwaysatO’Hareby2015tohandlethenewestgenerationof aircraft.• ReducingdelaysatO’Hareby80%andincreasetheairport’scapacityby300,000 passengersperyearby2015.

Parks

Creating 30,000 Jobs over the next three Years. investing More than $7 billion in our CitY’s infrastruCture.

Water and roads

• Infiveyears,everyChicagoanwillbewithinaten-minutewalktoanimprovedpark.• Building100basketballcourts,20newplaygrounds,and12newparks.• 180acresofnewparkland,sixnewcommunitybuildingsandeightnewartificial turffields.• Completingthe31stStreetHarborandtheBloomingdaletrail.• FournewboathousesalongtheChicagoRiverwilloffercanoeing,skulling,and kayaking.

• Aquarterofourwaterinfrastructureismorethanacenturyold.Wewillsave170 billiongallonsofcleanwaterbyimprovingthesystem.• Replacing900milesofwatermainsthatareover100yearsold.• Repairing750milesofsewerlineand160,000catch-basins.• Repaving2,000milesofstreetsoverthenextdecadethroughwaterandroadway projects–nearlyhalfofalloftheroadmilesinChicago.• Buildingnewbridges,improvingintersections,andmakingourwalkwaysand sidewalksmoreaccessibletothedisabled.

• Expandingschoolstoeaseovercrowding.Buildingnewlaboratoriesand gymnasiums.• Replacingoldroofsandwindowsandbuildingtech-readyclassrooms.• BuildinganewfacilitiesforMalcolmXCollegeandOliveHarveyCollegetobetter trainstudentsforcareersinhealthcare,transportationandlogistics.

schools

• Fixing26milesofslowzonesthroughoutthesystemoverthenextdecade.• Upgradingandrepairingmorethan100CTAstationsinthenextthreeyears.• TheCTAmovesmorepassengersmonthlythanAmtrakdoesannually–improving stationsandservicewillimproveourcommunities.

CTA

airPorts

AGENCY 2012 ($MM)

2012 Jobs

2013 ($MM)

2013 Jobs

2014 ($MM)

2014 Jobs

Total ($MM)

Total Jobs

Water 348 1,450 465 1,935 556 2,316 1,369 5,701

CTA 340 1,416 598 2,491 190 792 1,128 4,699

CDOT 622 2,592 485 2,020 433 1,803 1,540 6,414

CPS 660 2,750 - - - - 660 2,750

PBC 229 955 72 300 7 30 308 1,285

CCC 479 1,996 - - - - 479 1,996

Aviation 589 2,452 483 2,013 337 1,406 1,409 5,871

CPD 80 333 85 354 55 229 220 917

Retrofit 225 938 - - - - 225 938

TOTAL 3,572 14,882 2,188 9,113 1,578 6,576 7,338 30,571

2012-2014 infrastruCture investMent:funding and Job Creation ProJeCtions

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.