News & Articles

Public Finance Alert
Published Friday, May 18, 2012 6:00 am


Stephen Pugh
spugh@pjjlaw.com


Glenn Weinstein
gweinstein@pjjlaw.com


Lorraine Tyson
ltyson@pjjlaw.com

City of Chicago Creates Infrastructure Trust

On April 24, 2012, the Chicago City Council passed ordinance O2012-1366, authorizing the creation of an Illinois not-for-profit corporation to serve as an infrastructure trust for the City of Chicago. The stated purposes and objectives of the trust will be to:

  • provide funding and credit support to qualifying transformative infrastructure projects;
  • play an important coordinating and facilitative role in attracting private investment for
  • these infrastructure projects;
  • have associated grant-making capabilities for select infrastructure projects;
  • facilitate funding of infrastructure projects affecting one or more co-ordinate units of
  • local government that will enable the sharing of labor, resources and knowledge
  • between and among such units of local government; and
  • establish high standards of transparency regarding the types of capital and investments
  • received, the infrastructure projects funded, the investment returns on such projects
  • and other information that will be easily accessible to the public and subject to rigorous
  • oversight and audit.

The ordinance lists as examples of City infrastructure assets mass transit, surface and highway transportation, freight rail, air and maritime ports, elementary and secondary schools and community colleges and water and sewer facilities.

 

Trust Governance

The trust will be governed by a board of five directors appointed by the Mayor of Chicago with the approval of the City Council. Four of the five directors must have expertise in the areas of financing and development of infrastructure, capital markets or public finance. One of the directors must be a member of the City Council. Each director will serve for a term of three years except for the initial directors, one of whom will serve for a term ending December 31, 2013, two of whom will serve for a term ending December 31, 2014 and two of whom will serve for a term ending December 31, 2015. All of the directors will be subject to removal by the Mayor for cause.

The Mayor will appoint the Chair of the board of directors from among the directors. The other officers of the board of directors will be selected by the directors.

The board of directors may also have non-voting, advisory members. Three such members may be appointed by the Mayor and shall be commissioners, officials or employees of the City of Chicago, the Public Building Commission of Chicago, the Chicago Transit Authority, the Chicago Board of Education, the Chicago Park District, the Chicago Housing Authority, Community College District Number 508 or co-ordinate units of government, serving ex-officio. An additional three such members may be appointed by the directors for terms of two years and will be subject to removal for cause by a majority of the directors.

Trust Funding

The preliminary clauses of the ordinance provide that the trust will be capitalized by a combination of moneys appropriated by the City Council and capital from third party investors and organizations. Initially, the ordinance authorizes a transfer by the City to the trust of $200,000 for the payment of professional services and other expenses related to its purposes. The ordinance also authorizes the further transfer by the City to the trust, subject to the appropriation of available funds, of an additional $2,500,000 in one or more grants to fund infrastructure projects.

The ordinance requires that the above transfers be made pursuant to grant agreements to be negotiated between the City and the trust. The grant agreements must contain provisions imposing certain covenants on the trust, including:

  • to establish criteria for investments received from third parties;
  • to develop financing structures for infrastructure projects submitted to it;
  • to provide public notice of meetings, conduct meetings in accordance with the Open Meetings Act1 and post
  • minutes of meetings online;
  • to provide public access to books, records and documents in accordance with the Illinois Freedom of
  • Information Act,2 and cooperate with the City with respect to its compliance with such act;
  • to prepare annual reports for public review detailing the activities and accomplishments of the trust;
  • to comply with all rules of the City regarding procurement;
  • to require full economic disclosure statements from all investors, which will be available for public review; and
  • prohibiting pledging the full faith and credit of the City or allowing any of its obligations issued in connection
  • with any infrastructure project to be a general obligation of the City.

As a not-for-profit corporation, the trust will have all of the powers granted under the General Not For Profit Corporation Act of 1986, including the powers to own, lease, convey and mortgage real and personal property, borrow money, issue bonds, notes and other obligations and make contracts.3

City Council Approval

The ordinance provides that prior City Council approval is required for any transaction by the trust that seeks to utilize present or anticipated funds, revenues, assets or properties of the City.

For further information or for assistance with infrastructure financing projects within the City of Chicago, please contact Stephen H. Pugh at (312) 768-7800 (spugh@pjjlaw.com), Glenn Weinstein at (312) 768-7850 (gweinstein@pjjlaw.com) or Lorraine Tyson at (312) 768-7820 (ltyson@pjjlaw.com).

 


 

1/ 5 ILCS 120/1 et seq.
2/ 5 ILCS 140/1 et seq.
3/ 805 ILCS 105/101.01 et seq., in particular 805 ILCS 105/103.10.

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Copyright © 2012 Pugh, Jones, & Johnson, P.C. All rights reserved.

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