CHICAGO – An investigation released today by Project Six shows how Chicago elected officials allowed major portions of city-owned buildings to be put on lien to a private bank to finance an energy upgrade project that ended up wasting millions of tax dollars.
In 2012, Mayor Rahm Emanuel and former President Bill Clinton unveiled a new program that promised to revolutionize how Chicago would fund city construction projects. The program, called the Chicago Infrastructure Trust, is a private nonprofit organization funded partially by tax dollars. The trust was intended to find private financing for city construction and building upgrade projects. Its first major project, called Retrofit One, was retrofitting city buildings with energy-efficient equipment and systems.
An investigation by Project Six into Retrofit One shows how major parts of city-owned buildings were used as collateral for a private loan to fund the project. Project Six’s investigation also found millions of tax dollars being wasted on labor and overhead costs for work that easily could have been done by existing city maintenance employees.
Details on the Project Six investigation, titled “Dark Trust: How Chicago’s mayor put city buildings in financial limbo and wasted millions of tax dollars” include:
- The Retrofit One project of the Chicago Infrastructure Trust had an original goal of raising more than $200 million from private investors to install energy efficiency upgrades to approximately 1,000 buildings. The project was scaled back considerably and got a $13.5 million loan (with interest) from Bank of America for upgrades to 60 city-owned buildings.
- The total interest cost to Bank of America for the loan is $5 million.
- To get the loan from Bank of America, the Infrastructure Trust used all the new energy-saving equipment being installed in the Retrofit One project as collateral that the bank would have the right to repossess if the city defaulted on the loan or violated the terms. The equipment used as collateral includes all upgraded lighting, electrical and heating, ventilation and cooling (HVAC) equipment.
- Major portions of the Retrofit One project included very minor upgrades, such as replacing light bulbs with lower-wattage bulbs, adjusting temperature settings in buildings, installing weather-stripping to doors and windows and installing sensors that turned lights off if no one was in a building. These projects cost more than $2 million.
- In most of the work done with the Retrofit One project, the labor and overhead costs amounted to more than the actual upgraded materials. For example, the city paid more than $1.4 million in labor and overhead costs to change light bulbs and lay down weather-stripping—work that easily could have been done by existing city maintenance employees.
“This is yet another frustrating example of Chicago’s elected officials wasting tax dollars for political talking points,” said Faisal Khan, CEO of Project Six. “The mayor promised revolutionary changes to the city when he created the Infrastructure Trust, but the program devolved into projects that have put major parts of city buildings in hock.
“Trying to make Chicago energy efficient is a laudable goal, but spending millions to change light bulbs and put down weather-stripping is wasteful spending and offensive for taxpayers who are forced to pay the bill,” Khan said. “The evidence shows that Retrofit One was a project that wasted tax dollars and the Infrastructure Trust purposefully kept taxpayers in the dark. Chicagoans deserve better, and mistakes like we’ve seen with the Infrastructure Trust should not be tolerated by our elected officials.”
Executive Summary is available here
The full report is available here
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Project Six is a nonprofit, nonpartisan group dedicated to investigating and ending government corruption in Chicago and Illinois. Working with residents, Project Six hopes to make Illinois’ elected officials work for taxpayers and voters, not for the politically connected or corrupt. Anyone interested in learning more about Project Six or submitting a tip to Project Six investigators should call (888) 366-2569 or visit thesecretsix.com.