In the city that invented the skyscraper, no small plans will do. In that vein, Mayor Rahm Emanuel promised to transform Chicago with mega-projects so sexy they could be bankrolled entirely by private investors in exchange for a chunk of the profits.
He staged media events with former President Bill Clinton. He touted the plan at big-ideas forums. And he heralded the new Chicago Infrastructure Trust as a "breakout strategy" for modernizing buildings, bridges and broadband without waiting for Washington handouts.
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Fast-forward two years, and the trust is launching just its first endeavor -- a massively scaled-back energy efficiency project for 60 buildings with an outside investment of just $12 million -- piddly in the world of infrastructure.
The Chicago experience with public-private partnerships, echoed in a similar initiative on the West Coast, shows that tapping private funding to overcome fewer public dollars hasn't proven to be quicker than traditional funding methods. Neither investors nor politicians have backtracked on the idea, but the results so far haven't lived up to the expectations raised by Emanuel and others in touting a new quick-fix for American cities' budget woes.
"We built this grand scheme to do these great things and then we do this underwhelming project," said Chicago alderman John Arena, noting how any savings will end up with investors. "The whole idea ... was for big thinking, and we're not doing that right now, at least I haven't seen it yet."
Backers say it's too early to dismiss Chicago's first-in-the-nation experiment. Experts say just closing the first deal shows investors the city is serious, and the alternative -- relying only on methods like bonds and federal grants -- is a certain path to decay.
"We'd all love to be able to dive right into big projects with big outcomes," said Chris Taylor, executive director of the West Coast Infrastructure Exchange, a multi-state partnership similar to Chicago's trust. "But at the same time you're talking about moving a large number of risk-averse entities that have been doing things a certain way for over 100 years, and expecting that that's going to change overnight is not necessarily realistic."
Experts in these types of deals say the pace does not reflect a lack of investor interest. Major banks and pension funds make clear there is a tremendous amount of capital looking for a home in infrastructure, which is seen as a source of lower but stable returns sheltered from the volatility of public equity markets. Still, some projects are considered riskier than others and one analyst even warns investors about "rosy" forecasts from politicians.
Taylor's initiative has encountered similar startup challenges to Chicago's. It teams California, Washington and Oregon with the Canadian province of British Columbia, which has more than a decade of experience turning billions in private money into light rail lines, bridges, hospitals and courthouses. He says the trick is starting small and building credibility.
Similar public-private partnerships have been used by states to build toll roads, bridges and transit lines. But Chicago is the first U.S. city to set up a panel of experts to screen projects that could entice the likes of JP Morgan and Citibank to spend millions.
Initially, Emanuel -- President Barack Obama's former chief of staff -- had to overcome skeptics fearful the city would put public assets up for sale. Now the criticism is primarily that he hasn't gone far enough.
The city closed the trust's first deal, known as Retrofit Chicago, last month with Bank of America. The project includes landmarks like City Hall and the Harold Washington Library, and is expected to save about $1.5 million annually in utility costs. Bank of America will get a return of just under 5 percent, over a 15-year contract.
When first talking about the trust in 2012, Emanuel spoke of including more than 1,000 city buildings, $225 million in investment and $20 million in energy savings. The ultimate $12.2 million deal is even smaller than what went into Chicago's bike-sharing program: about $22 million. Instead of 2,000 construction jobs, it's around 100.
The retrofit shrank in part because some buildings couldn't generate enough of a payback over the 15-year term; others had liens.
The trust's CEO, Stephen Beitler, says the initiative might later include some of those sites in separate deals. He said he envisions "greater and greater investor interest" as the project gets "better and better."
Emanuel, in an interview, said he's not disappointed. He said with a framework now in place the city is ready for projects targeting energy-sucking city swimming pools and a quarter-million streetlights.
"We're going to do it in steps -- since it's something new," he said.