A privatization ordinance designed to prevent travesties like the infamous 2009 parking meter deal was introduced in the Chicago City Council July 29.

It is sponsored by Ald. Roderick Sawyer (6th) and Mayor Rahm Emanuel. The BGA was actively involved in its development in meetings that took place over the last five months.

Ald. Roderick Sawyer

The proposed ordinance contains numerous provisions—some suggested by the BGA—that promote careful evaluation and meaningful public scrutiny of proposed privatization deals, and demonstrated benefits to taxpayers. They don’t ensure wise decision-making but they ensure decisions can be made with eyes wide open.

The ordinance is in two parts, one dealing with privatizing public assets, the other with privatizing public services.

When the City considers sales or leases of public assets valued at $400 million or more for a term of 20 years or longer:

  • The draft ordinance requires at least 90 days for public and City Council review. The review process starts with a prominently posted, plain-English summary that includes a location for public comment.
  • It requires a separate public hearing in addition to the City Council committee meeting that takes public comment.
  • The City must engage one or more independent advisors to monitor and assess a proposed deal and issue a report to City Council. 
  • A contractor must fund city oversight of the transaction and asset and return the asset in good condition at the lease’s end.
  • When the City enters into very large and very long-term leases that are structured to provide up front cash, 10 percent of the proceeds is set aside in an intergenerational trust fund for benefit of future Chicago residents.

When the City considers privatizing public services with a contract value of $3 million or more, the City must conduct a cost-effectiveness study, allow employee comment and proposals to, on a competitive basis, keep services in-house. The City Council holds at least one hearing and votes on the proposal. Contractors submit annual reports and the City evaluates the contractor’s performance every two years.

As Chicago’s budget picture grows ever more grim, new privatization deals grow ever more likely. Any possible way to generate cash will be under consideration and that could include putting some city assets on the block.

The BGA has no position on whether privatization is a good thing or a bad thing. But we do have thoughts and ideas, not surprisingly, on what kind of process should be used for considering these high stakes, long-term deals.

“Good government helps us avoid bad deals. That means transparency, time for careful consideration, opportunity for informed public input, addressing conflicts of interest and assuring independent expert evaluation of a proposal from concept to contract,” said Judy Stevens, BGA Policy Coordinator.

The BGA has maintained this position and promoted it over the last four years through press conferences and forums, columns and action campaigns. In what may be the homestretch, we appreciate the productive collaboration that’s been possible, even among parties that often disagree.

The ordinance is a big step forward on an important issue.

We anticipate a hearing on the new ordinance in September. Stay tuned.