Posted January 10, 2016 5:13 pm by Comments (2)

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By: Mark Glennon*

 

One particular piece of bragging in the offering materials** for Chicago’s upcoming bond sale caught my attention. No, it wasn’t any of the silly ones like “stable population and business base” or “proven record of implementing reforms.” And, no, it wasn’t any of the obvious ones like “commitment to raising revenues.”

 

It was this one: “gaining high income households rapidly, rising median family income.” That seems harmless on its face, but what’s it really saying? Let’s think about it remembering that the city’s population is declining and factor in some other recent news. It’s not something self-styled champions of the poor and middle class — our political establishment — should be boasting about.

 

cmap change-in-MHI-map

Source: CMAP, http://www.cmap.illinois.gov/about/updates/-/asset_publisher/UIMfSLnFfMB6/content/changes-in-household-income-in-northeastern-illinois

First, the basic claim appears true. Median household income has risen in Chicago, though it depends on what period you look at and the increase isn’t matching national averages. CMAP (the Chicago Metropolitan Agency for Planning) published a nice study on that last month for the whole region, looking at data from 2005 to 20014. The results are reflected in the map on the right, where Chicago and other areas with income growth are in green and losers are in blue.

 

But over that period Chicago’s population shrank from 2.83 million to 2.72 million, according to the Census Bureau. That almost certainly means the above average earners are moving in and the bottom half is moving out.

 

Or forced out — in the case of those in need of public housing. That’s Rahm Emanuel’s “next scandal,” as the New Republic put it in a scathing article last month. Despite hundreds of millions of federal dollars, the Chicago Housing Authority has done little except tear down housing. Few of the units destroyed have been replaced. “The Chicago Housing Authority has been quietly and steadily perpetrating some of the most disturbing institutional mismanagement in a city where jaw-dropping corruption is a spectator sport,” the article says. So, the CHA has become very rich, sitting on a surplus of $430 million of federal money unspent.

 

And guess what it has done with all that doe? Why, fully fund its own pension, of course. That’s right, while pensions for other workers in Chicago and across the state are bleeding out, CHA maxed out contributions to its own pension while ignoring its basic mission.

 

I have in on very reliable authority that all major decisions at CHA are run past City Hall. This is by design.

 

CBS Chicago last week profiled some examples of CHA’s dereliction. In one building, CHA gets $100,000 per year of federal money yet all but one of its eleven units are boarded up.

 

Then there’s Chicago’s utterly hair-brained affordable housing ordinance that we wrote about earlier. It, too, has done almost nothing for affordable housing yet slaps developers with a $100,000 fine for each ten units they build if they fail to make one affordable. In the seven years through last year, it resulted in only 187 affordable units!

 

In a sense, none of this is new. The migration of poverty from the city to the suburbs has been well documented. Chicago Magazine had a good piece on that three years ago. What’s galling is to see that trend, fueled in part by such appalling public housing policy, used in effect as a selling point for city bonds, all while our political establishment brags about its record fighting for the poor and middle class.

 

A commenter on our Facebook page put it quite eloquently today: “Citizens are of no consequence to them, only the illusion of caring and ‘progress.'”

 

*Mark Glennon is founder of WirePoints. Opinions expressed are his own.

 

**Bond disclosure materials for Chicago’s upcoming offering can be viewed at Munios.com. The portions quoted in this article are in the “Road Show” slides for the coming offering.

 

 

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nixit71
It’s never been a secret that Chicago is kept afloat by two people…Chad in Wrigleyville and Trixie in Lincoln Park. When Chad marries Trixie (Chaxie), they become DINKs (dual income, no kids) and continue to keep the city afloat. Then, when they have children and those kids are school age, Chaxie moves to the suburbs and soak up those suburban educational resources, thereby saving Chicago untold millions in education funding. The few Chaxies that remain typically send their kids to private schools, saving the city even more money. And when the Chaxies move, they are then replaced by a new… Read more »
J. A. Herzrent
Most buyers of these bonds are investing other peoples’ money. It’s doubtful that the people (or institutions) who bear the economic risk of default actually read the Official Statements. The buyers (pension and mutual funds) want to fill their files with evidence of due diligence so that their decisions can be defended when the bonds default. The Official Statement is probably full of disclaimers about pension debt and bankruptcy risks so that the various fiduciaries up and down the line can avoid being tagged for liability. Most of the bond proceeds will end up as compensation to public employees, whose… Read more »
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