Mr. Mayor: The Hurricane is You

Mayor Daley must have thought that he needed to speak forcefully to drive his point home when he said this.

Mayor Daley said today it would literally take an earthquake or a tornado for Chicago taxpayers to be left holding the bag for the 2016 Summer Olympic Games.

Three days before traveling to Copenhagen to sign the host city contract, make a final sales pitch and put Chicago’s fate in the hands of the International Olympic Committee with its Oct. 2 vote, Daley expressed confidence that the blank check from local taxpayers would never be cashed.“

They have been very, very fiscally responsible in regards to their presentation. I really believe that. Unless … ,” Daley said without completing the sentence.

Now, it's interesting that the mayor said that it would literally take an earthquake or hurricane in order for him to go back on his promise and force the tax payers to front money for the Olympics. That's because for the last couple months the Olympic Committee has promised the city that they would tighten up a new insurance policy that would protect the citizens from having to front any tax money in case of unexpected expenses. This policy is underwritten by AON, the same company founded by Pat Ryan, the leader of the Olympic Committee. In fact, Alderman Flores, who initially wanted to limit the city's exposure to $500 million, told me that the structure of the policy would play a large role in determining if he would move forward with that legislation. He eventually scaled his legislation back and cut out the $500 million cap from his final ordinance. Now, what is an insurance policy if it doesn't cover such unexpected expenses as hurricanes and tornados? I now understand why Crain's Chicago Business characterized this insurance policy as rather worthless.

Mayor Richard M. Daley and Patrick Ryan assure Chicago taxpayers that a safety net of insurance would insulate them from the financial risks of hosting the 2016 Olympics.

But the insurance policies Mr. Ryan says he'll secure would cover only about $1.1 billion of the $3.8-billion operating budget that the mayor's Olympic point man has drawn up for the games. In many key areas, no insurer stands between taxpayers and the risk of revenue shortfalls or cost overruns.

For example, there's no insurance against the risk that private lenders won't shell out $1 billion to finance construction of the Olympic Village, as Messrs. Daley and Ryan predict they will. And there's no coverage against shortfalls in corporate sponsorship sales, which they predict will rake in $1.8 billion, two-thirds more than London expects to collect for the 2012 games.

I suppose that an insurance policy that doesn't protect a city against a natural disaster isn't much of a policy. There's a larger point here. The real hurricane facing the city isn't the literal kind, but the figurative kind. The mayor is right. Only a hurricane or earthquake would put tax payers on the hook, however that earthquake is our Mayor and the corruption, waste, and abuse that defines his government. This city should fear the hurricane of his endless stream of no bid contracts that will go to his friends than they should the literal earthquake that might befall the city and set the budget back.

It's time to advance this story. Never has a complicated political situation been so obvious to so many and yet no one has a solution to resolving it. The citizens of Chicago are, by and large, tired of Daley and his corruption. His current approval ratings rival Bush's in his last year in office. The citizens of the city are fed up with the city council which they see as little more than a rubber stamp. Everyone knows this and we all understand it. What no one seems to know to do is fix it. We all complain. We all moan and groan. Yet, no one expects Daley to face more than token resistence the next time he's elected in 2011. No one expects allies like Ed Burke and Richard Mell to face any more resistence when they run for re election. In fact, the only city council member that ever faces trouble is one that dares to ever challenge Daley.

So, we have a corrupt and unpopular mayor. We have a rubber stamp of a city council. We have a city that largely gets all of this. All we're missing is a solution.

Alderman Flores' Olympics Ordinance Passes

I recently spoke with a member of Alderman Flores staff and they gave me some details of what is now the newly minted ordinance that will provide more transparency, accountability, and oversight over the Olympics process as it unfolds. They told me that after introducing the bill last week Alderman Flores then spent the last week negotiating with the mayor's office, the council and the 2016 committee to finalize the ordinance.

Flores' office told me that the Alderman is very happy with the results of the final legislation. They believe they got almost everything they negotiated with and that the city can now count on strict oversight of all expenses from the Olympics.

Here are the highlights of the bill. First, the finance and budget committees in the city council will be tasked with "oversight" of all expenditures of the Olympics as it unfolds. Second, the bill creates either an independent task force or the City's Office of Inspector General to be another watchdog. It requires quarterly reports of all expenditures to be published on the Olympic Committee's website. The City Council will also retain "independent groups to comment on reports filed by the Olympic Committee".

What Alderman Flores is hoping to create is multiple layers of watchdog and oversight. In other words, instead of having one watchdog, which can then be corrupted, Alderman Flores' bill creates three separate watchdog groups. Furthermore, his office points out that all of the extra transparency means that the citizens themselves will be the fourth layer of watchdogs. Here's Alderman Flores statement on the matter.

The legislation that passed the City Council today was a result of weeks of negotiation with Chicago 2016 and the City's Corporation Counsel. I am veryproud of how far we came. This ordinance mandates a high level oftransparency for the Organizing Committee -- from public posting of quarterlyfinancial reports, to mandated insurance on Olympic Village developments, toreporting on compliance with the MOU between Chicago 2016 and communitygroups, to disclosure of all contractors and subcontractors and whether they havedonated. These requirements were not included in Chicago 2016's originalproposal, but I have always believed that they are necessary to ensure taxpayerdollars are protected.

"The legislation also authorizes the City Council to call upon the Office of the Inspector General and other independent civic organizations to make certain that
we are providing the necessary scrutiny to the Olympics planning process. If we are fortunate enough to receive the Olympic bid, the City Council will assume this
oversight authority and must execute it with great diligence.

All of this is fine in theory, and we can all hope that it works in practice. There are, however, several potential problems. The City Council committees charged with overseeing the process are chaired by Mayor Daley allies Ed Burke and Carrie Austin. It's hard to imagine that either would be all that dutiful in being a watchdog. The Mayor himself would choose the City's Inspector General and so it's hard to imagine that the IG would be independent. It's less than clear if there is a truly independent group in Chicago. We were all lead to believe that the Civic Federation, which produced a report in August, was independent. Then, we found out that almost half their board is tied to the Olympics and they gave their biggest award in 2007 to Olympic Committee Chairman Pat Ryan.

So, it remains to be seen if all this oversight will actually be effective. I was, however, assured by Alderman Flores' office that the Alderman will be an active alderman in making sure that the ordinance will be effectively implemented.

I didn't get a chance to speak to the other side, however, the folks at No Games Chicago made their feelings well known with this post. The post is simply titled "City Council Finance Committee Signs Blank Check – Ald. Burke Will Watch the Store" I spoke with Tom Tresser of the group when this was first introduced and it doesn't appear as though their position has changed. No Games sees all of these layers of transparency as nothing more than window dressing. Tresser thought the idea that Ed Burke would be the main watchdog is indicative of the sort of "transparency" this bill provides. No Games sees this ordinance as nothing less than a "sellout of the tax payers". So, there's, shall we say, a difference of opinion here between that watchdog group and Alderman Flores.

The final decision is now less than a month away and we'll all know on October 2.