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.

Fun With Numbers: The Chatham Walmart Proposal

I have a stimulus proposal. It's a 150,000 square foot superstore. The construction would require 500 UNION contractors, electricians, construction workers, etc. The construction project would keep these 500 employed for about a year. Once built, the superstore would employ another 400 employees to operate it. This project would be entirely privately financed and would require absolutely no public funds. In fact, this private entity has all the cash available. This is important because in the current commercial mortgage market trying to finance such a project is very difficult. For instance, my mayor's (Richard M. Daley) nephew, Robert Vanecko, attempted to fund a similar, though much smaller, project and was unable to secure financing in this market. That won't be an issue here because this private entity has cash on hand to fund the entire project themselves. This project is SHOVEL READY. In fact, as soon as the city council approves the project, all that needs to happen is securing the proper permits and then they'll break ground on the superstore. In fact, several project managers would be hired immediately even while the permits are gathered. So, this project would produce jobs immediately. Finally, the area where this superstore would be built is currently occupied by dirt.

Of course, I am describing the proposal by Walmart to build its second superstore in the city of Chicago. Chicago's latest unemployment rate is 10.3% and climbing. So, a project that would employ 500 UNION workers to build a superstore and then 400 more people would be hired to manage and operate the store is one that would have plenty of takers. There's more. This store would be placed on 83rd and Steward in the Chatham neighborhood. According to Walmart's records, which measured the receipts from credit cards and checks, the three zip codes that surround this proposed location spent $80 million at Walmart stores in the suburbs, In fact, according to the same records, Chicagoans spent $500 million last year in suburban Walmarts. (keep in mind the real receipts are much higher because cash payments can't be measured)

Chicago has one Walmart currently. That store is on North Avenue and Cicero. (4600 W. North Avenue) In the two years since that store was completed, a Menard's, Bank of America, Dunkin Donuts, among several strip stores have since been built. That store, slightly smaller and without groceries (like what would be proposed), has generated $10.3 million in tax revenues for the city, county and state.

The reason that I love to use a plethora of numbers in my stories is because numbers don't lie. The numbers are clear and they are unmistakable. Walmart would create jobs. It would create revenue for the city. In fact, it would keep revenue in the city that is currently moving to the suburbs. If you don't believe the numbers, then just think about this. In order to believe that Walmart wouldn't stimulate the Chicago economy you would have to believe that a plot of dirt is more economically stimulative than a 150,000 square foot super store.

So, why aren't the folks at Walmart not working right now to gather the proper permits to begin building? It's because powerful Alderman Richard Mell has buried their proposal in his rules committee. Chicago politicians have a long history of connections to the unions. That's why Chicago politicians hate Walmart. Walmart employees are NOT unionized. Yet, that's why I capitalized unions in pointing out that constructing the superstore would employ strictly union employees. In other words, the same people that are trying to protect union jobs are, ironically enough, costing 400 union jobs that would be needed to construct the project. As such, even protecting the unions becomes a lot more perception rather than reality. Ultimately, this is nothing more than demonizing Walmart.

If the Chicago economy had 4% unemployment that would be one thing. It doesn't. Chicago's unemployment crossed 10%. Here comes Walmart presenting a SHOVEL READY project that they're willing to finance all on their own. (the city can contribute up to $10 million to encourage business construction) They've even committed to hiring up to 500 UNION workers to build this store. Still, that's not enough. Their proposal isn't allowed to see the light of day while a powerful politician buries the proposal. What does Mell have to say for himself? Not very much, that's what. He ignored my email just as he ignored the call of the Chicago Tribune when we both asked the same question. Why are you against this proposal?

This is what happens when politics trumps policy. There's a plot of dirt there now, and Walmart wants to put a 150,000 square foot super store there. They want to pay each and every dime to build and maintain the store. They want to hire UNION workers to build it. They want to hire hundreds of people to operate the store. Finally, if it's not built, Chicagoans will simply spend $500 million in Walmarts in the suburbs. Talk about a no brainer. That's only if you have the best interest of the citizens of Chicago in mind. I'd like to believe that Richard Mell has the citizens of Chicago's best interest but not only does he refuse to allow this proposal to even receive a vote but he refuses to even explain himself.