April 23, 2012 Dear Aldermen: I have had the opportunity to review the ordinance for the Chicago

Infrastructure Trust, and related documents and articles. While I can say that the concept is innovative and shows promise, I respectfully request that you vote against the measure as presented by Mayor Rahm Emanuel on April 11, 2012. I also request that you work collaboratively with the Mayor and Inspector General to strengthen the ordinance and underlying program such that the City can create a triple-win situation in which the City can expand its access to capital and provide sound governance over the Trust; the residents of Chicago can enjoy an enhanced quality of life brought about by infrastructure enhancements and service efficiencies, and investors can receive a return on investment commensurate with the risks they take. I have outlined below some of my concerns with the ordinance, and ways that it may be strengthened. Newspaper articles have indicated that the Trust will provide a combination of debt, equity, and grants to infrastructure projects, while the City maintains control of its assets. There should be clarifying language to indicate whether control is actual ownership of the assets, or through other contractual means, and whether or not any investors will actually be managing any of the assets under separate arrangements. It may be helpful to have a definition section in the ordinance, and include a list of the various types of debt and equity instruments the Trust is allowed to invest in, as well as a list of prohibited instruments. There should be language to indicate the mechanics of the equity investment, and how the City maintains control of the asset while allowing equity investors to have an ownership stake. The Ordinance provides that infrastructure investments made by the Trust will not be a general obligation of the City and will not be secured by the City's full faith and credit. This gives the impression that taxpayers are not assuming any default risk, which may or may not be accurate. There should be clarifying language that indicates that investments may be secured by dedicated revenue streams, and outline mechanisms for repayment in the event that that revenues are insufficient to repay investors. If there are, or may be, any guarantees by any entity, that should be outlined. The Mayor has provided very few details regarding how the day to day operations of the Trust will be structured, and has promised to provide details after the Ordinance is approved. This makes it difficult for City Council to make informed judgments as to whether or not to lend their support. It also makes it difficult for the Inspector General to give an accurate opinion as to the limits of his authority in regards to the Trust. Perhaps it would be wise to require the Trust to do a business plan before making any investments. This would help the City to better quantify and articulate the need for the Trust, identify the financing gaps the trust can fill and demonstrate how it can be used in tandem with the City's existing general obligation borrowing program. It would also help the Inspectors General of Chicago and Sister Agencies to clarify their roles.

Valerie F. Leonard 4111 West 21st Place Chicago, IL 60623 Phone: 773-521-3137 Fax: 773-522-1832 Website: www.valeriefleonard.com E-mail: consulting@valeriefleonard.com ...Helping organizations build sustainable communities

Section 2.(a) of the proposed Ordinance indicates that 4 of the 5 members of the Board of Directors would be finance professionals "with expertise in one or more of the following areas: financing and development of infrastructure; capital markets; and municipal finance, and one of these Voting Members shall be a member of the City Council." Media reports give the impression that the prospective board members may have already been selected, and they could come from financial institutions that have already made informal agreements to be initial investors of the Trust. Ideally, a formal recruitment process in which candidates are selected from broad pool of potential board members should be utilized. Section 2.(a) also indicates that "any Voting Member who has a financial interest in any entity that is being considered by the Trust to perform work for the Trust or for the City, to receive funds from the Trust or from the City, or to provide funds to or otherwise make an investment in the Trust, shall recuse himself or herself from any vote of the Board of Directors regarding said entity. This section should be expanded to include voting members who are employed by Trust investors. They may not have a personal financial interest in their companies or proposed projects, but there could very well be a conflict of interest, or appearance of a conflict, when matters come before the board that concern a member's employer. Section 2. b) provides for non-voting board members to include representatives from Chicago's Sister Agencies, including commissioners from the Chicago Park District, CTA, CPS, etc. At the same time, the Chicago Inspector General has opined that the Trust is, in effect, a program of the City of Chicago. In as much as the Trust may be considered a program of the City, and the prospective non-voting members of the board of directors of the Trust are employees of the City and Sister Agencies, I would recommend that they participate on the board of the Trust as full voting members (ex-officio), rather than in an advisory capacity, unless the Municipal Code prohibits this. In closing, I thank you for your consideration of my comments. I also wholeheartedly support recommendations made by Alderman Scott Waguespack et al, Chicago's Inspector General and the Better Government Association. If you have any questions, please feel free to contact me at 773-521-3137 or consulting@valeriefleonard.com. Sincerely,