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Tags: daley | mayor | chicago | finances

Daley Passes Torched Finances to Next Mayor of a Revived Chicago

Friday, 07 January 2011 07:15 AM EST

The Chicago that Richard M. Daley transformed and will hand off in May to the next mayor can be seen from the corner of Chicago Avenue and Larrabee Street.

On one side sits a former warehouse for Montgomery Ward, the Chicago-born retailer that closed in 2000. It’s now home to Groupon Inc., owner of the Internet coupon service with 40 million subscribers that showed the city’s 21st century swagger last month by spurning Google Inc.’s $6 billion takeover offer.

On the other side stands what’s left of Cabrini-Green, an icon of public housing’s decay whose demolition displaced 15,000 predominantly black residents. During Daley’s 21-year tenure, the nation’s third-largest city became more Hispanic, less industrial and much deeper in debt.

“We’ve seen a transformation from a city very much defined by a large blue-collar working-class population and a local economy with a heavy concentration on industry,” said Larry Bennett, a DePaul University professor and author of the new book “The Third City: Chicago and American Urbanism.”

“So many people believe we are the city of broad shoulders, of north and south divisions,” Bennett said. “Daley moved beyond that kind of thinking.”

Straddling the old and new Chicago is Rahm Emanuel, who polls show is the frontrunner in a race to replace Daley that includes former U.S. Senator Carol Moseley Braun.

Emanuel, 51, the former White House chief of staff, reflects many of the changes. He was born in the city, moved to its wealthy northern suburbs as a child and attended Sarah Lawrence College in Bronxville, New York. He returned to Chicago where he started his political career as a fundraiser for Daley’s 1989 mayoral campaign.

No Ward Credentials

Emanuel, who studied ballet, didn’t take the route that spawned generations of Chicago politicians: ward organizations like the Daley family’s power center in an Irish-Catholic enclave on the south side. Emanuel, who if elected would be the city’s first Jewish mayor, won his first public office when he ran for Congress from the city’s north side.

Daley, 68, leaves his replacement a city gleaming with public-works projects like the lakefront Millennium Park. Yet he paid for such improvements and balanced his budgets by tapping one-time revenue that won’t be available to his successor.

The City Council on Nov. 17 passed Daley’s 2011 budget of $6.15 billion, closing a $654 million deficit by spending most of the $1.15 billion it got from leasing the city’s 36,000 parking meters.

Bond Downgrade

Standard & Poor’s on Nov. 5 downgraded Chicago’s credit rating to A+, the fifth-highest investment grade, partly reflecting concern over the city’s “heavy reliance on nonrecurring revenues to bridge its 2011 budget gap.”

Since 2002, the number of city employees has dropped by almost 6,000, from 38,802 to 32,922, according to city budget records. Chicago’s debt burden rose to $5,399 per resident in 2009, bond offering documents show, topping even those for all U.S. states including Connecticut, the highest, at $4,859, according to Moody’s data.

Daley surpassed the tenure of his father, Richard J. Daley, on Dec. 26 when he became the city’s longest-serving mayor, logging 7,917 days, or 21 years and eight months. The two men governed the city for 43 of the last 55 years.

Trump Tower

After he was elected in 1955, the first Mayor Daley oversaw a wave of construction that included the Sears Tower and John Hancock Center, bookends that define the city’s skyline. His son’s era brought Trump Tower and lakefront tourist magnets like the renovated Navy Pier. He put a personal stamp on the rebirth of Chicago’s South Loop by moving his family home there.

While the father watched Chicago’s exchanges invent the financial futures market in the early 1970s, the son saw the city’s trading move from open-outcry pits to computer servers. Leo Melamed, chairman emeritus of CME Group Inc., remembers asking Daley to make their case to the administration of President Bill Clinton against a transaction tax on futures trading because it would threaten the exchanges’ ability to compete globally.

“The mayor personally called the president,” Melamed said in an interview. “This Mayor Daley followed in the footsteps of his father, but he did it even better. He is more worldly. This mayor understands Chicago is a global city.”

Business Fans

That’s a refrain of Daley’s supporters in the business community.

“The Daleys have always understood that business needs to flourish in Chicago,” said Jeff Carter, an independent trader at the CME. “My worry is will the mayors that are going to come behind him, will they be that way?”

Emanuel has lined up backing from executives of major Chicago-area companies. A Nov. 15 fundraiser for him was co- hosted by Glenn Tilton, chairman of United Continental Holdings Inc., the world’s largest airline; and Miles White, chief executive officer of Abbott Laboratories, among others.

The election is set for Feb. 22, with an April 5 runoff if no one gets more than 50 percent of the vote.

When Daley announced Sept. 7 that he wouldn’t seek re- election to a seventh term, he resurrected racial and ethnic tensions among Chicago’s three largest demographic groups: white, black and Hispanic.

Leading in Polls

Emanuel, President Barack Obama’s former chief of staff, had the support of 32 percent of likely voters in a Chicago Tribune/WGN-TV poll taken Dec. 10-13. No other candidate broke double-digits in the poll, which had a margin of error of plus or minus 3.6 percentage points.

He earned at least $17 million as an investment banker after leaving the Clinton White House in 1998. He went to work for one of Clinton’s top fundraisers, the late Bruce Wasserstein. Emanuel tapped the contacts he made in government to close deals while working in the Chicago office of Wasserstein Perella & Co.

His largest transaction came when he represented Unicom, the former corporate parent of what was Commonwealth Edison, in an $8.2 billion merger with Pennsylvania-based Peco Energy Co. The merger, completed the year after Daley criticized ComEd for service problems, created Chicago-based Exelon Corp., the largest U.S. power company.

Residency Challenge

Critics have called Emanuel an outsider and challenged -- so far unsuccessfully -- his legal right to run for mayor, arguing that his almost two years in Washington disqualified him from meeting a one-year residency requirement.

One of his opponents, Gery Chico, 54, is a former Daley chief of staff and Chicago school board president whose Mexican heritage illustrates the biggest ethnic change in Chicago. The city’s Hispanic population rose to 27.4 percent in 2009 from 19 percent in 1990 as the overall population grew 1.4 percent to 2.85 million, U.S. Census Bureau data shows.

The non-Hispanic white population has fallen, though the last nine years showed whites moving into gentrified areas close to downtown. Groupon CEO Andrew Mason, for instance, lives in the Ukrainian Village neighborhood.

Braun, 63, comes from a black community that has been politically fractured since the death of former Mayor Harold Washington.

Blacks remain the largest single voting bloc, although their share of the population has dropped to 33.8 percent in 2009 from 39 percent in 1990, census figures show. The decline occurred as the Daley administration razed public housing high- rises across the city that mainly housed black families.

Black Decline

The decline in the proportion of Chicago black residents contrasts with other northern urban centers such as Cleveland and Detroit. Cleveland’s black population increased to 50 percent from 46 percent from 1990 and 2009, while Detroit’s rose to 77 percent from 75 percent, the census data shows.

Braun is now the only prominent black candidate after U.S. Representative Danny Davis dropped out of the race on Dec. 31. City Clerk Miguel del Valle also is running.

They’re competing to lead a city that has reversed the departure of corporate headquarters, attracting Boeing Corp. and drawing the merged United and Continental airlines. At the same time, it has nurtured an emerging technology hub along the banks of the Chicago River.

The 1.25-million-square-foot Wards building, now called 600 West, hosts Groupon and Thinkorswim Group Inc., an Internet securities brokerage acquired by TD Ameritrade Holding Corp. in January 2009. Luxury cars are parked in front of upscale condos, just blocks from fields strewn with weeds.

Cabrini Remnants

The remnants of Cabrini-Green, the fictional locale of the 1970s sitcom “Good Times,” remain home for some residents of row houses north of Chicago Avenue.

“It’s a lot better,” said Wesley Brown, 63, who has lived most of his life in the Cabrini development. “They relocated a lot of people. Once they get it right, it will be a good neighborhood.”

Just a few blocks to the northeast, Carter, the CME trader, lives with his wife in the Gold Coast neighborhood. They came to the city from the suburbs in part because of Chicago’s current leader.

“That wouldn’t have happened without Mayor Daley doing the things to the city from 1989 to today,” he said. “I wouldn’t have moved here.”

© Copyright 2023 Bloomberg News. All rights reserved.

The Chicago that Richard M. Daley transformed and will hand off in May to the next mayor can be seen from the corner of Chicago Avenue and Larrabee Street.On one side sits a former warehouse for Montgomery Ward, the Chicago-born retailer that closed in 2000. It s now home...
Friday, 07 January 2011 07:15 AM
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