by Mick Dumke
Rahm Emanuel signaled throughout his mayoral campaign that he's open to all sorts of ideas for fixing the city's budget problems. Still, while not ruling out privatization deals, Emanuel said repeatedly that they should only be executed within the framework of a "formal policy," which he did not detail.
But his pick for the city's new chief financial officer suggests he's more open to privatization than he mentioned previously to reporters and voters wary of another parking meter mess.
Greg Hinz is reporting at Crain's that Emanuel's CFO will be Lois Scott, president of the financial advisory firm Scott Balice Strategies. Among other things, the firm is well known nationally for its work on government privatization deals, including proposals to privatize parking facilities in Pittsburgh and Los Angeles that were later put on hold. The firm was also hired by the administration of convicted former Illinois governor Rod Blagojevich to explore the possibility of leasing the state lottery.
In addition, the firm's leaders have been frequent donors to city and state officials, including Blagojevich, city treasurer Stephanie Neely, and current and former aldermen.
Scott Balice was not hired to work on Chicago's now-notorious parking meter lease deal. But when the deal provoked an initial wave of interest in other cities around the country, Scott Balice was tapped to provide analysis to Pittsburgh and Los Angeles. As Chicago's lease agreement came under intense scrutiny, the city councils in both cities slowed up their privatization plans. As of now, both appear dead.
But other deals are in the works. A year ago the New Jersey Transit system hired Scott Balice as a financial adviser, and in October the agency announced plans to lease its parking lots for up to 50 years.
Last summer the city of Harrisburg, Pennsylvania, hired the company to help it cope with its budget woes. From a story in the local Patriot-News:
"City officials have said they need an independent adviser to help them through the complex issues, and [Mayor Linda] Thompson said Tuesday that the Scott Balice team will leave the city on an equal footing for talks with bond insurers, suitors for parking garages and other city assets, and other stakeholders."
Members of the Harrisburg city council, concerned about potential privatization plans, have expressed reservations about some of the firm's ideas. "Their end result is always the same: Sell assets, sell assets," councilman Brad Koplinski told the Wall Street Journal.
In 2006 the Blagojevich administration hired the firm to help Illinois privatize its lottery, and last fall Governor Pat Quinn announced that Northstar Lottery Group had been picked to run the system after a selection process "guided by a team of external advisors" including Scott Balice.
The firm's leaders are known to local politicians for their generosity as well as their financial work. Scott herself has donated to a number of office-holders through the years, including Neely, the city treasurer; former county commissioner Forrest Claypool, whom Emanuel just picked to head the CTA; and Blagojevich. Scott gave $500 to the ex-governor in 2007, but Dean Balice, the firm's senior managing partner, was more charitable, contributing more than $15,000 to Blagojevich between 2000 and 2007, state records show.
Balice has also chipped in to the campaign coffers of state attorney general Lisa Madigan, outgoing Mayor Richard M. Daley, and City Council mainstay Richard Mell.
The city's current CFO is Gene Saffold, whom Daley lured from JP Morgan Chase in 2009—just in time to take heat for the parking meter lease deal. Saffold didn't work on the deal but has been compelled to call it a winner for two-plus years in the face of all evidence to the contrary.