Is this the right link for finance?
Yes, it is.
Good morning, ladies and gentlemen. Happy Monday.
The Committee on Finance is called to Order.
We will now take a roll call Vote.
Alderman Lata. Alderman Hall.
Alderman Mitchell. Alderman Beal. Alderman Lee.
Alderman Ramirez. Alderman Quinn. Alderman Lopez.
Alderman Curtis. Alderman O'Shea. Alderman Mosley.
Alderman Rodriguez. Alderman Scott Alderman. Ccho Lopez.
Alderman Burnett. Alderman Irvin. Alderman.
Talia Farrell. Alderman Cardona. Alderman Waba.
Alderman Rodriguez Sanchez. Alderman Cazada.
Alderman Viegas. Alderman Sdo.
Alderman Vazquez. Alderman Riley.
Alderman Knutson. Alderman Martin
Alderman Silverstein.
President Pro Tem Nugent.
Chair Dow is here. Alderman Mosley is present.
We have a quorum. We have 18.
Uh, I'd like to acknowledge Alderman,
or excuse me, vice Chair Conway, alderman Moore,
Taylor Mitts, Harrison Hopkins, who have all requested
to participate remotely at today's meetings
for reasons stated under the provisions of Rule 59.
Can I have a motion to allow these alderman to participate?
So moved by Alderman Viegas.
All those in favor signify by saying Aye.
Opposed in the opinion of the chair. The ayes have it.
Um, and I want
to confirm Vice Chair Conway present. Alderman Moore.
President, chairman. Thank you.
Alderman Taylor. Here.
Alderman Mitts present Alderman Harris here
and Alderman Hopkins present At this time,
we'll begin the public comment period.
The public comment period will be limited to 30 minutes out
of respect for everyone's time.
Each speaker is granted three minutes.
And we have one person signed up for public comment today.
And that's Mr. George Blakemore.
Bonnie the money.
Good morning, Mr. Blakemore.
Finance the money.
This country was built on black label slave labor,
money, working people for nothing.
It is disgraceful
that you only have one public speaker this morning.
And I was inquiring about, uh, uh, Ms.
Silver Swing, whatever your name,
but my Jewish lady friend, uh,
and the other lady, Ms. Newton, my,
the only white lady down here, Uhhuh.
Why? Why? I'm talking about finance.
And I know my Jewish lady friend know about finance
because it's all about the money.
It's all about the money. And I'm being educated.
I say, do they have any black banks here?
But, but, uh, when they deposited this money
and say, yes, we have one.
And then I found out that's not a Black American.
That's one from Ghana.
You see how arrogant she, this lady when I'm speaking both
of 'em, because they, they're not interested.
They're not interested at all in what I'm seeing.
The finance, this is disgraceful. No, black bank.
When I came to the city of Chicago, they had seaway.
They had black, uh, uh, finance, uh, banks,
black banks, money.
And then Bill McDonald Bank, uh, was one of the, uh, uh,
rich banks and, uh, bankers in Fort Worth, Texas.
This is disgraceful. You don't have the finance.
You black people have gotten too low.
Not even a black-owned bank.
See where we had our own bank?
And look at Ms. Newton, uh, right there.
I'm gonna concentrate on
this, uh, account.
Real white lady. The other one is white too Uhhuh,
but one practice j uh, uh, of the Jewish religion and,
and the Jewish religion.
That's a black religion.
And they're arrogant as I'm speaking.
They are. They're talking to each other,
playing on their phone.
It's this graceful.
You black people don't even have one bank
back on bank in the city of Chicago.
When I came here, not you, we had black owned banks.
And I kept asking around. I said, where's Melissa?
Because she's the one that has to deposit that money.
I said, do you, do y'all have a black owned bank?
They said, yes. I, and then I, I kept asking ques,
Thank you Mr. Blakemore.
Um, I want
to also acknowledge Alderman Faroh, who has requested
to participate remotely under the provisions of Rule 59.
Can I still move, uh, by Alderman Viegas
to allow Alderman Farrell to participate this morning?
All those in favor signify by saying Aye. Aye. Opposed?
And the opinion of the chair. The ayes have it.
And, uh, alderman Farrell,
can we confirm that you're with us right now?
Um, thank you, chairman. Okay.
Um, alderman Burnett, alderman Cardona
and Alderman Irvin have been added to Quorum.
Good morning. Uh, this morning we have, uh,
subject matter hearings.
Uh, the first subject matter hearing will be
to discuss the municipal deposit depositories as required
by section two dash 32 dash 400 of the,
of the municipal code.
Also being discussed
during the subject matter hearing is the resolution
introduced by alderman, OSHA
and others, calling on budget director,
comptroller Chief Financial Officer,
and the Council Office of Fiscal Analysis Director
to discuss the state of the city's cash flow situation
and the timing and plans to meet,
meet such advanced pension payments requirement under the
fiscal year 2026 budget.
Um, no votes will be taken on the subject matter
hearing today.
Um, and we will start the first discussion on the
municipal deposit depositories.
Um, and we're joined by City Comptroller,
Mike Belsky from the Department of Finance,
who's present at the DAAs.
And Craig Slack, who's the Deputy City Treasurer
and Chief Investment Officer
for the City Treasurer's Office.
Um, we also have, uh, people available, uh, in the box
to answer questions.
We will also have a presentation from Horatio Mendez,
the president and CEO from Woodstock Institute, uh,
presentation by Anthony Simpkins, president
and Chief Executive Officer of Neighborhood Housing Services
of Chicago, a presentation by Kevin Jackson,
who's the Executive Director of the Chicago Rehab Network.
And finally, a presentation by Ben Jackson,
the Executive Vice President for Government Relations
for the Illinois Bankers Association.
Um, we'll turn it over first to, uh, Mike Belsky,
our city Comptroller.
Thank you. Um, chairwoman members of the council.
I'm wondering, um, if I can indulge you to, um,
ma make an announcement about a tragedy
that occurred over the weekend, um,
that affected the Department of Finance
and the of course, entire city, um,
and then asked for a moment of silence.
Um, it is with profound sadness that the Department
of Finance and announces the passing of our colleague, um,
assistant controller Gani Draga of the grants,
uh, and projects accounting division.
He began his career with the city in 2017, uh,
eight years and eight months exemplary service.
Um, he served, uh, with distinction, providing hi,
hands-on expertise in leadership support
of the city's financial audits,
but not limited to the act for single audit grants reporting
and grants management.
He's widely regarded by the group
as a subject matter expert.
He's a valued resource by his colleagues
and the consummate professional.
This loss comes as a profound shock to all who knew him.
We respectfully ask that all of you keep Mr.
Dusa and his families in their thoughts
and prayers as they prepare to lay him to rest.
He's from Kosovo.
Uh, he's actually, um, being flown back there
to be buried in his home country.
Um, the depth of this loss is felt not only by his family,
but by his extended family here
at the Department of Finance.
Um, his return to work will begin adjusting to a new
and difficult reality, one that will be navigated
with the same professionalism, resilience,
and mutual support that Mr.
Dusa himself consistently demonstrated.
And this was written by Denise Stevens, um,
from our staff, and I thank her for that.
But, uh, Madam Chairman, given this tragedy, um,
if we could have a moment of silence just to honor, uh,
his work and, and honor his loss.
Thank you.
Uh, thank you, Mr. Comptroller.
And actually, before you start, I would also like to, uh,
ask that we take a moment of silence for Mama de Ate
who, uh, served us, uh, well as the
director of our, um, animal care
and control department who went over to the Cook County, um,
to serve in a similar position.
Uh, he, uh, died last week,
and, um, I know many of us know him,
so if we could take a moment of silence for Madu as well.
Thank you.
Good morning, chairman Dow, vice Chairman Conway
and distinguished members of the Committee on Finance.
My name is Michael Belsky,
controller of the City of Chicago.
Thank you for the opportunity to address the committee
regarding the 2026 municipal
depositories process.
I'd also like to thank the various organization that
provided us various organizations that
provided us with, um, information, uh, regarding
the deposit depositories
and their role in economic development.
It's helpful to have advocates for affordable housing
and banking for the underbanked, along
with the banking industry itself.
Your insights and data are
of great value in the multifaceted ways we try
to improve our city.
I want to thank the members of my staff
for doing their part in the annual municipal
Depositories RFP process.
I also want to thank Treasurer Coner Urban
and her office for their due diligence in selecting
depository banks that meet criteria important
to the people of Chicago.
Examples include having the financial capacity
for safekeeping and maximizing return on taxpayers dollars,
funding mortgages, consumer
and business loans throughout all of Chicago on a balanced
and equitable basis, a commitment to diversity
and employment and giving back to Chicago
through the Federal Community Reinvestment Act,
and adhering to equal opportunity
and diversity in employment practices.
I, I want to share with you our process
for getting here today in accordance
with the Lending Equity Ordinance.
The Department of Finance, along
with the Treasurer's Office, advertise the RFP
for the 2 20 26 municipal deposit depositories online
and in local papers on October 2nd, 2025.
To ensure that local banks were aware of the RFP issuance,
we con contacted 42 banks and savings and loan associations.
This RFP was open for over six weeks.
We worked hard to create a fair, transparent
and competitive process.
As in any business endeavor.
Increasing demand for investing the city's cash balance,
coupled with a requirement for good corporate citizenship,
helps us as a city government and Chicago's in general.
From a fiscal perspective,
the following 10 16 banking institutions responded
to the November 17th, 2025 proposal due date.
I'm pleased to report that this list includes both small
community banks and large banks domiciled in Chicago.
Do you want me to go through each one?
Uh, Albany Bank
and Trust Company NA, amalgamated Bank of Chicago,
bank of America National Association, bank of Montreal
Bank National Association, Citibank
Fifth Third Bank National Association, first Eagle Bank,
GN Bank, JP Morgan Chase, bank National Association,
Liberty Bank Trust
and Company, old National Bank,
PNC National Association, the Huntington National Bank,
the US Bank National Association, Wells Fargo Bank,
and Wintrust Bank.
The Lending Equity Ordinance provides a list of information
as requested from bidders as part of the RFP process,
which includes, but is not limited
to the following information, statements of resources
and liabilities, residential rent lending, uh,
by zip code, consumer lending, uh, savings
and checking accounts, community reinvestment Act,
performance, mortgage applications,
and depository information such as number
and location of each bidder's facilities
located within the city.
The RFP responses, which include this information
and other details, are posted on the Department
of Finance's website, and a link to them was provided
and a letter sent from me
to all council members on December 15th, 2025.
The city has cash balances at times in the billions.
It should be considered a privilege to hold our deposits.
And with that comes the responsibility of hearing, adhering
to the values expressed
by this body in the Lending Equity Act.
I would like to thank all of you for your time this morning
and your continued partnership.
I'm happy to answer any questions you may have along
with our Deputy Treasurer.
Craig.
Uh, thank you Mr. Belsky. We'll take questions from Mr.
Belsky on his presentation
before we go to, um, our guests for their presentations.
Are there any questions? Alderman Moseley.
Thank you, Madam Chair
and thank you Comp Controller for being here today. Please
Me. Alderman Moseley, before
you start, I want to, uh,
alderman Beal and Alderman Hall have asked to be, uh,
to participate remotely, uh,
for Rule 59 under the provisions of Rule 59.
Can I get a motion to allow them in?
So, move by Alderman Lee.
All those in favor signify by saying Aye. Aye. Opposed?
In the opinion of the chair. The ayes have it.
Alderman Paul,
confirming your present, your present
with us this morning? Alderman Beal.
Yep. Yep. Gotcha.
Um, alderman Mitchell has joined us
and will be, uh, counted towards Quorum. Alderman Moseley.
Thank you so much, Madam Chair.
Uh, I, I wanna ask around, uh, something
that I believe impacts, uh, the very group
that we're gonna be working with.
Uh, and that's vacancy.
So vacant properties
and want to know, uh, as we approve depository institutions,
um, how do we give our communities that confidence
that we're holding them to the same standard
that we would anyone, uh, whether it's a resident, uh,
or, uh, a business that owns properties.
Um, have we created a list that speaks to
bank control, properties that are known to be public nus,
uh, have public safety issues,
and what are we doing to write those situations?
Um, well, I, I would say that that is not a requirement
of the, um, of the, uh, RFP
and the ordinance, but they do have
to put in the previous years foreclosures.
Uh, but I would probably, uh, defer to, um,
other departments that handle kind
of the inventorying of land.
Uh, and certainly, you know, the, the legal department, um,
enforces the administrative hearing code.
And a bank should be treated no differently than any
resident that's not keeping up their property.
Um, so I don't know if the
treasurer has anything to add to that. Yeah,
The, the only thing I would add is that we, we, we meet
with these banks, uh, on an ongoing basis.
We've been through a, a blackout period, uh, so we've been,
uh, out of communication with them at present,
but on an ongoing basis, we meet
with these banks on a quarterly basis.
We go over all of the things that are concerning
to the treasurer, to the, uh, uh,
to the comptroller citywide concerns relating to de
and I, uh, you know, their lending practices
and things that they're doing of that nature.
We could certainly add that component to our meetings
and see where they stand on it.
And I'm happy to do that, uh,
as we begin the quarterly meetings going forward.
Definitely would love to see reports on that.
Sure. Absolutely. This, this comes from you as
Your, your question is holdings
and what they're doing to rectify correct the situation.
So we can, we can certainly make that part
of the process happy to
Do so. Thank you. As
this council has moved towards making sure
that, uh, as we, um, utilize tax dollars
for, for public goods, that institutions are doing the same.
I mean, we are calling to make sure
that the debt at sister institutions are
paid for and so forth.
Um, we know the negative impact Sure.
That these foreclosures
and abandoned properties have,
particularly when we talk about our commercial corridors.
Correct. So what are we doing to make sure
that we have the vibrancy there?
And would even ask specifically, uh, I, I see one name
that keeps reoccurring in my ward, which is Wells Fargo
that has multiple commercial foreclosures.
That Correct. Are just disinvested.
Um, and, and how are we
having these corridors come back to life
and making sure that these institutions know their role, uh,
in that, and then also, particularly
after property is sold that's been in foreclosure so long,
um, how do we have a plan of stabilization,
whether than speculation, just
because you sold it doesn't mean
that it's gonna come back online, uh, in a productive way.
And so what's gonna happen to these, uh, properties? Yeah,
I think that's a wonderful idea.
Our focus has really been on getting banking services into
the hands of the underbanked
and unbanked, uh, as well as getting, you know, uh,
lending resources into the hands of small businesses.
But that's certainly something we can incorporate.
And then lastly, just wondering, even partnerships.
I know you mentioned department of law and so forth,
but even DPD, you know, is there opportunities
for joint RFPs?
Uh, is this something that could transform, um, as we look
to maybe expand missing middle in the future?
Uh, so that it hits an actual block level
where residents just, you know, I'm gravely concerned
that I, I constantly run into issues where
a property is in disarray.
It's impacting the quality
of life of the neighbor next door.
And when we look
and see that there's a bank there, it's, it's very hard
to get a result that restores some quality of life there.
Yeah. I, I appreciate your question.
I think your, your thought process here is excellent.
That, you know, we have, we, we do garner information, uh,
from these deposit depositories.
And as, as I said, it's a privilege to hold our money.
You know, they're, they're reinvesting that
and making a return themselves.
We make a return, but so do they.
And, uh, to the extent that they have, uh,
foreclosed properties, we should bring the full force
of the government to make sure that they're, uh, you know,
those are kept up,
but they're also communicated throughout departments in the
city as development opportunities.
Thank you. Thank you to both of you.
Look forward to following up. Thank you, Chuck.
Thank you, alderman. Mosley.
Um, just to follow up on his point, uh, comptroller are,
are, are these items that could be
included in the review
of these municipal deposit depositories
before we select them?
Are these, are there, is there an opportunity, for example,
to maybe make some changes in the existing ordinance
so we can capture, um, information that
might come up during this, uh, hearing from
Alderman Mosley and other colleagues?
I, well, I'm, I, I, I've actually would turn
to Karen Coca,
but just my own thought is that, um, it probably, since we,
since we've put out the RFP, uh, if we were gonna, um,
we crossed additional information as criteria, uh,
we'd probably need to ask legal if we can make
that sort of modification.
But certainly we'd be open
to discussing changing the ordinance going forward.
Okay. Um, and as we said, we in, in our regular discussions
with the bank, there's nothing that precludes us from asking
for that information now,
but if you wanna make it mandatory, I would say, yeah,
we want to change the ordinance subsequently, and
I wouldn't think that would be too onerous.
Uh, Madam Chair, I, I, I think that the,
the migration has been
to make the process easier rather than more difficult.
But I can't imagine that if this is public record, uh,
that it can't be attainable, uh, either through submission
or by, by public ma means,
Uh, thank you on that.
And, uh, alderman Mosley, the Department of Buildings,
maintains a list of residential vacant property, um,
that are owned by, or, and controlled by banks.
So you can check with, uh, um,
commissioner Hopkins around that.
Thank you. Point of information, alderman Mitchell,
and a point of information.
Alderman La Spotter. Yeah.
Thank you. Mad Chair. Um, I,
I appreciate the request, alderman Mosley.
And I want to add to it that a lot of these banks, um,
use service companies.
So when you ask them about their involvement, uh,
with buildings or property within our awards,
we would also acknowledge
what service company they're working
with too. So, thank you,
Chair. Thank you. And Alderman
Lata,
It's more of a question. Is that all right, ma'am,
Chair? No. If you
have a question, I have
to put you at the bottom of the list.
I, I will accept the bottom
Of the list. All right.
Um, alderman Viegas, followed by
Alderman Martin
and Alderman Vasquez will count you towards Corner.
Thank you, Madam Chair. And,
and re really to piggyback off your statement, the,
could the, uh, treasurer's Office
and a comptroller provide, you know, some of the criteria
for selection of depositors,
and then also how's that weighted?
How's that weighed as it relates to the selection?
Uh, go through that. Okay.
So, um, in the, in the ordinance
and in the RFP, uh, there's a requirement
to provide information.
So obviously one of them is, um,
sworn affidavit about your financial condition.
Uh, 'cause we wanna make sure, you know, we're our,
our deposits are protected.
So along, uh, uh, related to that is that they have
to have FDIC insurance.
Um, we look at, um, you know, all
of their financial statements,
but also the residential lending information by, uh,
census Track, uh, both inside and outside of Chicago.
But we we're most concerned about inside, um, you know, the,
uh, effective interest rate for all their loans.
We also look at, um, consumer loans.
Same thing by census tract, uh, small business loans, um,
any sort of, uh, you know, any sort
of commercial lending information, so large
and small businesses.
Um, and also we look at their EEOC policies,
diversity policies.
Um, and, and then finally, um,
their Community Reinvestment Act
reports and how they're doing.
And as you know, the Community Reinvestment Act is a federal
act that requires, uh, these banks as a result of,
back in 1977, this was passed, it was amended in 95,
but it, uh, you know, basically augers against
predatory lending, redlining and things like that.
So, they, uh, are great.
We, we take a look at those reports to see
how the federal government's graded them.
But, but the CRA ACT is more, there's other items
that are part of that act.
Correct. It's not just, there's more than just those two
items you mentioned that are part of the CRI act. Correct.
CRAC Community re the
Community Reinvestment Act. Yeah. Yeah.
CRA. Well, yeah, they're more, yeah.
I mean, the Community Reinvestment Act, I mean,
the reports banks have to submit are, are huge,
but what they're the, the overall performance of a bank,
they have, uh, a, a grading and either you're outstanding
or satisfactory, or need to improve.
And I'd say the preponderance
of our banks are all outstanding.
Gotcha. Okay.
Um, in the ordinance, it states, um, that
this is for both the City of Chicago
and Chicago Board of Education.
Yes. Why, why just CPS
and not the other sister agencies?
Just, I, I guess traditionally, I mean, obviously
that would, you know, that would be up to them.
I mean, certainly, you know, an approach.
If the treasurer wanted to take it, I'd have to look at
That. Yeah. That ordinance
and, and get back to you. But, yeah.
So, um, who, who picked c
who picked Chicago Board of Education?
Is it state statute? Is it city ordinance?
That just said that we're gonna combine those two?
Because if you think about, you know, uh,
the sister agencies, the amount of potential, uh, revenue
that they have, and it just makes a little sense
to consolidate it.
But just curious as to whether that's via state statute
or city ordinance.
I'm not sure. I'd have to get back. Okay.
Because you can get that through the chair. Yeah. Yeah.
I'd be interested. And then lastly, the Treasurer's Office.
Could you just provide, um,
what the Catalyst Fund balance is right now? Uh,
I do not have the exact.
I would say it's about 57 million. Okay.
Um, I could get you an exact number. Right.
Uh, where it stands now, alderman, uh, is that, uh,
as you recall, uh, the, at the onset of COVID, uh,
mayor Lightfoot and Treasurer Cony Irvin came together
to determine that, that they would use, uh, a good portion
of that money towards PPP type loans
to small businesses within the city of Chicago.
I believe 29 million of
that was loaned out in five year loans that stepped from,
uh, a zero interest rate to 1% to a sub-market rate for,
for these organizations.
Excuse me. There was a, a, a, also a line of credit that was
provided for the CDFIs to lend that money out.
It was done according to the old, an old ordinance, uh,
that dictated that we had to move that money out through
CDFIs into those loans.
Those loans have now been all paid off.
Uh, so a hundred percent of that money has come back
to the city and is now sitting, uh,
in the custodial account at Northern Trust, uh,
that's earning interest.
And I believe it's 57 million that's sitting, waiting
to be deployed in catalytic types
of investments as we speak. Um,
Sorry. Yeah. If you
could talk, give us a little bit, either
through the chair or now any, hi.
The history of the Catalyst Fund and where it's at.
Now, you mentioned the COVID,
but you mentioned P-P-P-P-P-P were unforgivable loans, so
that was not what the Catalyst Fund did.
It's so much that. Correct.
It provided a low interest loan for businesses that Correct.
We're gonna pay. Okay. So if you could provide kind
of the history of, of, of when it was originated to
where it's at now, and what the future is of it.
Sure. $57 million that are for, for catalytic, uh,
ventures, economic development.
Uh, we had some discussions
around utilizing the Catalyst Fund for, uh,
affordable housing for existing structures.
Mm-hmm. So that way it would be less, uh, of achar a less
of a cost for a building,
but yet I haven't seen any movement from it.
So if you can provide some information around
what the Catalyst Fund is gonna do.
Sure. Uh, because that money's stand sitting there
dormant, it's not really doing much.
Agreed. And I think, I think, um,
I certainly wouldn't wanna speak for the treasure
and her plans, uh, for the fund,
but I know that as, as we've chatted about it internally,
uh, there is a need
to change in my mind to change ordinance.
Um, uh, you know, it's city money.
It is sitting on our books as an investment.
Uh, it's unappropriated.
So, you know, the question becomes how much to,
to be truly catalytic,
what your willingness to tolerate loss.
So, so those are the questions that need to be, uh,
hammered out with, with counsel, uh, to change ordinance
to become more effective.
I think the, uh,
and more catalytic, in my mind, the original intent
of the Catalyst Fund, um, that was set up under, um, uh,
treasure Summers, uh, um, uh, and,
and, um, uh, uh, I believe under his, uh, watch.
But, uh, the, the idea was to be a small partner, uh,
with banking partners taking the lead, uh, to be aligned
with us on catalytic investment in the city of Chicago.
And I think that was sort
of a flawed, you know, perspective.
Uh, I think if you look at it from the perspective
of having Chicago, uh, be the true catalytic provider
of capital to underserved neighborhoods, you do need
to change the ordinance to make it less of a fund to fund,
uh, organ uh, structure
and more of a direct, uh, investment, uh,
in the communities that we're serving.
Yeah. But happy
to provide some thoughts from the treasure once we can
talk about it and get her ideas. Gotcha.
And then my last question, Madam Chair, is around
these 16 entities that are, are partnering with us.
Um, are there any M-B-E-W-B-E or VB goals?
I mean, I, uh, you know, whether they have in-house,
or, I'm sorry, whether they outsource auditing services,
accounting law, something to, to kind of help, uh, you know,
with, with, with smaller businesses
that may be located in the city of Chicago.
Um, so I, again,
I was having trouble hearing you, so you're asking,
So I was asking if, if, um,
I'll get closer. So this is important.
I think I'm losing my, I if
This is, if, are there any requirements for M-W-V-B-E
for these 16 entities that we selected, whether it be
through some services that they may be outsource in order
to demonstrate that their commitment to smaller businesses
outside of the CRE Act?
Okay. So you're, you're asking if the depository banks
that we've selected
To use the billions of dollars that they hold for us,
what are they doing to help smaller Chicago local, uh,
based businesses that are minority women
or veteran-owned businesses?
Um, well, I would say that that, uh,
criteria is not currently in the ordinance.
Um, you know, it has more to do with
how they deploy their capital.
You know, consumer loans, mortgages, things of that nature.
Uh, certainly could be something
that could be part of the ordinance.
Could you ask them, uh, to provide that information?
I'm just curious to see, um,
since they do provide information, uh,
the CRA, I would imagine that
Yeah. And something
That talk to that.
I, I, I, I often say, I don't speak for the treasure,
but I think I can speak for her on this matter.
Um, knowing her as I do, and, and, uh, uh,
and knowing how passionate she is about this very topic, uh,
I can tell you the primary focus of her administration is
to get the tools and resources from these banks into the
communities that you serve, uh, and we serve.
Right. Um, I would point out to a, uh, a number of, uh,
initiatives that, that she's created, uh, money Market, uh,
money, money Mondays with Melissa, can't get it out.
Money Matters Institute, the A EBC commission that she, uh,
chaired with Treasurer Frecks to, to advance equity, uh,
in banking, uh, throughout the city and the state.
Uh, that's had great, great impact.
Um, you know, the, the idea of getting resources into
and, and lending services into the hands of the unbanked
and underbanked, financial literacy is one
of her key key initiatives.
Uh, getting tools and resources into the community, uh,
for small businesses.
Uh, so those are all things that we're using this platform
to get those very tools
and resources into the, to the, to the hands of residents.
Uh, Cherise, uh, is in our, in our box.
She handles that for the Treasurer's Office.
I don't know if you'd like her to speak on it.
This is like, I think the question was, uh, do we,
are you able to obtain information on
how the banks spend their own money,
how they are purchasing Okay.
Goods and services within the community,
and the extent to which they use MBE
and WBE companies to do so, is
that information that we can get? We
Can certainly ask, and I don't know if they would be
required to provide it.
Uh, it also referred to Ben Jackson, uh,
from the Illinois Banker, uh, association,
who's in the, in the box as well.
Uh, I think they've been very forthcoming in infor in
providing information, uh, as well
as our broker dealers that we employ.
Uh, there've been very forthcoming
in getting that information.
That's just, banks are one thing that we're here for today,
but we do a lot of business
through our broker dealers as well.
Uh, so we we're happy to ask the questions.
Yeah. If you could provide that information.
Sure. Yeah. I mean, I think you're,
you're asking what's the multiplier?
I mean, these are depository banks, their businesses.
That's right. They use services. That's correct.
Personal services. Right. So you're asking
what's their record using?
Absolutely. Yeah. I mean, since we're depositing billions,
love to see some of those local firms participate.
Thank you all. Thank you, Madam Chair.
Uh, alderman Martin, followed by Alderman Cjo Lopez.
Thank you, chair. Good morning.
I had a question about the Woodstock Institute memo,
and, uh, apologies if you haven't, uh, seen this in advance.
So just have one or two questions.
If through the chair is best, just let me know.
Um, so they note at the bottom of the first page that, uh,
referencing a chart of, uh,
banks attracting mortgage applications from borrowers
of color, think the average across the dozen plus banks
is 52%.
And they note that it's gone up a little bit over the prior
year, and then gone up quite significantly, uh, relative
to two years ago, 40%.
So about a 25% increase over two years.
Um, I was wondering if any of that, um,
was done in concert with the city in terms of specific asks
or recommendations that Department of Finance and
or the Treasurer's Office had in terms of, uh, changes to
preexisting mortgage application practices.
This is from the Woodstock Institutes. It just,
What page are you on, on the, I'm on just the bottom
of page one, uh, for the Woodstock Institute's memo,
and they, the notice several year increase in the percentage
of mortgage applications, um, uh, solicited by the banks,
uh, that were put in by minority Chicagoans.
And as your two departments have had ongoing conversations
with these depositories, I'm curious if there are policies
that you've advocated for suggested, um,
that might be contributing to this, this good increase.
Well, thanks, thanks for that question.
And I would, again, the way the, the ordinance is drafted,
um, and, you know, just the fact
that we have the word equity in our ordinance is that I,
I would think so, that, uh,
because of the things we ask about, a lot
of them do focus on mortgage loans.
They do focus on what's been turned down, uh,
and what's been provided and where, and income levels,
and a focus on low to moderate income lending
is what the ordinance tries to drive.
So I, I, I do believe that some of
that improvement must be coming from this.
But, um, you know, can we, can we do better?
I mean, one of the, you know, there are broader issues about
interest rates and, and affordability and housing.
So I think all the things we're trying
to do in this administration to create supply, uh,
will help as well.
But, um, I, I would say anything we can do
to fine tune the ordinance
and work with these groups, um,
to make further improvements, we're open to.
Okay. Um, I'll hold the remainder
of my questions for our panelists. Thank
You, chair. Thank you. I think
those are for
Mr. Mendez from the Woodstock Institute who's
here with us today.
Alderman Lita, uh, excuse me.
Alderman Seche Lopez, followed by Alderman Li Spotter.
Thank you. Um, thank you Chairwoman,
and thank you Comptroller and the treasurer
and all, everybody who came here for this important topic.
Um, my question is regards, a previous, uh, report
for the Office on Inspector General, I think was in 2023,
about the, and one of the thing, the conclusions
of the report, and I think here again, is, is the lack
of enforcement to, uh, when there are banks.
And I think that, you know, in the Woodstock Institute,
there are plenty of examples of, of banks
that fall completely behind,
or banks that employ predatory practices are not in line
with the values and principles of the city,
and not having, effectively consequences a way to enforce
or incentivize better practices.
So, two questions that I have.
One is how much, uh,
in municipal de depositories we currently
have in these banks.
Two is what measures are we taking since then, uh,
to improve enforcement in terms of, uh, incentivizing, uh,
equity and better practices in a time
where the small businesses and small homeowners are
struggling to access, uh, funds?
I do think that it's important that we,
uh, do everything we can.
So the, the money that these banks effectively do
by borrowing, uh, lending to other, uh,
other entities is significant.
And the cost for taxpayers, when we don't see, uh,
benefits directly or small businesses, I do think, uh,
it is a call for action for the council
so we can incentivize this.
So those are the two questions.
How much money is currently there in these, uh, banks by,
or, um, deposits.
And two is, um,
what measures are we taking based on the recommendations of
that 2023 report?
Yeah, so I mean, just on the, on the, um,
the issue of compliance, uh, the, the ordinance
is kind of a point in time thing.
If everyone, if they're compliant
with things like their EEOC, policy, CRA
and things of that nature, we, we select them.
And again, ultimately the selections up to the council.
We, we went through the process to bring in
as many bidders as possible.
But, um, you know, we expect at the time
that they are selected, uh, they are in compliance
with all those sort of things going forward.
Um, I would probably, uh, defer to the treasurer,
but it sounds like because of their regular communications
with these banks, um, if they're not compliant,
we also have, you have the right
and the ordinance to remove a depository.
Mm-hmm. So, um, you know, I think,
I think your question's valid and, and
because we do have the, the power to, um,
remove a bad actor if they're not
doing what they represented.
Yeah. I, and I can certainly answer the question related
to amounts of deposits, and I'll share those with you.
Um, I, I've heard that the, the,
the number 2 billion being thrown around,
but I can tell you we don't keep that much money, uh,
at the banks themselves.
Right. And I've also heard it, you know,
the term invest in these banks, these are deposits, uh,
that we achieve a rate of return, uh, in exchange for
that money sitting there, just like you would with a,
with a savings account in 2025,
our average balance over the entire year per month was about
266 million.
The year prior, it was 435 million.
In 2023, it was 252.
In 2022, it was 327.
And in 2021, it was 345.
That money, that, that, that number
fluctuates on a daily basis.
Right. And it, and my, my role
as a chief investment officer, my team, is
to achieve the highest risk adjusted returns possible,
the word risk adjusted comes outta the equation
because all of these deposits are a hundred percent
collateralized in, in, in some way, shape,
or form, usually with letters of credit.
So there's really not a risk component.
So we can allow that money to flow
to the highest returns possible.
Right. So to, to hold them accountable.
It, it's, it's, it's very transient.
So we move that money based on returns rather than impact
for, you know, behavior.
And, and maybe that should change.
Um, we do have two smaller organizations.
I think the treasurer has mentioned these, uh,
in her briefings
before that we think of as impact deposits.
And we use the, uh, that term, uh,
because we've had banking institutions,
we've had Albany Bank in, uh,
and First Eagle Bank in the, the,
the idea is these smaller banks
that serve their communities are more effective stewards
of those deposits to, to, you know, the example
of JP Morgan, for instance, you know, having, you know, uh,
the average deposit for JP Morgan, uh,
in 2025 was $33 million.
Right? So, I hate to say it like that,
but it's not moving the meter for JP Morgan.
Right? There are trillions of dollars, right.
But an Albany Bank
or a First Eagle Bank,
where $25 million can be impactful, that's meaningful.
They've come to our office, they've told us
what they're trying to do with those deposits.
First Eagle is A-C-D-F-I,
and we know that credit unions, smaller banks and,
and CDFIs are more effective at deploying deposits within
the communities that they serve.
Right? JP Morgan is a New York, uh, based bank.
Um, so we're very careful about where that money goes and,
and how it's efficiently moving
to achieve the highest re uh, returns possible.
Uh, but at the same time, uh, those other deposits, and I,
and I really think of those deposits is more our way of,
of doing a linked deposit program.
I think that's come up a number of times in this body.
Uh, the state is effectively running those, uh,
that type of a deposit.
What we would be doing is duplicative.
Um, but it's effective.
It's getting money into those organ,
those communities that they serve.
Um, that's kind of how we're,
we're monitoring it, if that makes sense.
Um, we, we certainly are monitoring our fees,
but those fees predominantly are for banking services
that are essential to running the financial operations
of the city, whether it be lock boxes, check processing,
things of that nature that are essential services, um,
that deposit money.
I'm not sure how much they're making for, uh, on it, uh,
but to, to say they're making hundreds of millions
of dollars would probably be a misstatement.
Uh, but, but certainly the, the monies that we, we,
we deploy with those deposits, uh, we're, we're expecting it
to go to banks that, that have been, uh, vetted properly
for, for being good actors.
And through our ongoing work with them on a quarterly basis,
we're achieving that.
They're achieving the goals that we set out
for them, uh, as a city.
Thank you. My, my, uh, my follow up question will be
around, um, the difference between
what a smaller bank community banks versus the big,
you know, banks that you mentioned.
Right. I think, uh, a few years ago, we,
we called even the CEOs or purposes of the bank Yeah.
To coming. They had showed very little interest Yeah.
Even coming from the council, but the impact, right.
For these smaller, uh, banks,
and also the impact for communities, especially when we have
difficulties accessing credit, right?
For small business, small homeowners is big.
So I think we'll ask the, the council to really consider,
uh, the metrics of these banks
and what they are yelling to the city.
Uh, I think for a 200, let's say an average of $250 million,
um, I think these banks will make easily, probably a few,
I think a few dozen million dollars easily mm-hmm.
Right out of the investments of our city.
And I do think that those, you know,
those profits should be retained here in our city.
I think there's a lot of harm has being done even
with community banks over time,
that disappearing credit unions.
Mm-hmm. Yet, those are the most effective entities
where, as you mentioned, right.
That really have a better partnerships,
better grounds in our community.
So, um, I would like to, to see how we can oversee this.
Has, my last question is, has there any entity
that has maybe not met
or expectations that being ever any kind
of disciplinary action or review
or any kind of review that will help us reassess
or at least giving them a different opportunity,
another opportunity to change the practice?
Has there anything, any, any, any such measures?
Uh, not to my knowledge.
I think the, other than removal, yeah.
Um, the, the one bank that, that it was in the news, um, um,
it was GN Bank.
Uh, they went under OCC control.
They're now out of OCC control
and have been fully compliant with the submission.
Uh, that's why they were selected this year.
Um, so we'll be monitoring that.
We'll probably bring them in, have a conversation about
where their footings are
and how they, how they view, uh,
their exit plan from the OCC oversight.
Uh, but to my knowledge, none of the banks that we deal
with have had any issues related to,
to discipline in any way, shape, or form.
Thank you. I think we'll definitely look into the way
that they are dispersing funds for mortgages
and the small businesses, that equity component,
and I know it's not important for the federal government,
but certainly here we can feel the impact.
The, the one thing I would offer, uh, we from Albany
and from First Eagle, we get impact studies, uh, of
what they're doing in the, in the community.
Would that be helpful for you to see? Yes. Okay.
I'll get, make sure we get that to you. Thank
You. And, and, and I
would like to add, when you sit down
with GN Bank, they should be encouraged
to do some mortgage lending in the
community that they serve.
Um, alderman La Spotter,
Thank you Chair, um, followed
By Alderman Irvin, I treasurer.
I was wondering if you could first speak to what is our,
you mentioned the average balance citywide.
You men mentioned the average balance with JP Morgan Chase.
What is the average balance that we keep
with First Eagle and with Albany Bank?
Uh, so, uh, in those, we've, we've committed
to staying consistent with that number.
So they, when I talk about the transit nature
of our deposits, I don't include those, right.
Those are, those are, uh, committed com, uh, deposits.
I think of those more as time deposits.
Uh, the, um, fir Albany first, I'm sorry.
First Eagle is $10 million, and Albany is $15 million.
What's gn, by the way?
Uh, GN is not currently a depository.
Oh, okay. But They're, they're up for commission now.
Um, we had, we had had, I believe, $20 million with GN Bank.
Um, it was concerning to me because the city
and the state were such a large
percentage of their footings.
Um, I'm very concerned about, you know, uh, especially
with the nature of the ownership structure, the ability
for us to, uh,
effectively put a bank outta business by pulling a deposit.
So I just wanna be very, very careful of that, uh,
and commit to a level that wouldn't be disruptive
to their capital structure.
Of course, they have supplied a letter of credit, so the,
the deposit wasn't at risk at any time.
Uh, however, my concern was,
especially if the state was pulling their 20 million
and we were pulling our 20 million all at once,
I wanna be clear, I'm not
advocating for the money to be pulled.
Okay. That, that's not where my question was going.
I, I was trying to understand why, why they held
significantly lower balances from the city.
Is that a matter of collateralization,
or can you speak more to that?
And I'm sorry, you're talking
about GN Bank at the time? Yes.
No, no, no, no. About First Eagle and Albany Bank,
Why they're so low. Yeah.
Yes. Uh, comparatively Well, um,
how much can they take a smaller bank?
We have to have a frank discussion of
how much they can actually take, uh,
how much they actually want.
They, you kind of, you know,
take yourselves back into time when we were at, and,
and I think fundamentally about finance classes
and how can you go to negative rates when you have
to put money someplace, and they don't want the money.
It, it, it can go negative, right?
It, it's, you know, we, we just, no one wanted a deposits.
So there is a, you have to have somebody
who wants your deposits and can effectively deploy them.
So it's not lost on me
that if we give someone a hundred million dollars
for a deposit and they have to put a hundred million dollars
of collateral up for, for that
to be a hundred percent collateralized,
that's a cost of doing business.
So they have to make a judgment of whether
or not they want that business
or whether they don't want that business.
And their rates determine whether
or not they want that business we supply.
Um, so, so one is how much do they want?
Two is how much am I willing to commit to someone
that I'm not gonna touch?
Right. I'm not willing to say,
here's a hundred million
dollars, I'm never gonna come get it.
Right. 20 million, 30 million, 40 million.
Yes, I can do that. Right.
But in a time, we're gonna have another subject matter
hearing where we're talking about liquidity position of the,
of the, uh, the city.
My, my, my job is
to ensure the liquidity needs of the city are met.
Right. So, I can't commit to giving deposits
that I can't touch
unless I feel very comfortable that I'm not going
to need to access that money.
Right. The other thing, the third thing is I do that at a,
at a slightly below market rate.
Correct. So it's a link deposit is
I give you money at a below market rate, although
Is not a link deposits program, to be clear.
Correct. It's not a link deposit program,
but it operates effectively the same way.
Right. It, it, it literally operates the same way.
It, it just documentation. Right.
But I'm giving you a deposit at below market rates.
I expect that you are going to lend within the parameters
of the, of the guidelines you've set forth in my office.
While I can't regulate a bank, I can expect
that you're gonna do what you say you're gonna do.
If you don't do that, I can pull that money. Right.
And we meet with them on a quarterly basis
to discuss those impacts, uh, uh, studies that,
that the alderman asked about in the previous question.
So it's, it's sort of a three pronged stool, if you will,
to make sure that, that we're getting money
to these smaller banks in a way
that we can digest effectively at a slightly
below market rate to encourage capital finds
its way into those neighborhoods.
This is the, we've talked
for a few years about this linked deposits concept.
This is the first time I've heard that
from a defacto perspective,
we are operating a link deposits program.
I find that very interesting and encouraging.
Um, well, good. Yeah.
I would, a link deposit program, just so you know,
to implement and effectively run a link deposit program
takes a lot of resources, right.
I don't know how many people the state has working on it,
but more than working the
treasurer's office here in the city.
So this is an effective way to do it
by achieving the same results.
Um, and,
and I think a much more, um,
streamlined process to do it right.
So, but they do have to be a, a depository,
which I would put back at, at this body to say, let's,
let's, let's lighten up the load for, for, uh, submission.
Make it easier for these small banks to apply
and allow more of them to come in to allow me
to give more money to the smaller banks at slightly
below market rates so
that money could be put into the systems.
This is a very intriguing path for us
to follow up on after this hearing.
Um, I want to ask the impact statements,
and my apologies if I did not
review all attachments prior to this meeting.
Were those impact statements forwarded to counsel?
Uh, no. That I, I, I certainly will though, in,
in subsequent, uh, uh, post hearing. Uh, I'd very
Much appreciate that, only from the perspective of, they,
they generally don't make it into the,
the charts that we receive.
Correct. So it's hard to make that apples to apples
or even apples to come quats comparisons.
Yeah. I think you make a really good point.
And I don't know how much we can bring in the larger banks.
I can certainly work, uh, um, uh, with no,
No, no, not, not the, the personnel, the numbers. Yeah.
Right. To put these, to put the numbers into a pers
into a, a readable, digestible format
that you can actually take away from. Okay.
Yeah. Appreciate that.
My, my last question,
'cause we've, we've talked about the accountability measure
in the past, but to be clear, every, every bank
that applied to be a municipal depository
is on this list for approval.
Is that accurate?
That's correct. They've made it through the RFP process.
This is just a subject matter hearing.
Ultimately, it's up to the council to do, you know, we,
we do the process of selection, then you, you decide
who you want as your deposit.
Okay. I appreciate it. We,
We, the, the list, you know, this year to last year,
I think changed by one bank,
but you know, you'll ultimately have a say any
of the information you requested here today
that provides input for that will be part
of your decision making process that
Votes on Wednesday.
Yeah, and I, I, the only thing I would add is that
we had several, we have four trustee banks, uh,
that service custodians
for our bond proceeds portfolios when we
go out and issue debt.
Uh, that money is managed by our office through
what we call trustees, which is basically a custodian.
I think there was a time when they were, uh, applying
to be municipal deposit
depositories when they didn't have to.
Um, I hear all the time.
Um, I think that shortened the list of people that applied.
I think also, um, the,
the perception is
that this is a very tough process to get through.
Right. It, especially for a small bank
that doesn't have the resources of a JP Morgan, Wells Fargo,
bank of New York, whoever.
It literally touches, as I understand it, every corner
of the bank, including legal departments from different
groups, the costs
and those costs are applied to the submission process.
Right. I, I don't know exactly how they do that,
but you know, all of a sudden you've got thousands
of dollars, uh, that are charged
to a banking center for applying.
And if we are not supplying services in, in, in lieu of
that submission after time
and time again, why am I gonna apply?
And so, um, the, and,
and I think that comes back to, you know, the, the fact
that a lot of our banking services are sticky
lock boxes are tough to distribute.
Right. One of the things that, that, um, you know,
under former, uh, comptroller, Ray Winkle,
we were talking about submitting the,
the lockbox is up for an RFP, that's a heavy lift.
It incorporates a lot of different groups in our,
in our, in our city.
But it should be done.
So that's an encouraging sign that you apply and you,
and there are services that we can provide
that we're gonna bring up again
and again for RFP, it makes no sense that we, why,
why do we have check, uh, processing
through one organization we have for 50 years?
So I think a lot of these services that we provide
or that banks provide, should be looked at, uh, uh,
in my mind, uh, just, you know, RFP so that we can make sure
that we're paying the right fees for these services. If
I may, since you raised the point, since I was not aware,
which are our four custodial trustee banks,
and what is the process for becoming a
Custodial bank? Uh, so that
is not done,
that's done by the Department of Finance.
I believe it's Zions Bank. Um, what, what was that name?
Zions Bank. Bank of New York.
Um, um, uh, who's across the street? Um,
Amalgamated, Amalgamated Bank.
Um, I'm missing it. Um,
What was the first name you Said?
Uh, bank of New York. Zions, uh, spell.
Could you spell that for me? Amalgamated?
No, Zions. Like Zion. Zion, Yeah.
They're out of, Uh, and then, uh, I'm missing one. Um,
Might be JP Morgan.
No, they're not. Uh,
I mean, the, the way they're selected is quite different
than this and that, um, they're, they're in connection
with bond transactions, right?
Yeah. And the role of the trustee in a bond transaction is
to make principal and interest payments to the investors
that are holding those bonds.
There's a registry called Depository Trust Company
that holds the names of every owner of the bonds
and when they're exchanged.
Um, but they also are, uh, you know, their role also is
to make sure that, um,
all the covenants in a trust indenture are being adhered to.
Um, so like if we have a rate covenant on water, you know,
they're monitoring that on behalf of bond holders.
And that selection is like selecting other parties
to the transaction, the underwriting firms
that buy the bonds and sell 'em the bond council.
So typically that's on a, on one is a capabilities basis.
There's very few I need
To interrupt. I understand
that. What I've asked about now is outside
of the subject matter of this
hearing. I'll follow up at later.
Thank you. Alderman Mo? Nope. Thank you. Chair.
Uh, alderman Irvin.
And then I would like to move to, um, our presenters, uh,
from the various organizations,
alderman Irvin, chairman Irvin.
Thank, thank you, Madam Chair.
Uh, first off, I, I'm glad, uh, to see that, um,
you've added another African American bank to the, uh, list
of depositories in, uh, Liberty Bank
and Trust, which, um, I believe is, I think is,
is the largest black bank in the country.
I know they have offices, uh, here in the,
uh, in the state of Illinois.
Glad to see that. Um, glad to see GN back in the mix, um,
of our, of our banking.
You talked about the, uh, deposits that you're making to,
um, help recycle money back into the community.
You talked about Albany Bank, um, first Eng,
first Eagle Bank.
Um, are you looking to do similar things with both GN
and Liberty and the other bank that, uh, has,
has had a heavy community lending presence that I,
that I see on your list this year is, uh, Wintrust Bank, um,
are, are those things that they're seeking from us,
or are those things that we're asking of them,
I'm sorry, alderman from the, the deposit perspective?
Correct. Yes. They, they, they are actively asking us
for deposits given, uh, the framework of a presentation
to commit to, um, community development
and impact in their neighborhoods.
And is that of, is that just of the small,
of the small guys primarily?
Primarily, yes. And right now we've got
15 and 20 set up kind of theoretically like that.
We've got a total of 25 million between the two banks,
15 million to Albany and 10 million to First Eagle.
Okay. And, and we, I think both of them would like to see
that upped a little bit,
which we're contemplating currently.
Okay. And then, uh, are we looking at similar setups
with GN and Liberty?
Uh, well, GN Bank is not approved yet.
I mean, understand, I, I think the, the, the, and,
and this is a discussion, I think you
and I could have, you know, uh, offline.
Um, but I think the, the, the problem that we had,
and I think Chairman Dowell mentioned this,
when we first got that original deposit to GN Bank,
we just weren't seeing the lending that they were told,
telling us they were gonna do.
In fact, they were, they were
less than forthcoming in the data that they were,
they were providing to us.
We were going out to, uh, to areas they said they, uh,
they were loaning on and there were vacant lots.
So, um, at that point, you've gotta question anything
that, that they're saying.
So I, I would have
to have a little bit more comfort level in, in their ability
to provide information, uh,
and perform on what they're saying.
I'd want to hear a little bit more about, you know,
how they're emerging from the OCC oversight.
Mm-hmm. Uh, but I certainly wouldn't be opposed to that, uh,
you know, um, especially with your council, uh,
and your input, uh, from the caucus.
I would, I would certainly want that input. Yeah.
We, we, we, you know, we have all had some, you know,
concerns, but I'm good.
It is good to see they're outta the OCC control.
Uh, but again, Liberty is a much more stable, uh,
institution then, uh, one would categorize GN to B.
Uh, and, um, it just looks like a, a great way
to infuse capital in neighborhoods on the
so, and west sides of the city.
Yeah. You know, Liberty has had, you know, conversations,
I've been in conversation with them for a while, trying
to get them, uh, in a branch in, in the, uh,
in the West Loop area.
So, um, this, this is, uh, this is good news.
I'm glad to see that, uh, we're, we're expanding the, uh,
depositories and with that lens in mind of what they can do
to be more helpful to our, um, you know, our,
our lending needs across communities.
So, again, thank you for that. Thank you, Madam Chair. Yeah.
And we, we had, I'm sorry, uh, we had some,
some brief discussions with Liberty.
Uh, and, and from the tone of their, their conversation,
it does seem that they echoed exactly what you pointed out.
So I would not be at all opposed
to including them in that process as well.
Uh, and, and Alderman I did.
I was, I was given the information.
It is, um, US Bank is the fourth one
that I mentioned, uh, that I forgot.
And Chairman Irvin, uh, regarding Wintrust.
I think we, you should look at the data some more there
below their peer banks on, quite below
on, uh, lending, um, and mortgages.
Uh, with that said, I, yes.
Brief point of information 'cause we need to move on.
We got another subject matter hearing.
A hundred percent. Thank you. Uh, were the, was it just
how many banks applied for the RFV
16, wasn't it? No, that's,
How many were you selected? How many in total?
I think everyone that applied was accepted.
Okay. Thank you. Um, 42 banks, uh, we,
we met with 42 banks. Um,
Yeah, that was not the entire outreach.
The outreach was much broader than than 16. Gotcha.
All right. Thank you so much.
Uh, comptroller Belski
and Deputy City Treasurer Slack,
you have something else to say?
16. 16 banks, um, re respond the rrp.
Okay. Um, we'll now hear from
Horatio Mendez from the Woodstock Institute.
Anthony Simpkins from Neighborhood Housing Services.
Kevin Jackson from the Chicago Rehab Network
and Ben Jackson, uh, from the Illinois Bankers Association.
Mr. Mendez.
Good morning. Yes. Okay. Good morning.
And thank you for having me back to, uh, discuss how banks
that want to serve city government are serving
the residents of Chicago.
I have about five minutes to provide an hour worth of data,
so I'm gonna get right to the point here.
Uh, first I want to share with the committee
that this ordinance and these hearings matter,
and we have an example of that in Old National Bank.
They were at the bottom of almost,
Um, excuse me, Mr. Mendez, can you turn up his mic
and can you begin your presentation over again?
Okay. Is that better? Is That better?
Yes. Alright.
Okay. Are we on? Perfect. Thank you.
Uh, good morning, and thank you for having me back
to discuss how the banks that want
to serve city government are serving
the residents of Chicago.
I have, uh, five minutes to go through an hour of data,
so I'm gonna get right to the point here.
First, I wanna share with the committee that these hearings
and this ordinance matters.
And we have an example of that in Old National Bank.
They were at the bottom of almost every factor we analyzed.
Last year after my testimony, I had a message waiting
for me at my office from their executives team saying,
we need to talk for a second.
I thought they found an error in our data
and they were gonna sue us instead.
Luckily, they walked me through what they were doing
for their numbers to improve
for this year, and they delivered.
They came in third overall in terms of how they compare
to the other institutions that responded
to the city's request for proposals to serve
as municipal depositories.
So that's wonderful news and validates this process.
Now, earlier this morning, we
provided the committee with a memo
that goes into more detail on our analysis,
and I'll have time to cover this morning,
but here are some of the highlights.
We have two respondents
that are community development financial institutions,
meaning they're mission driven institutions
that provide financial products
and services to underserved communities.
And we have one minority depository institution,
meaning their ownership
or the communities they serve are predominantly of color.
Unfortunately, the institution that is both A-C-D-F-I
and a minority depository institution received a needs
to improve on their last CRA exam.
All the others either had an outstanding
or a satisfactory CRA rating.
Overall public information about Bless you.
Public information about each institution is limited.
So we're showing you what we have that can serve
as an indicator on how well they're serving communities
of color and low and moderate income,
or LMI communities in both mortgage
and small business lending.
And we're comparing them to each other
so we could see who stands out.
Now, I'd appreciate 30 seconds.
Uh, to make an additional point,
Woodstock Institute's mission is to advance economic justice
through research and advocacy.
There's no mention of politics.
Poverty doesn't have a political party,
nor does race or ethnicity.
Everyone deserves our focus to ensure
that the financial industry works for them equally.
And I doubt many of them would say that it does.
So for this administration to try
and shut down the agency that provides Woodstock
with the data to do the kind of analysis I'm sharing
with you this morning, it hurts everyone
and it can't be allowed to succeed.
That's why we made the tough decision
to sue the administration for its attempt
to defund the Consumer Financial Protection Bureau.
We're a 10 person nonprofit. Hasn't been easy.
And I'll tell you, it's taken its toll,
but it doesn't matter if you're a small organization like
Woodstock, a city like Chicago or a state like Illinois.
It's gonna be a cold day in hell when we don't stand up
to fight to protect our residents.
Red or blue, lemme get to the next slide.
You'll notice that these charts exclude
some of the banks from the list.
To be fair, we didn't want to pit banks that do a lot
of loans in this market against banks where mortgage
or small business lending isn't a big
part of their business model.
So let's start by looking at
how well these institutions do at attracting mortgage
applications from borrowers of color.
This chart shows how many
of each bank's mortgage applications came
from minority borrowers.
The average here is just over 52%,
which was mentioned earlier, big jump
from two years ago when it was 40.
US Bank is on top of 62% of their applications
for minority borrowers with BMO close behind in B
of A in third place, most improved would be B of A
who jumped from 40 to 56
and Old National who jumped from 40 to 54.
The next chart, hopefully I did, I can't read it from here.
The next chart shows how many
of these applications turned into an actually approved loan.
The highest performers here are B of A BMO,
and Citibank with Huntington close behind.
Last year, B of A was
below peer on attracting mortgage applications from
borrowers of color, but ranked at the top
of their peers in turning those applications into loans.
This year they stayed on top in turning applications into
loans, but they significantly upped their game in
attracting more applications.
So good for them. Citibank is now where B of A was last year
and underperforming on applications from borrowers of color,
but doing a decent job of turning
what they got into actually approved loans.
Now in the previous slide, we saw US Bank at the top
for the number of applications from minorities they
received, they're below peer in turning those into loans.
We don't wanna penalize effective marketing of products
to borrowers and them getting a lot of applicants
that might not be qualified.
But this does give us an opportunity to talk with them on
how to improve those outcomes.
Again, congrats to Old National that improved from 27%
to 44.6%.
Big jump. So let's transition to the same analysis,
but for low and moderate income
or LMI borrowers,
the high performers on getting applications are old national
PNC and Huntington in terms
of turning those applications into approved mortgages.
The next chart shows Old National Street continuing from
bottom of the pack last year to top performer this year
with BMO and Bank of America.
And second and third, again, you have the situation with PNC
and Huntington where they did a good job
of attracting applications from LMI,
but not as good a job in turning those into loans where BMO
and B of A were middle of the pack in attracting
applications, but outperformed their peers in
turning those into loans.
Now our last two mortgage charts focus on
geography, not individuals.
Chart five looks at how these banks did.
This is chart five, right? Yeah.
At attracting applications from majority
minority census tracks.
You'll recall that US Bank was a high performer on getting
applications from minority borrowers.
So it's no surprise they're a top performer here.
Wells Fargo, who was middle
of the pack on getting applications from minority borrowers
and PNC bank, who was bottom of that pack,
are leaders in getting applications from
minority census tracks.
Now, there may be a few reasons for this,
but the one that comes immediately to mind is,
while they're doing a good job in attracting mortgage
applicants in minority communities, many
of those applicants don't seem to be minorities.
Chart six looks at how many
of each banks' originations came from
minority census tracks.
You'll recall that BMO was a high performer on originating
loans to minority borrowers.
So again, it's no surprise
that there are top performer here, chase
and our most improved player, old national, tied for second,
but were neck and neck with BMO.
Finally, chart seven shows us
how many small business loans went
to low and moderate income.
Census tracks Small business data is really limited,
so we can't do the same kind
of analysis we did for mortgage.
The high performers here, PNC, fifth third,
and B of A, so which bank stands out, B
of A was the highest performer on these charts.
They were average on attracting applications from low
and moderate income borrowers in minority communities,
but they outperformed all
of the other peers on every other factor we had debt on.
BMO was close behind, but their underperformance
and small business lending prevented them from overtaking B
of A for the top spot.
Happy to take your questions afterwards. Thank you.
Thank you Mr. Mendez. Mr. Simpkins,
Thank you.
Is this okay? Can you hear me?
This work with that? Okay.
Uh, good morning, uh, Madam Chairwoman Dow
and, uh, members of the committee.
My name is Anthony Simkins, president
and CEO of Neighborhood Housing Services of Chicago.
Uh, for those of you that don't know,
NHS is a 50-year-old nonprofit.
We're a HUD certified housing counseling agency, a, uh,
nonprofit mortgage lender, uh,
and a nonprofit housing developer.
Our mission is to improve the lives of Chicago residents
by promoting family wealth building
and community revitalization
through the power of home ownership.
And we've served over a quarter of a million Chicago, uh,
residents in Chicago and Cook County suburbs.
Um, so
the lending equity ordinance, uh,
which is the subject matter hearing today,
was passed in 2021
and established this hearing to examine how banks
and municipal deposit depositories perform in terms
of lending and in investing in Chicago's low
and moderate income neighborhoods
and for residents of color when the ordinance was passed.
As Racio says, there were really stark disparities,
especially in mortgage lending and low
and moderate income neighborhoods,
and to applicants of color amongst banks.
Uh, many banks made significant commitments
to improve lending and investing for low
and moderate income communities
and borrowers of color at that time.
Here we go. Uh,
and thank you to Woodstock for providing the data
and the data analysis.
Um, so we're borrowing heavily from their charts.
Um, as you can see from the 2024 hum, the data compiled
by the Woodstock Institute for the Bank seeking
to be municipal deposit depositories,
uh, for the city of Chicago.
There has been noted improvement in this regard, especially
for mortgage originations to, uh, applicants of color
and the banks should be congratulated for this progress,
and we encourage them to continue
these efforts and this progress.
However, the data also highlights
that purchase mortgage lending rates to low
and moderate income borrowers still needs improvement.
On average, uh,
these banks were origin actually originating on less than a
quarter of their loans across the board to lower
and moderate income borrowers, uh, despite increased numbers
of applicants of applications by low
and moderate income, um, applicants for mortgage loans.
So there's still work that needs to be done.
Um, and just as, as a side note,
we were just talking about this earlier, one
of the things you'll notice is that, uh, loans made in low
and moderate income neighborhoods
or census tracks, uh, have increased.
Uh, but loans to low
and moderate income borrowers are far less, right?
So what does this means?
This means that loans are being made to higher income
applicants in lower income communities.
So this may be actually a sign of gentrification.
Um, and so we need to keep in mind
that when we look at this data, what are some of the, um,
things that this data is telling us, right?
Um, I would also note that, um,
this same pattern is particularly true
for home improvement lending according to Woodstock, uh,
data analysis for Huda data from 2021 through 2024,
I think I'm, nope.
Okay. No, I'm still there. Uh, 2024, the demand
and the need for home improvement financing is high.
Nearly 48% of occupied housing in Cook County,
uh, and a little more in Chicago was built before 1959.
So this is a hou, this is housing stock
that needs maintenance.
Um, and from 2021
to 2024 home improvement loan applications in Cook County
grew by 56%.
Uh, about 40% of Chicago's applicants
for home improvement loans were low
and moderate income applicants.
And this of course includes many seniors.
Uh, and their denial rates,
however, was were as high as 58% for first
lien position, uh, home improvement loans,
and 72% for subordinate loans.
Uh, these loans are critical for maintaining safety
and the value of homes and keeping people in their homes.
Um, those most in need, low income homeowners
and seniors on fixed incomes are least likely to be able
to get a home improvement loan.
Did I miss it? Okay.
Um, this also, I think, reflect is reflective
of another factor, and
that is the rising cost of home ownership.
Uh, despite the recent fed rate cuts,
mortgage rates remain high
and have even risen recently as high as 6.34%,
uh, in December with tight supply
and historically high construction costs.
The median home price remains very high
at $426,800 nationally,
and 365,250 in Chicago as of November.
Um, this is a 34% increase from pre pandemic pricing.
Uh, while household incomes on the other hand, even
for middle income families have not kept pace
with this increase, this puts home ownership out of reach
of more and more potential home buyers.
Uh, the Chicago median household income only rose 8%
during the same period from 2022 to 2024, while
the median home price rose 34%.
Uh, so you see the problem.
Home ownership is moving farther
and farther out of reach of low
and moderate income, not just low
and moderate income Chicagoans,
but middle income Chicagoans
with the average down payment now being 63%
or 18% of the purchase price according to Redfin
as property taxes, insurance repair,
and utility costs continue to rise.
This is keeping, keeping at home is also becoming more
and more expensive as,
as rates and prices continue to increase.
Home buying is, is also decreasing overall,
as you can see from the chart here,
and especially for low on modern income households.
Further locking families
and communities out of wealth, building out
of the wealth building power of home ownership.
And you'll see right in this chart, uh, when rates go up,
there's a precipitous drop in the, uh, home purchasing.
So there's, there's a definite connection.
Community development financial institutions,
or CDFIs like NHS are nonprofit mi, mission-driven lenders.
As Raio pointed out, NHS is one of the few CDFIs
that provide mortgages for people, non-depository CDFIs,
that provide, uh, mortgages for people who want to buy,
keep, and fix their homes.
CDFIs are community-based trusted partners
who can reach borrowers that national banks
and traditional lending cannot.
As members of the Chicago City Council, along with the mayor
and his administration, there are concrete steps
that you can take to ensure greater lending
and investment by banks in Chicago neighborhoods
and for residents of color.
For instance, you can encourage the banks
that the city works with to partner with CDFIs
to help expand access to home ownership.
They can do this by providing CDFIs with
key resources like purchase assistance funds,
low cost capital for lending, loan purchases for liquidity,
and other forms of investment.
Um, these are things that you should be looking for.
These partner and these partnerships work.
NHS partners right now with one
of the banks you just mentioned, Liberty Bank
and Trust, self-Help Credit Union, uh, chase Bank, um,
so they can partner with CDFIs like NHS, uh, when they want
to, um, much more is needed.
The city can also provide direct incentives like subsidies,
loss reserves, loan guarantees, credits, enhancements
for banks that, or specifically for investment in CDFIs.
These are small but powerful public investments
that can leverage incredible amounts of private capital
to invest in economic opportunity for low
and modern income households.
And the city must be proactive, track
and hold banks accountable
for the investments in lending in Chicago's neighborhoods
to small businesses and working with
and investing in CDFIs in order
to do business with the city.
A rising tides, a rising tide raises all boats.
When banks expand lending to low
and moderate income households.
The economy improves for everyone.
Socially responsible investing
and lending provides returns for banks,
but it also provides returns for communities
and promotes a stronger economy for everybody.
Thank you.
Uh, thank you Mr. Simkins for your remarks today.
Uh, Mr. Jackson from the Chicago Rehab Network.
Thank you. Chair down, members of the committee.
My name's Kevin Jackson with the Chicago Rehab Network.
Thank you for the opportunity to present our testimony.
On behalf of CRN Chicago's Network
of Community Development Corporations committed to a mission
of community empowerment and development.
Without displacement,
the Rehab network does not own real estate
or affordable housing.
Our members do.
They build it and preserve affordable housing throughout all
neighborhoods of the city and other community assets.
We at CRN organize
and deliver capacity building training, reports
and analysis, as well as our leadership
for affordable housing policy, such
as shared ownership initiatives
and strategies like co-op housing as a third avenue, uh,
that we need to explore stronger.
We have worked together with Woodstock
and our partners at NHS
and among others for decades to embrace
and expand the community.
We Investment Act of 1977, and we certainly share Mr.
Mendez's opening comments about the strength of that being,
uh, reinforced as we move forward
and wanting to see more
equity in our neighborhoods and communities.
We have been recipients of CRA investments
and private partnerships often anchor to the strategies
for community revitalization and reinvestment.
Chicago, by the way,
is a national leader in community development,
and it's demonstrated in neighborhoods across the city the
critical and factors included in successful developments.
As you members of the finance well know,
one local agency like community development corporations
accountable to the neighborhood.
Two is a committed and patient investors.
And three is a collaboration
between a responsible government leadership.
A key question that we ask
for community development in Chicago remains who benefits
from city investments
and how to maximize leveraging public-private partnerships
for the all investments.
What can the city do to induce private
and reliable investments in areas long
void of market capital?
All communities of different scale opportunities
do deserve investment and strategies to increase that.
This is the foundational question for us.
What can we do better? And how do we mitigate risk
and displacement for all one?
We can fund intentional affordability via land trust
and limited equity models, shared ownership
and co-ops, which control the cost of land
and taxes, as is the case for thousands
of market rate co-ops along the lakefront.
Two, we need to create new products, much like Mr.
Simpkin was talking, that enable patient capital for
refinancing, renovation,
and repair of both the single family stock
and multifamily affordable at the unit level.
This would need to be accomplished
with understanding the appraisal gap challenges in many
neighborhoods that were historically redlined.
We've been working with NHS
and many at the policy level that this is one
of the great restrictions
of getting capital into the neighborhood, is the challenges
with appraisal policy and frameworks.
We'll continually to work with that, we wanna affirmatively
educate residents in areas of speculation
and predatory real estate practices
to deter against panic selling
and assist owners with improvement in their taxes.
Finally, affordable housing should be required in all
programs, including Chicago's Opportunity Fund.
Last year we were here,
we did speak about the Catalyst Fund.
As you were speaking earlier with Alderman Viegas, we met
with the city and we're gonna recommend that we do
that again, delighted to hear there's an interest about
changing that ordinance
'cause that's what was required to get it to do the type
of work that we want to see for our neighborhoods.
So we would recommend 90 days from now coming back
with the leadership to talk about what can we do
to get investments into these areas,
and particularly attending to the condo market,
the co-op market,
and other shared ownership markets that should be reinforced
and preserved as that strategy for an affordable option
beyond what we do with the Department of Housing
and other agencies using tax credits and the like.
Happy to discuss with you. Thank you Chairwoman.
Uh, thank you Mr. Jackson.
One to acknowledge Alderman Curtis and Alderman Rodriguez,
and they'll be counted towards quorum.
Uh, Mr. Jackson from the
Illinois Bankers Association is our last presenter.
Thank you, Madam Chair. Members of the committee,
Ben Jackson, executive Vice President
of the Illinois Bankers Association,
appreciate the opportunity to testify.
Um, want to once again commend, uh, the chair
and particularly the city treasurer, who is a present today,
uh, and her staff for pursuing a balanced approach
to this, uh, ordinance.
And we've talked today about, uh, several changes that are,
uh, potentially up
for discussion in the future, wanna address those.
But we certainly want to work with, uh,
city officials towards, uh, maintaining
that equitable balance that we've seen.
There are a few points that, uh, we would like
to address in terms of changing the ordinance that have,
uh, been overlooked.
So those can certainly be brought into the fold if we're
looking at a expansion
or, uh, another, uh, renegotiation of the OR ordinance.
One is there's a requirement to split out aggregate data,
um, between the city data loan data, uh, within the city
and separately in the Chicago MSA.
It doesn't really make much sense.
It doesn't tell you all much.
You really want city data,
I think not necessarily the MSA comparison.
Um, that is a ma that becomes a manual process
for small banks particularly to split out.
It's very difficult and it is a deterrent
for small depositors in applying.
Also, the affidavit requirements can, um,
have a deterrent effect.
We've seen banks drop off.
Um, we're not suggesting that we, um, reduce the,
the data reporting, um, that flows
through those affidavit requirements,
but certainly, um,
requiring a senior executive officer within a bank
to sign off on, um, all of this information
that they haven't really seen does have a deterrent
effect on, on some banks.
We've seen that happen.
Um, I do wanna remind the committee though, that this is,
this is a voluntary application process.
So while, while many of the suggestions today are,
are certainly well intended, um, they are difficult
but not imposs
or almost impossible for small local institutions
to comply with.
Um, and they're overly cumbersome
for particularly small banks to apply.
Um, Craig, earlier in his testimony,
or I think an answer to a question mentioned, first Eagle
and Albany is, is small lenders who have applied.
And you'll notice in the last few years,
we've had some small banks
come onto the list and then drop off.
Typically, I follow up with them
and I know the treasurer's office does as well.
Uh, and typically it's, it's the, just the burdensome, um,
application requirements that act as a deterrent.
So holding those deposits aren't necessarily worth it
for those small banks
because the application process is, is so lengthy.
We certainly want this committee
and the council generally as well as, uh,
city elected officials to be armed
with data when they're making this decision.
However, you know, we, we wanna strive forward towards
that balanced approach.
Um, economic data, I had some of that in my presentation
that's largely been covered,
and I know the, um, hearing is going long.
So I'll just say that, you know, we agree
with the previous speakers that yes, higher interest rates,
higher purchase prices, they're certainly, um, pushing debt
to income ratios higher and affecting lending.
We saw hum to data look a little better, uh, for 2024,
the most recent year than, than it was in 2023
in terms of applications.
But certainly interest rate policies and,
and other policies are having an effect.
Typically in my presentation, what I like
to do is provide some examples of
what banks are doing in the community directly,
and I'll name a few of them, uh, that are applicants.
And it, you know, just to be real, uh, direct
with the committee here, um, it's been mentioned already,
the, the Trump administration,
what's going on at the federal level
and the effect that that's having throughout,
um, industries.
Not just banking, the banking industry,
but all throughout the city of Chicago
and the state of Illinois.
And, um, I don't have a lot of direct examples, uh, today.
I can talk privately with any of you about any, uh,
particular applicant bank, happy to do that
or connect you with them.
However, you know, unfortunately, we're seeing kind
of a shrink back from banks wanting
to directly highlight their contributions.
Unfortunately, outside what's in the, uh, applicant data,
I can say that local banks are investing here.
We see the effects of that. We see, uh, you know,
as was pointing out earlier, that, uh, many banks strive to
perform well, uh, once they reach this threshold
of having this hearing, they want
to have their data look good and show progress.
That's certainly, uh, valuable.
And I can tell you just, uh, for my part, we've seen the,
uh, interest in branch openings, for example,
increase in the city of Chicago.
That is great news
for every community in the city of Chicago.
Every neighborhood. Uh, I've attended branch openings
with many of you in this room in the past year,
and those are really wonderful occasions.
Many of those openings have been in underserved
areas of the city of Chicago.
And it's a, I think it's a real bright point for the city
that we're seeing a new, uh, renewed investment in brick
and mortar branch openings.
Uh, I do wanna, in conclusion, just address a few points
that were brought up, um, in, um, in some
of the comments and discussion and dialogue today.
And I'm also happy to answer further questions.
But one point on CDFIs, we discussed those, uh,
community development financial institutions.
There aren't too many of them left
because funding has been in jeopardy, uh,
under the current administration at the federal level.
It's been shrunk back.
There's been threats to eliminate it altogether.
That's been a challenge. Uh, but I wanna point out directly
and put exclamation point on this, that, uh,
first Eagle Bank is A-C-D-F-I.
It is A-C-D-F-I, an increasingly rare one that is actually,
uh, A-C-D-F-I with a bank charter.
So deposits into that bank, um, are direct deposits
by the city into community, uh, um,
development financial institution, the IBA.
We would welcome working with city officials,
particularly the treasurer's office
and the finance department to target additional CDFIs
and work with them to make this process better
and easier for them so that they can apply next year
and the city can directly invest in those institutions.
Would love to have that discussion and that partnership.
Uh, minority Business lending was mentioned earlier.
I just want to point out that, that, you know,
the last time we renegotiated this ordinance,
which was roughly about five years ago,
that wasn't included in that specifically for the reason,
because there's not broad sources of data collection
that are in place right now for minority, uh,
lending application data
and denial data that is coming online to kind
of in a s sput, uh, stop start way here, uh, through,
um, a specific provision of the Dodd-Frank Act
that was passed after the housing crisis in 2009.
Uh, there's been litigation around this on, on both sides.
There's been various rule proposals.
There is a final rule here, uh, in place.
We'll see how it's implemented
with the current structure of the CFPB.
Um, however, the bottom line here is that in some fashion,
there is going to be a minority business lending data
that's gonna begin being collected
and reported within the next few years here.
So I would just caution the,
the council advise the council just to wait
and wait until that data begins to be collected
by all institutions that have to collect it
and report it out, uh, to move forward with that type of,
uh, structure within the application process.
Mortgage lending, uh, there was some discussion
of mortgage lending and, uh, comment about, uh,
looking at opportunities, uh, you know, banks doing a lot
with opportunities that they had to lend.
I just wanna mention that
we've seen the trend in recent years of, uh, non-bank,
non-credit union mortgage lenders taking a
larger share of the pie.
Once again, this has echoes of 2007, 2008,
where those non-banks, non non-credit unions,
those non depositories, which you can't touch
through this ordinance at all, um, are taking a bigger share
of that mortgage application pie.
Uh, that's can be troubling.
I've had a lot of anecdotal, um, stories relayed
to me from our member banks that there's a lot of,
um, these non-bank lenders that are making
what we call non-conforming loans.
Those mean that they're, uh, loans with irregular features
that typically don't fit in the typical, uh,
secondary market, uh, bucket to sell
to Fannie Mae and Freddie Mac.
That is incredibly troubling.
It's a trend very much that I'm watching.
Um, and, you know, it does affect the ability of
standard depository institutions to get a larger share
of mortgage loans.
With that, I'll conclude, happy
to answer additional questions.
I hope my kind of conclusion here helped, uh,
clarify some comments from earlier in the,
uh, in the committee hearing. Thank you.
Thank you. What would, uh, can you describe what you mean
by irregular features?
I'm sorry, Madam Chair, could you repeat the question?
Could you describe what you give some examples
of irregular features?
I was trying to follow that conversation.
Yes, Madam Chair. Um, with regard to irregular features,
some of those might be, um, insufficient debt
to income ratio, uh, insufficient, uh, collateral,
um, lower down payments, those types of features.
You know, um, you might remember back in oh oh 8, 0 7 and
before, there were a lot of like no doc loans,
no documentation, not enough documentation
on income, et cetera.
Typically now,
because of federal rules that are still in place, um,
you have documentation,
but there's kind of a acknowledgement that we can kind
of move around that depository institution,
which are our members.
And the applicants under this, uh, ordinance are,
are not making non-conforming loans, uh, generally speaking.
All right. Thank you for that. Uh,
and thank you all for your presentation.
Are there any questions from members of the committee?
Alderman Martin.
Thank you, chair. I just wanted to re-up, um,
maybe directing to you, Mr. Jackson, um,
from the Bankers Association, if you are at liberty
to share any, um, multi-bank approaches, uh,
to lending practices that have driven, uh,
the upward increase in applications submitted from,
by minority individuals from minority areas across Chicago.
And if that's something that needs to be done off the record
for privacy purposes, that's fine.
I, I'll give, uh, alderman, I'll give one example of that
that I've seen throughout banks
and, uh, that continue into the present day
is the implementation of specialized mortgage teams,
particularly in the city of Chicago,
to conduct more outreach,
but also help, uh,
individuals understand their credit scoring.
And a lot of the, the institutions
or the, um, organizations that have spoken
before, uh, work with housing counselors, our banks do too.
So it's, it's really about kind of connecting individuals
that want to own homes, uh, with the resources
that are out there, including the
organizations in this room.
So our banks have
us typically organize these specialized lending teams
that can connect all those parts together
and be accessible to those individuals, um,
out at community events
and other opportunities to, uh, connect.
Great. Uh, I'll follow up with you offline.
I'd like to get into some more
information, but that's all I have
right now. Thank you. Absolutely.
Thank you. Alderman Lita?
Yes. Thank you. Um, Mr. Mendez, first I,
I hope when you get back to the office,
you also have a voicemail from Wintrust based off of the,
the data that we're looking at here on the screen.
Um, I wanna actually ask you a serious question related to
that, because you noted in your previous slide
that Wintrust also has an outstanding CRA rating.
How can an outstanding CRA rating
a CRA rating of outstanding and those equity numbers
and lending as the youth might say, make that make sense?
Like, how, how do those go together?
Um, first
and foremost, it should be noted that, um,
I have a representative of OneTrust on my board,
so there will be some explaining
to do when I get back to the office.
But, um, the, um, the challenges that,
uh, with regard to the way
that the Community Reinvestment Act
is applied at many institutions, it is much more
of a check the box process than measuring whether
or not you're getting the impact you want in community.
So it's entirely possible
to fail your way into an outstanding
community reinvestment Act rating.
Um, not many institutions do that,
and sometimes they take their eyes off of the ball in terms
of seeing whether or not they're making community better
because they're so focused on the compliance requirement
of checking the boxes of, we have this program, we have
so many loans in this community, et cetera.
Now we have an insurance policy that we were able
to advocate for and pass here in Illinois a few years ago,
which is a state version of the Community Reinvestment Act,
which does include to Mr.
Jackson's point, uh, does include mortgage companies
and credit unions, which a federal CRA does not.
Um, so for an institution like wintrust,
we have an opportunity to have deeper conversations
with regard to what their federal rating is,
but what we see in the local community, um,
those are constant conversations that many
of us on this side of the box, I think it's called,
have all the time with regard to, to a certain degree,
we would say a financial institution like GM Bank,
which has a charter to be able to serve the underserved
and yet is doing poorly on CRA.
We don't have enough data to be able
to show are they really doing the things that matter in
that community, but some of them don't count
underneath the formula
that the examiners use for community reinvestment.
So there's a little bit of a dysfunctional waiting process
that has been an argument over CRA reform
for the better part of the two decades
since it's been rewritten.
I appreciate that. Um, my second question was related to,
can we put up just like four comparison, like one
of the slides showing you a different banks, uh,
at peer average, below peer average, above peer average?
Well, we all have a, the time for slides fast.
They're in front of me. Sorry about that.
Just ask your question. Please. Don't worry about it.
Don't worry about it. Um,
Hmm. So
here's a question that I would ask.
We talked about the banks
showing improvement.
I'm curious, is that related to
the actual peer average going up
or the number of banks performing, um,
at or above pure average, which is
to say like if the pure average of mortgage applications
for majority minority tracks was going down,
but more of them were performing above that average,
would that be improvement?
Um, does that question make sense?
Yeah, it, it's, um,
if everybody sucks, who's sucking the lead?
Yes. Essentially, with your question. Yes.
Um, we do take an additional look at that layer.
Uh, we haven't seen anything particularly troubling
with regard to the mortgage lending side of things
with regard to those institutions that have responded
to this RFP on the small business side.
Uh, some of the data that we're able to get.
But unfortunately to Mr.
Jackson's point, we still don't have the granular data.
Um, financial in institutions are focusing on making small
business loans into communities that are low
and moderate income and communities of color,
because that's something that is looked into with regard
to the Community Reinvestment Act.
But we're seeing lower volumes
and that's of interest, uh,
since we don't have the granular data to be able to show
that, yeah, these are the guys that are doing the best,
but everybody's doing less,
I'm more concerned on the small business side than on
the mortgage side at this point.
Interesting. Okay.
My, my last question, truly last question. Thank you.
'cause we have another subject matter here.
I I know they, they should not put two
very interesting topics together.
Yeah. Well, you have a lot of questions, but go ahead.
I, I think is my job to have questions. I agree.
Here's what I, final question.
'cause a topic
that interests me when you put it up on the chart is related
to mortgage interest rates
and what is the variability in the interest rates
offered across incomes, across geographies,
and yet adding that layer
of data request feels like it would only make the process
more cumbersome for all banks,
particularly CDFIs to participate in.
How do we get the best understanding of the quality
of mortgages being offered, particularly across communities
of colors without making
the application process more cumbersome?
We have that data. Um, I can tell you without equivocation
that, um, bars of color pay more, um, again,
that's on average, uh,
and we can provide that data to this committee
to you directly, et cetera.
But, um, there are ranges through laws like the, uh,
home Ownership Equity Protection Act
and others that mandate
through the Home Mortgage Disclosure Act
and others to be able to provide the ranges
of fees and interest rate.
So this is information
that we have on our data portal on the
Woodstock Institute website.
Or we can sit down with any of the older people here today
and walk through exactly what we have district by district.
'cause we have it broken down at that level as well.
I'd be interested. I'll follow up
with you. Thank you, sir. Thank you, chair.
Thank you Al Alderman.
Just quickly, and this is one of the things
that we've looked at in N-H-N-H-S as as, um,
A-C-D-F-I mortgage lender.
What you'll find is that minority applicants are more likely
to be pushed into FHA loans, uh,
which are far more expensive.
They have life of the loan, PMI
and lots of other stuff, loan level price adjustments.
Um, so the type of mortgage loan that applicants
of color are being pushed into does become
very important, right?
You have CDFIs, you have special, uh,
purpose credit programs, all sort of non-conforming.
Um, but that can offer, uh, much more,
um, powerful mortgage terms for borrowers.
And so encouraging folks to do that becomes very
To, uh, to make it clear though, um, the preponderance
of the increased cost.
We see that much more
with mortgage companies like guaranteed rate and, um,
and Rocket Mortgage
and others, uh, than we do with the kind of institutions
that are requesting, uh, to serve the city of Chicago.
Um,
Thank you Alderman La Spotter, alderman, uh,
chairman Irvin, point of information,
I, I just got a very quick question.
Um, I know in, in years past on the deposit depositories,
we talked about credit unions.
Where, where do we land with that?
Or where is either a preventing us
or what can we do?
'cause we talk about that local infusion
and the credit union generally has done that.
So where are we at on that?
Um, I would say no closer than we were when we started.
Um, unfortunately, um,
I know the treasure's very passionate about wanting
to bring, uh, credit unions to the fore to be able to apply.
Department of Law has opined that the original ordinance
that that, uh, articulated state
and federal banks was done through a statewide, I'm sorry,
citywide referendum.
And to add them would require a similar statewide,
a citywide, uh, referendum, which is not practical.
So we are kind of, uh, at a standstill is what I would say.
Alright, thank you Es Thank you Madam Chair and,
Uh, alderman Ccho Lopez to give us a closing question.
Yeah, thank you. Um, just briefly,
and I think goes back to maybe what Kevin mentioned.
I know that recently the federal government has borrowed
Wall Street investors, were buying single family homes.
But what is the alternative?
And I think in terms of financing, you know, you mentioned,
um, funding for housing cops
or share housing, other alternative ways.
Unfortunately, oftentimes these structures are not easily,
uh, funded through these kind of mechanisms
of the city council encouraging
and pushing banks to perhaps fund this kind of, um, uh,
instruments, uh, housing cops
and share housing have shown extremely effective,
but yet financing is one of those big issues.
So in terms of like land trust
and others, um, how do you see perhaps this kind of, uh, uh,
leverage in the city council to work with these local banks
to incentivize such, uh, financing of the structures?
We would definitely love to figure out a way where,
you know, these funds go to fund these kind of initiatives
that will create housing in a desperately needed time.
So just wanna think maybe your thoughts
and maybe options that we've seen in other municipalities.
Thank you, Madam Chair.
That's a great question. I think the key
process is always in a public-private partnership.
That was one of the things we were exploring last year at
this very hearing is, is the catalyst fund
a fund that could be used
to leverage both private and public sector?
A lot of people like to talk about some, uh, loss reserves
being set up by the public sector.
So, so to incentivize the private sector more, uh,
readily getting involved.
I think also there's, uh, an very critical role
of education in all of this that, uh, we, we see
repeatedly baked in the biases in
financing two communities
that have been historically redlined.
And that just continues to hold back.
And one of the comments earlier about, well,
who's, who's investing here?
Who's, who's, people are saying, well, we're glad
to see there's a change,
but we also gotta make sure there's opportunity for people
who reside in neighborhoods today,
and that they have that opportunity.
What housing brings to people, right?
There's just such a wealth, uh, of having that ownership,
uh, is one, but it's also the stability even
of a rental housing and that third avenue, uh, of co-op
and condominiums.
That's a different avenue of ownership as well.
And, and the stigma though, the ignorance,
the discrimination about what's happening in certain
neighborhoods that have prevented anyone from funding,
that's what started a lot of the lending equity to begin
with, was the report from WBEZ.
That was several years ago.
We haven't really resolved those issues. Right.
Uh, and the thing
that strikes us in the housing community is we began out
of the sixties with fair housing as a really important item
to have to address and to build from that.
And then what we see today, fast forward, the, uh,
ownership in the black community is less than it was then.
So there's a problem that we need to really sit down
and address and recognize.
It's, uh, really something that has
to be shared across government as well as the private sector
to get into a place where we're saying, as I started
with my remarks, that's
where the community development corporations came out of
at a time when the city was experiencing arson throughout
neighborhoods, it was community development corporations
that set up and said, let's find an alternative.
Let's have some authority about the
disposition of the real estate.
Let's make it available for our neighbors as well.
And that's what we wanna see is thinking through that.
And part of that alderman is getting investments right into
the community development corporations themselves.
We have a lot. The CDFI world is very
important, has been threatened.
It's extremely effective.
But so too is the CDC itself
as an institution over in Pilsen is a solid
one known nationally.
And we have those models across the
city and we wanna expand.
That was my comments last year.
Uh, uh, we talked about what went on in Woodlawn
by an organization led by POA in incredible amount
of reinvestment in building.
We talked about what went on in Pullman
by the Chicago Neighborhood initiatives.
These are models of investments, partnerships that work,
and there's no reason they can't be done in
Lawndale or any place else.
Thank you, Mr. Jackson. Thank you.
Thank You. Yeah, Madam Chair, I would love
to follow up on these in terms of ways love
to see foreclosed homes and other opportunities.
I think there's a lot of opportunity partners Kevin
mentioned, so we would love to follow up with you
and your committee.
Thank you, chairman Irvin,
This is more of a process question.
Um, are we, we're not going to pass this
Or No, today is, um, well,
today is the subject matter hearing the ordinance,
which actually designates these municipal deposit
depositories is before us at our
Wednesday meeting. Okay. Very
Well, thank you. Okay.
Um, uh, comptroller Belsky, I know you wanted
to correct something on the record.
Yeah, we, um, we've learned that first, uh,
not first Segal, uh, Liberty National Bank.
Um, it, even though they, uh, responded,
they've been rejected because they didn't meet the criteria
of code of being domiciled in Chicago.
And that's one of the requirements of the code.
So, um, we're gonna take a three minute recess
before we go into the next resolution
to give our court reporter an opportunity
to wiggle her fingers in a different way.
Thank you. Needs to
Good afternoon to the members of the Committee on Finance.
We'll now move to the second subject matter hearing,
which is a resolution that was introduced
by Alderman Matthay
and others calling on the budget director, the comptroller,
the Chief Financial Officer,
and the Director of the Council Office of Financial Analysis
to attend a subject matter hearing to provide testimony
and respond to questions on the state
of the city's cash flow situation and the timing
and plans to meet such advanced pension payment requirements
under fiscal year 26th.
Budget, no votes will be taken on this matter,
and as Alderman O'Shea had to leave to attend to
his Committee on Aviation duties, um,
we will have an introduction by Alderman Scott Waba.
We are joined today
by acting Chief Financial Officer Steve Ma
and Comptroller Mike Belsky from the Department of Finance.
And we have a number of people in the box
to answer questions.
Alderman Waba,
Thank you, chairwoman. And,
um, thank you Comptroller
and, um, CFO for being here today.
Um, as you know, with the budget that we had this year, um,
we were required to make a $260 million advance pension
payment to continue to grow the city's net pension
or reduce the city's net pension liability.
Um, and I appreciate you handing out this document here just
before the, the meeting started.
Um, but we all know that we face serious challenges
with our pension funds.
Um, we know that we get unfunded mandates from the state,
um, that have been put upon, uh,
put more pressure upon our budgets every year.
And we are looking for ways to, um, mitigate some
of those pressures with new revenues, um,
but also to do things that, um, would be critical
for the city to stabilize the net pension liability
that we have as pointed out in our resolution.
Um, one of the things
that we've been frustrated about is the, a little bit
of the lack of transparency around not just the timing
of the payments, but the payments that were asked for
by the city council through a vote on the city budget.
Um, so I appreciate you being here today.
Um, we want to get a better understanding
of the city's cash flow situation,
and I know some of my colleagues have questions, I think
as we move forward, but chairwoman,
I'm assuming they wanna make the presentation first.
Yes, they do. Okay. So I'll stop there
and then we can ask questions if
Possible. All right. Thank you. Alderman Waba,
we'll begin with, uh,
acting Chief Financial Officer.
Steve Ma, congratulations.
Thank you very much. Can everyone hear me okay? Yeah.
Well, good afternoon. Good afternoon.
Chairwoman Dow, uh, vice Chair Conway
and members of City Council and the public.
My name is Steven Maher
and I'm the acting CFO of the City of Chicago.
Speaking with you today is an honor,
and I look forward to establishing a strong working
relationship with this body and sort of the public.
My team members, uh, some of which are in the box,
have heard me repeat three values since becoming the acting
CFO just last week.
Those values are continuity,
competency, and trustworthiness.
The city council can expect me
and my team to deliver high levels of continuity,
competency, and trustworthiness to both internal
and external stakeholders.
Those values are important for my team
and are also important pillars
of prudent financial management,
including pension management.
And a key pillar of the 2026 budget is fiscal stability.
One of the challenges, arguably the largest challenge
for many years to achieve fiscal stability has been the
pressure caused by the city's contributions
to our four pension systems.
Today we are here to discuss the city's cash flow
and advanced pension contribution, sometimes referred to
as the supplemental contribution for fiscal year
or budget year 2026.
Comptroller Beski will start the presentation.
Mike, please go ahead when you're ready.
Thank you. And again, uh, appreciate the opportunity
to provide this information, uh, to the, to the committee.
Um, if you see on the first slide here, uh, your,
your question was about, um, cash flow
and cash flow considerations.
And probably the simplest way to, uh, to set the stage
for this is that, um, school districts often
get two major sources of revenue, property taxes,
but they get it twice a year.
But they have expenditures ongoing
throughout the course of the year.
So they'll often sometimes borrow, uh,
using tax anticipation notes
and pay those off when the, um, proceeds
or property tax receipts are received.
Um, or they'll take it out any sort
of ca excess cash balances they have.
Um, so the idea of liquidity management
and cash management has to, to do a lot with timing.
Um, and in addition to, uh,
just meeting the everyday needs of the city,
the operating needs of the city, which we must do
through this budget, um, we also earn interest on, on,
uh, dollars that we hold that are budgeted for, right?
So that's also part of cash management is it's,
is investing, which we just heard about in the last
subject matter hearing.
So, so what you see is we have about two point on the,
on this yellow part of the graph, 2.2 0.1 billion
in cash and cash equivalents at the end of the year.
Um, the demands going out in the first quarter
are the statutory required payment of pension.
This is, this is what's, uh, actuarily required.
You know, the supplemental is over and above this.
Um, and then we have our, um,
debt service payments coming due,
and then we have a, uh, the TIF surplus going out as well.
Um, so if you, uh, look at the bullet points, you'll see
that one of the factors is that we have a, a delay
in property taxes and this is something out of our control
and that could hold up about $700 million, um,
in terms of current liquidity, right?
So if you want to go to the next, uh, graph, it's kind
of busy, but it just, um, it kind of shows this point.
So the darker bars, the top
are revenues, the orange are expenses,
and the darker bars are the first quarter
going from the first quarter of 2022 to the first quarter
of 2025.
And what you'll see there is this yellow line
is the quarterly net the difference between revenues
and expenditures, and then it's the,
the purple line is cumulative.
You know, this is aggregated over a period of time.
And what you see, what you will see is in the first quarter
of the year, um, there are gaps in that line.
And in 2025, we had a gap in that line.
In the beginning of the year, meaning in that quarter,
we had more, um, expenditures than revenues coming in.
Uh, and cumulatively that remained the case, uh, through,
through, um, Q 2025.
And the other thing to point out here is that
for the pension funds, who we, we
have a really good relationship with,
I serve on three of their boards.
Um, we've actually made cash advances to them in the past
when they've had, uh, short, uh,
when we've had delays in property taxes.
So the city, you know, goes above
and beyond just the actuarial payment
and the supplemental payment we're actually pre-funding,
so they don't have to liquidate assets
or they lose out on interest earned, you know, for,
and that's something that's important for them
meeting their future obligations.
And then the next slide really just is, is taking
the net, that line, that was the net showing you, um,
cash flows per quarter.
And as you can see again, um,
what happens is you have these big outflows
and then inflows start to become positive.
So it's our expectation.
Um, we will comply with this budget.
We will make this payment.
This just is a matter of, I, I'd say
public policy in that if you look at public administration
and financial management, you have the budget,
you have the capital budget.
Cash management's also really important liquidity
so you can meet your obligations as they come due.
We had a first quarter, uh,
with big outflows, which is normal.
It's not anomalous,
but we also had the delays in pension payments
or in, in, uh, property tax payments from the county.
So we're just trying to be prudent from a cashflow
management and liquidity standpoint.
There's no intent here to not, not make this payment.
Excuse me. Um, comptroller, um,
in the first chart, the
central cash pool, you have a figure,
the Q1 cash demands.
What is that figure?
Um, I think it
amounts to over, uh, well, I would defer to our treasurer
representative here.
What is the, uh, current outflow
In for the fir for the first quarter?
Yeah, excuse me.
Um, break it down a couple of different ways.
First of all is the, the, the statutory contribution
that you mentioned, that's about $1.2 billion.
Typically, I make
that pa those payments in two installments this year.
I plan to make those two equal payments on February 18th
and March 18th.
We have debt service that is $265 million that goes out,
that it's out now.
Uh, Jan one is Jan two actually.
Um, payroll is $300 million per cycle.
Um, and we've got TIF surplus,
which we don't have an exact number.
I'm assured it's large,
and I'm assured it's over a billion dollars.
Uh, so those are the major, major things.
Uh, we, on, that's the, the revenue side, uh, I'm sorry,
the, the outflow side.
The other side of that is the revenue, uh, delay.
Uh, we just saw the, the county this morning.
Uh, they anticipate that everything is gonna go well
for an April one deadline that's two months delayed.
So that's a, it's a swing.
Uh, and we're still trying to re,
we still haven't received all of our money from the second
half, uh, property tax levy from 2024.
So, um, a lot of confluence of events that are bringing, uh,
what is always a declining, uh, part of our cycle,
which is the first quarter.
Uh, we typically build up just
so everyone in the, in the room knows.
Um, and,
and this never happened prior to my coming,
uh, to, to the city.
Uh, we had a lot of dislocation.
We now have a strong partnership across the
financial leadership of the city.
Uh, so we're collaborating on all of these outflows,
and I'm managing the city's assets
to these expected outflows.
But when there's uncertainty, there's, there's, it, it,
it brings a lot of, of risk to bear on how you manage money
and having liquidity available.
So, so what would the total be for, uh,
the cash outflow for quarter one?
I, I'd have to add it up exactly,
but it's, uh, in essence
$2.8 billion,
2.8 billion.
Okay. Finish.
And those are just the, the, the big round number
that we, we do have every year.
But I would add tip surplus is what double, uh, expected
to be double what it's been historically.
Yeah. Thank you. Thank you, Craig. And thank you, Mike.
So the, the slide up on the screen
now includes a short history
of the advanced pension contribution to serve as a reminder
for folks here, the city adopted the advanced pension
policy in 2023.
The table on the right hand portion of the slide illustrates
that the actual advanced pension contributions
that we've made have been larger than the projections set
out in the, the original plan for 2026.
Unlike 20 23, 20 24,
and 2025, the city will be making the advance payment
from corporate fund dollars rather
than assigned fund balance.
And despite the city's high statutory contributions
and the exhaust exhaustion of a signed fund balance,
the city has continued to commit
to making the full advance payment each year.
So for 2026, the city, as Mike noted,
is dividing the advanced pension payment into two equal
installments in an effort to be responsible stewards
of the city's cashflow.
The first half was paid on January 16th,
and the second half is currently planned
to be paid mid-year.
And when we talk about the advanced payment,
we really mean the plural
advanced pension payments we have made in the past,
and will in 2026, make advanced pension payments to each
of the four pension funds.
The table on this slide illustrates the approximate amount
of each of the advanced pension payments to each
of the four funds for 20 23, 20 24,
and 2025, as well as the budgeted amount for 2026.
The city's employer pension contributions have really
significantly increased since 2010.
This graph illustrates that growth
from 2010 to 2014.
The first five bars you can see there,
the city's employer contribution was less than 500 million.
The top of the slide indicates that the total
contribution today is approximately 575% larger
than 2010.
Again, that's 575%
or 6.75 times higher than 2010.
You can also see in that light font,
the acronym A-D-C-A-D-C stands
for actuarily determined contributions.
This is a phrase that many of you are aware of.
Since 2022, the city has made
actuarily determined employer contributions
to all four pension funds.
And since 2023, the city has made the advanced contributions
to all four pension funds.
The illustration on this slide displays the statutory
contribution for each fund
and the advanced contribution in different colors.
And the table on this slide illustrates that each
of the four pension funds improved their respected funded
ratios between 2023 and 2024.
The muni fund increased by 1.5 percentage points
the police fund by 2.2, the labor fund increased
by half a percentage point and the fire fund by 1.6.
At the bottom of the slide,
you can see combined there was a 1.8 percentage point
increase from 23 to 24.
And this is the last slide of our presentation for today.
It speaks to a few key considerations related
to our advanced pension payment for 2026.
First, the advanced pension contribution is a supplement.
The city is not required by law to pay.
However, it is a policy with the goal
of reducing the statutory contribution in future years.
In short, we pay more now in order to pay less later.
Second, the lion's share
of the advanced payment in 2026 will be,
will be paid from corporate fund revenues
not assigned fund balance.
This is a key difference from prior years
where assigned fund balance was utilized.
And while casino tax revenues will support a portion
of the police and fire advance pension payment in the
future, over the next few years,
we currently project the lion's share of the total advance
will be made by corporate fund revenues.
The third important point we wanna note on this slide is
that, and, and Craig noted this just a moment ago,
the offices of the CFO, the comptroller, the budget director
and the treasurer, are in constant communication in order
to prudently manage the timing
of our advanced pension payment for budget year 2026,
in the context of the cash flow considerations discussed at
the beginning of this presentation.
And I, and I mentioned in my opening remarks, the values
of continuity, competency, and trustworthiness.
The CFO, the comptroller, the budget director,
and the treasurer, and, and Comptroller Beski
and others in the box, can speak more eloquently than me
about their work on this front over many years.
But we have worked diligently to assist the four funds
to address the delay in property tax receipts from Cook
County and develop strong trusting relations
between the city and the four funds for the betterment
of retirees, employees, and taxpayers.
That's the end of our presentation.
We're happy to answer questions.
Uh, thank you. Uh,
before we open it up for questions,
any committee members have questions?
When you say midyear, what are you saying?
June, may, July.
It's a, thank you for the question. Otter Dow.
It's a good question. It's something that we are going
to wait to see until these cashflow issues are resolved.
My expectation when I hear Q2 is sometime in Q3, Q2, or Q3.
Okay. Alderman Waba.
Um, thank you for the presentation.
So, uh, just a few questions.
Um, number one, I,
I think just a comment too on the transparency, the CO
and trustworthiness, I think that's what, uh,
we are looking for in this council.
But so are taxpayers,
because they're the ones that we represent.
We don't represent political interests or ideologies.
Um, we represent the people who are paying into the system.
Um, so going into a couple of things
that you brought up there, the TIF surplus
has the reliance on a, this one time revenue source,
the TIF surplus, um,
now hitting over a billion dollars been a factor in
this cash flow problem.
And thank you for the question,
Annette Guzman, budget director.
So we anticipate over the course of 2026, um,
from property tax receipts that the TIF districts will grow
by about $1.3 billion, which is more than the revenues
that they brought in in 2025.
So, as, uh, uh, acting CFO, uh,
Mar has mentioned, um, this is really about a timing issue
and not about, um, uh, you know, future, um,
issues with our cash flow.
We have a ton
of expenditures going out in the first quarter,
and so we're trying to prudently manage the cashflow
as those other revenues come in throughout the year.
Um, do you think if we had not depleted the, uh,
unassigned reserves
that we would have this cashflow problem right now?
I think that the, uh,
pension advance over the past three years has been, um,
paid by an assigned fund balance
that was set out under the former administration.
And they paid it one year earlier than the,
than their executive order, um, laid out.
So if we had actually stuck to the original plan
that was set forth by that administration,
we would actually have a, a signed fund balance
to pay the advanced pension payment, um,
in 2026, which we did not.
Okay. Um, does this, uh, issue
that we're facing right now cause any damage
to our existing problems with borrowing
and, uh, credit rated agencies who
insisted in their reports that we make these payments?
Um, we as a council voted to, as majority
of the council voted to make sure
that the payment was made in full so that we could comply
with what the rating agencies were saying.
So will this have any, uh, pressure added to our
potentially, you know, potential down a potential downgrade
and the, and the negative outlook we're sitting on?
No. Yeah. Happy to. No, I don't be, I don't believe so.
We've been in regular communication with the radon agencies
for the past couple of months.
This body may have seen in January, Moody's and s
and p released reports on the FY 26 budget.
They did talk about the advanced pension
payment in those reports.
They also talked about concerns around structural balance
as they have for the past several years.
They talked about some potential execution risks associated
with some ideas in the budget.
They also talked about, um, public act 1 0 4, 0 0 65
that was passed back in, in August,
and some concerns associated with that,
but they didn't talk specifically about concerns associated
with the timing of the advanced pension payment.
In the past, we have talked to them about that concern,
but in the short term alder, I do not expect that a, uh,
a delay like this, um,
because of cashflow considerations will be, uh,
credit negative for us.
Yeah, and one thing I would add, add to that is that in,
in their management practices, uh, credit ca
category of risk, um, they do, they do mention having sound
well monitored liquidity policies, and very important.
So it kind of offsets that.
Um, they also, I I, I don't think the rating agencies, uh,
when they, when they do the rating and they,
and they do these outlooks, they're,
they're also projecting forward.
Um, and, you know, to react to, um,
a po a policy with no specified dates in it, as long
as you're doing that over the course of the year
that they're not gonna have a problem.
Um, so you mentioned, um, a sound liquidity policy.
And I, you both kind of put something forward here, I think,
through this document that you handed out.
Um, will that be the po a policy
that the public knows about moving forward as, um,
as we move into this upcoming budget where we
as a council are seeing what this transparency really means,
um, the revenue that's coming in,
we get our monthly revenue reports,
but, um, more into some of the details about these, uh,
what's going in, uh,
or what's coming in and what's going out?
I would, I would, Because we, I don't, I would say
that we really didn't get it this year as much
as I think we would've hoped, um,
based on seeing this document today.
Um, thank you for the question.
So we're actually enhancing the monthly revenue report.
Um, as you know, that only covers the corporate fund.
Obviously, our cashflow covers all of our funds,
including our bonds, includes, um, water, sewer, aviation,
all of that stuff, which,
which is included in the midyear report.
Um, but we are enhancing the revenue report to actually go,
um, deeper below the parent level account.
So you can actually see the line items that make up each
of those accounts, um, and, and see those revenues by month.
So you can have a sense of
how much we're actually collecting.
So I'm hopeful that that will, will be something
that will help you follow along, uh,
at least on the corporate fund as it relates
to the rest of our cash flow.
I think that that's probably a conversation we can have
about what that could potentially look like.
'cause cash flow and budgets are, are two different ways
of viewing, um, the city's finances.
But at least on the revenue side,
you'll have much more in depth information about,
about the revenues collected.
Um, chairwoman, I, uh, just one more question if I could,
and then I'll, I'll settle back here for a second.
Um, when, when you're talking about the,
uh, what the county sent us, um,
we got a letter back on June,
or excuse me, January 26th,
27th from the CFO that, um,
pointed out how much was going into the pension funds,
the total of 129 million, uh, made to those pension funds.
Um, then it talks about the cashflow advanced amount,
which was 396 million, almost 3 97
property tax reimbursements collected of 202 million.
Um, and property tax reimbursements outstanding 194 million.
Um, it says the city has recouped approximately half
of these cashflow advances
and is still awaiting about 194 million in property tax
supported reimbursements.
When, when you put out that letter, um,
what are you relying on
and what is the timing of those county payments
that are coming in or the, um,
the cash flow that's coming in?
Um, so the treasurer actually sent us a schedule
of their distributions for the property tax.
Um, they're trying their best to adhere to the schedule,
but they did note that it was, um, subject tentative
and subject to change based on continued ongoing, um,
monitoring of their new property tax system.
Um, so we do have literally a schedule, um,
that reflects when they believe they'll be able
to send their distributions out, not only to us,
but to all of the taxing districts in the county.
So, yeah, and I know the county's having a,
a massive problem, I think in some ways getting that out.
But in terms of this, um,
how bad were the problems getting the
funding from the county?
I'm sorry, could you just ask that question one more time?
Well, it was just, just in terms of looking at the letter
of the, um, 50, it says 51%
or 194 million outstanding.
What's the typical timing for when they send over
that information to produce this letter to,
to basically tell us you're gonna be short?
So, um, the, uh, comptroller's office is the one
that receives it and works collect, uh, collaboratively
with the CTO around the distributions as they're coming in.
Both the comptroller's office
and the CTO actually get those notifications,
um, from their bank account.
The treasurer also sends a notice
to the comptroller's office, um,
when they're sending those distributions.
So we are tracking based on what we know we budgeted
for property taxes for the year.
Um, the one, the one, uh, sort of
outstanding concern
that we have about those distributions is they're not really
telling us which tax year they relate to, which is important
for recordation purposes.
We have to attribute the taxes to the right taxing year.
Um, they have made a general statement
that these are all related to tax year 2024,
but as you know, we still get
loss in collections from previous years that were due to us,
that are still trickling in from people who, um,
who are still paying on their, their property taxes.
So that's the one thing that we're, um, still trying
to figure out,
because typically, if we're following our normal
property tax distribution schedule,
we would've gotten all of this in August.
We would know unequivocally that it's for property tax year,
but, uh, 2024.
But because it's coming at the same time
that we typically get, uh, distributions from other
taxing years as well, we're, we're
being very cautious about the number
that we believe is attributable to tax year 2024.
I think as of last Friday, we still, um, are, uh,
waiting on about $135 million in tax year
2024 from Cook County.
But essentially we get a notice from them.
They have a schedule that they've
provided to us that they're trying
to stick to as best as they can.
And, um, that's how we're tracking
what they're, what they still owe us.
Okay. So the, um, when I looked at the,
what the county said that they sent over, they had sent, um,
the letter says 627 million with 194 outstanding.
Um, so they sent looks like, um,
according to their document, 884 million.
So I don't know if you could explain comptroller
what the discrepancy is there.
Uh, just, just looking at their, um, the database
that they sent over for the distribution
that went out on February 9th,
851 million in the first install,
and then the, from 12 26 25 up to
one 30, those were the payment dates they had sent over
884 million compared to the, um,
the amount that we say.
And that was put in the letter
of January 26th. It's a huge difference.
Yeah, I would Only a few hundred million.
Marvin slo, our head of account, MD of accounting.
Good Morning committee. Um, I'm Marvin Zalo.
Uh, I'm the managing deputy for accounting. Excuse
Me, could you say your last name slower?
Marvin slo. S-A-L-A-O. Thank you.
I am the managing Deputy from accounting.
Uh, my team handles the A CFR.
Um, we also receive, as the budget director said,
communications from the county of how much they remit so far
for the amount that the county mentioned, 70% went to TIFs
and only 15% went to City of Chicago for paying back the,
the, uh, the tax delay advances that we did.
70,
Did you say 70 went to Tiff?
70% are for Tiffs.
And what, what to the city? 20,
Uh, just 15%.
15. Um,
yeah, the document I have shows the tiffs
and the, um, special service areas,
but it also, so shows City of Chicago.
So, um, city of Chicago, the grand total, uh,
that they have in here is 1.5 billion,
but the actual payments add up
to 884 million to the city.
So is that the percentage that you're referring to?
On, on the data that we received directly from the county,
the total is 700 million and only 15% went to the city.
Uh, just a hundred million went to
The city. Okay. So their
document must be wrong then,
Or, or maybe we need, uh, reconciliation with them.
Okay. Can we ask that, uh, your office,
like go back and just re have that conversation
and come back to us through the chair with the
same number or a different number, if that's
what your review shows?
Noted. Chair, can We also get
the document that you're referring to?
Alderman? The
One? Yeah, I think so.
Yeah, it's from the,
it's from the county, I believe.
So it just shows the amount that,
or actually no, it might be from the treasurer's office.
Um,
The county Treasurer just tracking the,
the total amount of payments.
Because I think what you're saying here is that, um,
hold on, let me look in the document here.
Sorry, chair, woman. Um,
your letter says cashflow advanced amount was 390,
roughly 3 97 3 9 6 9 54.
Property tax reimbursement collected, 2 0 2 8 3 7.
And we're 194 million short.
So that's from January 26th.
I think we got it on the 27th,
but I'll share that through the chair.
Can you share that and share that with, uh, Mr.
SLO so we can get some, uh,
alignment here? Thank
You, chairman. And I think just
my final comment is I really think we need
more, more transparency here.
Um, you know, prior to the city claiming this cashflow issue
and not making the full advance payment as the council
expected timing, I understand all that,
but, um, I know there's a lot of factors that go into it,
and I appreciate you pointing that out.
But, um, transparency is the key here
as we move forward. Thank you.
Thank you, alderman.
Any other questions for members of the committee?
Alderman Viegas?
We can go to the sec.
The next slide after, no, I'm sorry.
Uh, what's the title? Um, cashflow Considerations,
Page three of the, uh, handout.
I was just, I was just, oh, I was just, uh,
There's two cash flow considerations.
You mean this one or the chart?
Yes, yes. This one here. Okay.
I was just curious of the, uh, five bullets that you've,
that you have listed here, is there any priority list
or state law that requires us to put it in that order?
Or is that it's something that your office decides, uh,
or someone's office decides to, to, uh, pay
to pay it in that, in that fashion?
Well, this is, I mean, the, the, the, the outflows are,
are budgeted, right?
And obviously statutory pension
contributions are required by law.
Is is there a priority though,
like, I mean, because you have
Two, are these listed in any order of priority?
Um,
No. Uh, well,
excuse me, debt services, first
and foremost, if we miss that, we're bankrupt.
So debt services number one. So debt
Services is the highest priority we have. That's
Number one. Yeah.
Yeah. I mean, we've got, we've got to make our,
that's number two, our debt service payments on time.
I think most people in the city would argue
that payroll would be the second.
Um, we can argue about that.
Uh, but the timing of the, the, the pension payments,
we basically have to make satisfy due
and owing by the end of the year.
Right. We have historically paid, uh, our,
what we call our other contributing sources
or OCS, which is budgeted outside of levy payments
to the pension funds, which is about $1.2 billion in the
first quarter of the year.
We also pay loss of collections from the, the previous year
we paid the pension funds, everything that was owed
by the city before the end of the year.
So we had no debt outstanding to the pension funds.
One of the things that's very important to my boss is that
we're creating a relationship.
She sits on all four, uh, of the city pensions.
Uh, uh, I, it is her proxy on three.
Uh, Mike indicated he was on on two. You're on one three.
Uh, congratulations. Uh, CFO, Mario, you're now on three.
Um, so it, it, it, so the, the, the collaboration,
the partnership, the communication, the transparency
to alderman Waga spec's perspective has never been higher.
We wanna make sure that
by the time we've made our last payments at the end
of the year, as we get into the first quarter,
they're not hitting that same snag, needing
to liquidate assets or investments to meet benefit payments.
So I think if they, if you look at the time value of money,
of course, they're gonna tell you they want that,
they want dollars as soon as they can get them, right.
But I think, you know, one of the problems is
that the way they're all funded, I push $700 million
to the muni pension fund in those two payments.
So if they've got an allocation to cash with 3%, I take it
to 25% in one day.
So they have a, a problem in juggling getting
that money allocated according to their asset allocation
as they, as they, uh, as they hold their, their,
uh, investment meetings.
So the timing of that, the consistency of that is important.
So they budget that. Right?
So I would argue that that is three.
Um, and then, um, um,
supplemental payment, um, it, you know,
is obviously something we have, uh, I call it supplemental.
You use the term advance.
I use the term supplemental because it's above and beyond.
I think if they, and I had this conversation, I talked
to every one of the executive directors to,
to communicate the timing of our payments.
'cause I think that's also important.
The fact that they got half and it's above
and beyond, they're thrilled, right?
And so I don't think there's any, they certainly understand
every communication I've had
with them about the potential timing.
Uh, they're, they're just thrilled
to have the partnership with the city.
Every, every trustee from the city side has been committed
to their, their, uh, their roles with the pension funds.
We've been working together collaboratively to create a
and foster a healthy relationship
that's built on communication two way.
So I know that this delay in the advanced payment
or supplemental payment, whatever we want to call it,
is not going to affect their, their,
their investment strategies, their asset allocations,
their liquidations
to meet benefits in any way, shape, or form.
The one thing that could change that is if the county,
it delays the first half levy,
like they even further, right?
So I have unfortunately, uh, uh, obtained a healthy,
uh, uh, amount of, of skepticism about
what the county tells me they're going to do.
The system has been communicated is broken,
and I don't know what's happened between today
and what's gonna happen by April that's gonna fix that.
So as I plan for outflows
and invest for liquidity events for the city, I have
to take into consideration that there could be some,
some nuance to their April deadline.
Right? Uh,
I think if you guys can tell me what's happening in
Washington, there's some saver
rattling over federal funding.
I don't know what's gonna happen from the Trump
administration tomorrow.
I, I know we bring in about a billion dollars
in federal funding every year.
So I think, I think this year in particular,
even though we have historically made
that payment in January, this is a time in my mind that
that financial prudence outweighs that timing.
Uh, and, and not that it's not that it's as
to, to, to call $129 million irrelevant is, is ridiculous.
But in the grand scheme of things, the timing of it I is not
of material, uh, uh, impact to the pension funds.
And, and is that message, when you're talking
to the rating agencies being accepted and as,
Uh, that would be a question to, uh, CF om R
Is, is that rating agencies, when you're talking about
that scenario where the billion dollar saber rattling from,
from DC um,
and all the other unknowns, how is that being, uh,
taken from the rating agencies?
Yeah, thank you for your question.
It's, it is a good, good question.
In the reports that Moody's and s
and p put out in early January,
they really focused on two things.
The first was structural rev revenue solutions,
and the extent to which they were,
were not in the 2026 budget
and concerns around whether that will,
those structural revenue solutions will show up
in a 2027 budget.
The second thing they talked about were,
was the advanced pension payment.
Now, they didn't talk about the timing
of the advanced pension payment, but they did talk about the
fact that in this budget,
we've committed $259.6 million to making the payment.
There was, there's been some discussion about concerns
around, uh, federal funding,
but that's not been, that's not been a, a heavy feature
of our recent conversations with them.
I think they understand that as somewhat more temporary.
You know, four years is a long time, but,
but that the city's gonna be able to manage through, um,
as Annette and the OBM team have done for the past year. So
You've been able to talk about
the advanced pension payment.
What about the, the revenue side?
Have you, in your meetings with the, uh, rating agencies,
what recommendations have you, uh,
or not, not recommendations, strike that.
What position have you have you taken as relates to dealing
with that other half of the equation, which is the revenue?
Right. Also a good question.
The radiant agencies so far have focused on the sale
of receivables as being a, a sort of a question mark.
There is some skepticism generally
from the radiant agencies associated
with a handful of revenue ideas.
And, and the phrase they use is potential execution risk.
I think this body told us,
Can you explain what that means for us non-finance folks?
Yeah. In, in short, I think they are concerned that some
of the ideas may not materialize
what we have told them to answer.
The second part of your question is
that we are working diligently
to execute on all of those fronts.
I believe last week we sent a memo around to city council
regarding the sale of receivables
and the progress that we've made so far,
a working group establishing an RFI, understanding
what the costs of something like that might be.
And that's the message we've relay to the agencies, is
that on all of the fronts and the revenue ordinance
and the management ordinance we're working to execute.
And, and you saying that they're not feeling comfortable
with the strategy that the city council has put forward.
So interestingly enough,
they put out those reports early January,
the first or second week.
Um, you know, a, a few days
after the budget budget was passed.
Uh, we have since had the opportunity to talk
to the agencies and relay, you know,
some more clarity along these different fronts.
Specifically the cashflow considerations related
to the timing of the advance, the fact
that we are moving forward despite
what they may hear in the me, but despite
what they may hear in the media about
all these revenue ideas.
Um, so I think we've given them some reassurance
that we are making good on the budget
that was passed a little over a month ago.
I would also note that we,
we've had working groups on other revenue initiatives.
I've, I've attended several meetings on the advertising, um,
and I believe on the virtual reality.
So they're we're, you know, they're, we're active,
the administrative's active in
pursuing these revenue options
that have been provided in the budget.
Well, I'm happy to hear that that working group around,
uh, debt sale is, um, on target to meet the, uh,
the RFP deadline, uh, as required
by the management ordinance.
That's a huge chunk of revenue,
and we're talking about a lot of money that's outstanding
that we gotta either do something with
and then couple that with the, uh,
outstanding debt from the sister agencies.
Uh, looking forward to working with you
and your office to try to figure out working
with the chairwoman as well, to get an ordinance in place
to pass that and collect that revenue.
We've gotta find all the revenue needed, uh,
before we even start talking about new revenue for,
from taxpayers and from businesses.
So, put that on the record.
Um, with this, um, pension contributions,
total pension contribution,
you talked about us climbing that ramp.
And so I assume that
in 2016 is when the state law came into place where, um,
we were required to make the actuary payments, um,
for the, the four pension funds.
Is that, is that, is that about the time?
So I'm not sure I understand your question,
but let let me try to Yeah, go ahead.
Address it. Um,
before 2015, we were, um, on the multiplier
that was maybe a phrase folks, have,
folks have heard, as you said, 20.
That was prior, prior to, for the record,
it was prior me being here, so I'll,
Yeah, me me as well, me as well.
Um, but yeah, 20 15, 20 16 public safety ramp begins.
That ramp was getting us
to the actuarily determined contribution that,
that came into place in 2019 for police and fire.
Now, was that done from the state? I'm sorry?
From the required by the state or just a city
Prior by the state, like state legislation.
Gotcha. And, and maybe a better way
to say it is if we had tried to
do actuarily determine contributions that next year,
20 15, 20 16,
you'd have seen a massive year over year spike.
So the state said, we understand, let's get you on a ramp
to the A DC that started for police and fire 2019.
2020, and then for media and labor later on. Gotcha.
And then understanding that, um, Springfield continues
to get, provide unfunded mandates, uh,
with sweet in the form of sweeteners.
Um, have we, uh, talked
with Springfield about potentially, um,
looking at extending the date in order to
lower, to, to lessen the decline of the ramp?
'cause it's, I mean, it's a, it's a artificial date
of 2050 something that somehow was done,
but that was, that was prior to the state continuing to add,
um, to the liability without providing any revenue.
So has there been any discussion, uh, about going
to Springfield to figure out, given the unfunded mandates
that are there, extending a little bit in order to make sure
that we can lessen the stress on, on the corporate fund? So
I can actually answer this question.
Um, so we have been meeting with members of the,
the budget task force.
This is actually an area that they're very focused on.
Um, they'll have some recommendations to the city around
The budget task force. Is
that the, that this, that a different task force?
That's the task force that put out the report last year
that has their final report due in May this year
to the mayor and city council.
Yeah. Um, so long term liabilities is one of the areas
that they're very focused on.
They're actually looking at what it would look like
to re amortize, um, stretching out the date beyond 2055
for two of them in 2058 for the other two.
Um, so we, we are meeting with them, um, trying
to understand what their methodology is,
what their proposals are,
but that is something that they're, that they
believe should be a conversation potentially with the state
around doing that for the city.
Well, I tell you, it, it definitely needs
to happen given the fact that, um, they continue
to move the goal line.
Um, we were all set to have a strategy for 2055
and 2058 respectively based on the liability
that was, that was talked about.
Then you add on the additional debt, uh,
sweeteners in the form of sweeteners.
Uh, and again, I'm not pushing back onto sweeteners,
I'm just saying that there needs to be revenue
that comes with it, unfortunately.
So I'm glad to hear that the task force is there,
but I think that, um, obviously there's a lot of priorities
that need to happen in Springfield, but
that definitely needs to be, um, on the, on the first page
of, of requests, given the fact that, um, so much money, uh,
goes towards this, towards this, uh, liability here,
and there's not a lot of flexibility.
So we need some assistance from the state on that.
Yeah, I mean, it, it, it's, um, you know, I
what you're talking about is ability to pay, right?
So you, the amortization would relate to the ability to pay,
and that is something that rating agencies look at.
They look at what percentage of your budget goes
to pensions debt.
Um, so duly noted,
and I'm sure we'll have discussions with that group
and intergovernmental affairs on what
to ask for Springfield.
Perfect. And then, uh, from the working group
for debt sales, if, who's the point person on that?
Uh, myself. Okay.
And working with the CFO's office, it's a, you know, it,
it's, even though we collect the, uh, debt, we,
or we hold the debt, um, it is, it would be a transaction,
uh, a non-traditional transaction, more of a, uh, similar
to like credit card receivables and things like that,
and a asset backed security.
And so we're working hand in hand with the CFO, uh,
and the Department of Law to try to, uh, properly document,
um, that sort of transaction. Cool.
Thank you. All right. I'll be in touch with you.
Thank you. Thank you, Madam Chair.
Uh, thank you, uh, alderman, uh, a question
in the history of, uh, the city of Chicago, have members
of the legislative branch ever accompanied, uh, members
of the executive branch to speak
with credit rating agencies?
Not to the best of my knowledge.
Chairwoman Dow, but I, I can't say for certain.
Um, and, uh, comptroller Belsky, maybe in your
previous life as a mayor of a major, uh, small city,
uh, was, was there a policy like that at,
in, uh, your community?
Um, I, I, I, I can't say from, from the standpoint of, uh,
the suburban community, I don't think I,
I was never even included in a rating agency presentation.
It was usually prerogative, the city manager
and the finance staff.
But in, in my experience, being at a rating agency, uh,
typically the people that are involved are management.
So you would have, you know, the budget director,
the finance director, you might have the mayor, uh,
you might also have people from economic development
to talk about the growth of the base.
Um, but typically it's, uh, management
that's represented in front of the rating agency.
All right. Thank you. Uh, alderman Ccha Lopez, followed
by Alderman Riley.
Thank you, Madam Chair. And thank you again
for, for the presentation.
Um, my question in terms, I know that we, you mentioned some
of the history of the advanced payment.
Can you just, like, uh, in what year,
when was this implemented
and is this an ordinance or this is a policy?
So an executive order was signed in 2023.
The first payment was made in 2023.
Another payment was made in 24, the third in 25,
and this year will be the fourth advanced payment.
But an executive order, set it forth.
Of course, in the management ordinance for this year,
there's some language around informing counsel when the
advanced payment is made, what the amount
of the advanced payment is,
and, uh, the value of the advanced payment.
But it's been executive order followed by policy. Mm-hmm.
Thank you. Um, in terms of the, um, the revenue reports,
and I, I think, and I think important to mention the,
the difference and the complete
different landscape that we have.
Uh, I think at one point in the previous administration
thing, we have, uh,
$2.6 billion from the federal government.
Now we are seeing actually what actually arrives.
So I think in terms of fiscal prudency, uh, I, I do,
I do wanna think it's important to look at the numbers.
So in terms of the monthly revenue, OBM shares, those, um,
regularly, the, the posting on online,
I understand every month.
Is that, is that the case?
Yeah, I believe So. Yes.
We, um, we prepare them
and send them out, um, at the end
of the month For the prior, prior month, yes. Mm-hmm.
So, as far as, uh, as far as making the payments
and following the, the, the timelines of communicated
to the city council, those have been regularly posted
and they will be posted every month, correct?
Yeah, we, but we both post,
but we know that not everyone's looking at our
website every minute.
So we also send them directly to you via email.
Thank you. Um, I, I think that there's, um,
at least three letters of, uh, pension funds.
And I understand that, um, those relationships
and those communications with the pension funds,
and I think, I think there's a, at least from police
and fire and municipal pension, um,
those conversations happen regularly.
Den, and I'm glad that we're talking about is Springfield
and the Springfield strategy.
Um, other conversations around the, um,
the needs from the city, a state to collaborate.
I think, uh, it is, it is obvious
that we need new sources of revenue.
And I do think that this cannot be always on, um,
on the shoulders of the city for every dollar.
And I mentioned this after time, after time,
and I, I understand, you know, uh, the need for, um, uh,
to elevate issues and the soundbites.
But I do think it's important that this number,
to me is always striking for every dollar that we give
to the state, we only get 80 cents back.
I think it'll go a long way to be able to at least get some
of that money back as we're really
struggling to get federal funding.
So in that line, you know, what are the, you know,
the perhaps conversations that would love to continue
to know, uh, this conversation in Springfield I do think
makes sense for us, uh, to go as, as a council.
I think it was good to see many council members going,
and I think there's goodwill in the state,
and I do wanna talk about, you know, in these pension funds,
are there any conversations
or what can be done at the state level?
I do think that that is an important conversation,
and I'm glad that we're getting these reports regularly.
Uh, um, what I would say to the pension funds is
that those letters represent, um,
basically a test station from them saying that they,
they've received the first payment and they're okay.
They're not having to liquidate investments
to make payments to beneficiaries.
They have enough cash to do that.
They are expecting the balance of it. Mm-hmm.
And as I said, we will comply, uh, with the budget as far
as the pension funds getting involved in, uh, any sort
of revenue sources or pension legislation.
The composition of boards are made up of myself, other
Exofficio members from the council,
but they also have representation from their unions.
Their job is not to politically advocate.
Their members can, their organizations can, their job is to,
they have a fiduciary responsibility
over the assets they're investing,
and they don't expect their, their chairman
and members to be out there in Springfield.
'cause they don't wanna take their eye off the ball.
That's kind of part of the reason for
that structure and that law.
So, um, I'm sure, as I said, their representatives,
um, pursue that.
And, and, you know, this mayor and, uh, budget director
and CFO myself have talked a lot about needing, uh,
more support from Springfield
and, um, our IGA is dialed into that.
So it, it can be accomplished that way. Mm-hmm.
Thank you. Yeah, definitely.
Anything that we can look, especially with, um,
the corporate fund, uh, I do think there is a need to move
beyond the property tax increases.
You know, I think that, um,
I think the billionaire surcharge had a lot
of support when I went to Springfield,
and I do think that there's needs for, for that.
I do think that this is a, uh,
this is not the silver bullet.
I do think there's a lot of focus in this advanced payment.
It's not, I mean, this is a drop in the bucket,
but I do appreciate that the, the committee looking at this
and making sure that we make regular payments
and, uh, appreciate the conversation
with the council. Thank you.
Uh, thank you Alderman.
Che Lopez, uh, your questions reminds me to ask a question
to our budget director regarding the revenue reports.
Um, is it possible to break out, um,
into smaller groups, the trans, you know, some, some
of it just says transactions, right?
Transaction taxes, right.
To break that number out so we can follow, um,
on a monthly basis Yes.
What we're raising. Yeah. So
That's what we're gonna be doing for all of the 2026
and going forward, um, revenue reports,
you'll obviously still have the budget to actual
as the top page that shows it at the parent level,
but the next, uh, pages breaks it down, uh,
within those subcategories.
So you'll see it by month.
So in January, well, I,
I guess in February you'll see January's number in March,
you'll see January and February.
So it'll be additive as the year goes along
for each of those subcategories.
Great. Thank you. Uh, alderman Riley.
Thank you, Madam Chair. And, uh, good afternoon everyone.
Um, I wanted to pick up where Alderman Waga spec,
uh, dropped off.
And just so I'm clear, I, I've heard from a number
of witnesses in the box, uh, on the,
the Mayor's financial team, um, that we,
we've heard from Cook County that they believe the,
the Tyler Technologies issue has been resolved.
Um, how much faith are we putting in that statement?
Uh, I do not believe the system is, uh, has been fixed.
I put very little stock in the fact that it is, um,
every communication we've gotten from Treasurer Pappas is
that, I think they say non-working
or basically a polite way of saying it's broken.
Um, and so with the delay from February one to April one,
uh, as I said, I have a health healthy skepticism that
that's gonna, uh, come to fruition. Yeah,
That's, that's, uh, a, a great concern, uh, to me as well.
And what we've also heard in testimony here today is that
we certainly can't trust the Trump administration to
fulfill its obligations and its grants that are owe to us.
And now we're hearing Cook County is in the same box.
Um, I also wanted to, to check on, um, a figure,
um, I believe, uh,
the budget director mentioned it's 135 million
or so that is still owed, um, to the city by Cook County.
We had a communication, um, from former CFO Jaworski
to the City Council just a couple of weeks ago, indicating
that that number was 194 million or so.
So does that mean that some, some revenue has trickled in?
Yes, and I'll, I'll have Marvin talk
to this more at length,
but as I had mentioned earlier, we had a,
we got a schedule from the county treasurer
of when she believes she'll be able
to send distributions out.
Some of them are, are every day.
Um, we are actually in constant contact
with the comptroller's office as they're receiving that,
checking it against the balance sheets
that the treasurer gets from our bank accounts.
Um, so between the time that you received the notice from,
uh, Jill Dworsky, former CFO till last Friday,
I believe it was, I think it's, um, um,
we have received some more from, from
that time. But Marvin,
And the only thing I would add in your comment, uh,
alderman is, you know, do I have faith in the fact
that Cook County has got it fixed?
The fact that the money is coming
to us in these large chunky disparate
amounts tells me that the system is still broken.
Historically speaking, you get a an A CH file
with instructions, very clear instructions to Marvin's team
on where that money is to go,
whether it be Tiff SSA corporate fund.
That's not happening. In fact,
we saw someone from the county this morning
as we were walking in, and they told us, well,
we're gonna get another big chunk sometime this week
on Friday at three o'clock.
I got half a billion dollars dumped in my lab,
which is a great problem until you have to try
to find a place to put it before four o'clock.
So these are the things that tell me
that the system is still broken
and that there's not a a, a fix in sight. Well, and
That's a great concern. Obviously
we're missing the revenue
that we need desperately,
but it's also creating great issues
just for us operationally. Correct.
That's absolutely correct.
I mean, and, and you'd start thinking about it.
I mean, these are millions of dollars
that it's costing us by this delay, right?
Millions for gone interest on, you know, um,
couple hundred million dollars is, is a lot, right?
Uh, you're reading about it in the papers.
It's a, it's a problem, right?
Um, if you start thinking about the end of the year
where we are actually providing a creative solution,
we didn't have to do that, right?
We, we could have said, not our problem, not our problem.
That's a county, right?
But that's a short term answer to a long-term problem.
If we make a creative solution
with the liquidity we have available,
it's saving us money down the road hundred, you know,
millions of dollars, right?
Um, but when you don't have money coming in
and you're pushing money out to solve the problem, it's a,
it's, it's a double whammy, right?
So a half a half a billion dollars becomes a billion
dollars problem, right?
And, and so creating these, these solutions is, is, is,
is important, but we can't keep doing it forever, right?
We, my job and,
and my fiduciary duty is to ensure the liquidity needs
of the city, period.
It doesn't say liquidity needs
of the pension funds, although that's very important.
They're, one would argue they're part,
part and parcel, right?
So, but it is, you point out, it's a,
it's what keeps me up at night.
Me too. Um, and so, you know, we have a decent idea of
what this has done, what, what damage this has done
to the Chicago public schools.
They had to take out a $1.8 billion short term loan.
They're paying over $220,000 a day in interest.
And I think they're running total now is up
to over $62 million, um, in, in borrowing costs.
You mentioned it in your testimony, um,
that this too is costing the city of Chicago.
Are we keeping a running total of
what damage is being done to us by
Absolutely, Absolutely. The inability
of Cook County to
manage its property tax system?
Yes, we have. Uh,
Absolutely. And what is that
number as of today? I,
I don't have the total in front of me.
I can certainly provide something through the chair. I, uh,
That'd be helpful. Could you give us
a ballpark estimate?
And we won't hold you to it.
I, I think I would rather get it through the chair so
that we don't have to have, uh,
false information out there in the public domain.
I'd rather Okay. Have the accurate information.
I'm assuming it the rather large
number. Oh, yes. Madam Chair.
The, the, the advances we created Alderman go back
to 2022.
In 2022, we create, we,
we advanced the pensions $573 million.
We advanced in
twenty twenty three, four hundred and twenty 5 million.
We advanced in 2025. We didn't advance in 2024.
Not sure why that was, but no problems that year.
But 376 million, if you say.
Now, again, we can say that.
And, and the way I look at it,
the way I justify it is it's a first lien on property
tax receipts, right?
So it's, it, in my mind, it's not a risk risky, uh, issue,
uh, lending to pension, but it's a, it's a number
that we have, uh, we have to commit.
But if we say,
and I just did, it's a, call it a two month delay.
'cause we've got, if, if I advance in August,
I advance in September, I advance in October,
I advance in November, and I advance again in December.
If I call that a two month delay on the $376 million,
that's $2.5 million that it cost us.
There you go. We're gone. Interest income.
So I mean, roughly, I mean, if you want
to just throw a a number,
it's 9 million bucks.
Okay. And that's for a city that's struggling
with a pretty massive structural deficit.
Um, thank you for answering that question, honestly. Um,
I will come back with a, with an accurate number to that.
Thank you. I appreciate that.
I'm sure my, my colleagues are looking forward to that too.
Um, do we,
so just since Springfield's been brought up here a few
times, Madam Chair, I just wanted to put a pin
and a couple of bill numbers, um,
that my colleagues may wanna look into.
House Bill 52 41, uh, which is sponsored
by Representative DeLuca
and Senate Bill 36 38 rep, uh,
that's introduced by Senator Whiteford.
Um, these are measures that are being introduced.
I think they've already been introduced in Springfield in
the last few days, um, for the purpose of ensuring
that Cook County properly reimburse all of the taxing bodies
that have had to incur these massive costs due
to the counties incompetence.
And it's my understanding there should be a big legislative
push by municipalities, suburban school districts
and others to get these, these passed into statute
to require Cook County to hold them harmless
for the damage done here.
And it's my understanding, cook County, uh, shockingly,
does not support these pieces of legislation.
Um, the reason I'm asking about us keeping a running total
is that one, the money
that I heard about over at CPS is shocking, right?
Um, but likewise, I think if there is gonna get,
if there's some momentum behind these bills,
I would strongly encourage, um, the mayor's legislative team
to check in with the bill sponsors to ensure
that the city's interests are also properly protected here.
Um, because we're, we're talking about hundreds of millions
of dollars in damage done by this failed tax system.
Um, and So I just wanted to, to highlight those for you.
I was over the weekend at, um,
the West Suburban Municipal Conference of Mayors
and Managers out in, uh, Elmwood Park.
It was about 50 mayors and or managers there.
Um, and they were all sharing their own tales of wealth,
what this means for, um, their, their local municipalities
and how this is really make it
or break it for some of these towns.
Um, so I just wanna make sure that we're not left out
of the mix when there is a final accounting here, just
'cause I do get the sensors, a real appetite to pass these,
these bills in Springfield.
52 41 was house bill, Senate Bill
Bill. That's a house bill.
Thank you.
Yeah, and I'd be happy to share the, the, the language
with the administration if you'd,
if you'd like to review it.
Um, here's a question.
Uh, when we say that, that the county believes,
um, the system, the system is fixed, which is,
uh, we're not gonna believe that.
Um, is there gonna be another issue
by the, um, the extension on,
on paying the first installment, um, pushing that back
to April, um, is that also gonna create another gap
that we have to care for, um, as a city
or at the schools or both?
Um, or has that been contemplated? Do we?
Well, as you know, the first installment is the smaller
of the two property tax
distributions from the county each year.
Um, it's a one month delay, um,
and it's now set in state statute.
Um, they went down and got that.
Um, you know, for us, we have, um,
I mean I, I would look to, to Craig
because he knows the, uh, the, the kind
of cash flow better than I do.
But, you know, it's those first quarter of the year
where we have like the largest
expenditures going out the door.
And so we would look to see over the next several months the
revenues coming in
to support those expenditures that went out the door.
So we'll be watching and,
and, you know, monitoring as the county distributes, um,
those, uh, revenues to us, I would hope that they'd be able
to turn it around quickly, um, and,
and not, you know, have further delays, um,
after those, you know, the vast majority of revenue
that they get for property taxes paid by escrow accounts.
So my hope is that they'd be able to turn around and,
and pay the taxing districts rather quickly
once they receive it in April.
So we're basically in a position now
where we have to kind of hope and pray
A little bit.
Yeah, I I think the only thing I would add
to Annette's comments is that historically speaking,
and this goes back to, you know, the last five
or six years, we've managed the year end city's cash
position to a figure about $1.7 billion.
And that is to, to communicate
to the rating agencies our liquidity ratio, which is, uh,
one of the reasons having a strong liquidity ratio,
and I defer to Steven on this, uh, of
how important this was, but,
but maintaining a sound liquidity ratio was one
of the reasons that we had an upgrade to investment grade,
uh, by all three rating agencies.
So this past year we ended the, the year with $2.1 billion
of cash and cash equivalence.
Cash equivalents being, uh, investments
that I have on the books that are mature within 13 months
or in, so could be turned into cash very, very quickly.
But that $2.1 billion is, as we talked about earlier,
is largely going out the door in the next month and a half.
Right. So to two months.
So to your point of fingers crossed not a great strategy.
Yeah. But the hope is that,
and again, hope not a strategy either, uh,
but you know, that there, that system is not broken so
that we can start
to replenish those funds as they've gone out.
Understood. But we also believe the system is broken,
Correct? Yeah,
We're in a real bad way here.
Um, well, Madam Chair, I,
I'm gonna be circulating a resolution, um,
in the coming days that would do essentially
call upon the legislature to do essentially what these,
the House and Senate bills, um, would do, which is
to make sure that Cook County holds the city of Chicago
and CPS harmless for the financial disaster.
They have visited upon us over at Cook County
for their failure to manage the system.
Um, so if my colleagues wanna sign on to that,
I'd encourage you to, um,
and we'll make sure that that is shared with, um, our, our,
our legislators from the city of Chicago
as they do their work in
Springfield over the next few weeks.
Um, I appreciate your candid responses. Thank you very much.
Um, this was an entirely avoidable situation
and unfortunately failed leadership
and mismanagement is why we are
here. Thank you, Madam Chair.
Thank you. Alderman Riley, uh, alderman Irvin.
Thank you, Madam Chair. Uh, just a couple questions.
Number one, the, um, conversation
around the governor's desire to move
to a hundred percent funding.
Is that something that, um,
is contemplated on these funds as well?
And if so, uh, what impact would that have on the ramp?
That, well, we're off the ramp now,
we're doing a 90% actuarial.
Uh, what impact would that have budgetarily on us, uh,
you know, in the, in the coming years if a, instead
of trying to the 90%, a hundred percent payment by 2055,
I don't know if the date moved out any at all, uh,
would, would do to us.
Yep. Irvin, thanks for your question.
Uh, I've read some of the headlines over the past few days
associated with the governor's announcement.
Uh, we have not done any analysis over the past few days,
um, but we will be doing analysis over the, the next,
you know, several, several weeks to prepare
for conversations in Springfield.
But, but it is my understanding
that those are on the state's pension funds not, uh,
municipally held pension funds.
So it would, it would apply to theirs, not ours.
Um, okay. Alright.
I, I just, I I do get concerned
because a lot of times if that's happening at,
for the state fund, it would be very easy.
I mean, they, they can essentially push us
to a hundred percent whenever they get ready, right?
So even though it, it's gonna cause us some pain,
I just wanna understand potentially what
that pain looks like.
Uh, for us, and I'm not sure if the date the outdate was
their outdate based on the conversation
that the governor started is the same as the outdate
that we have, which, I mean, it may,
it may be cash neutral, I don't know.
But I do think we need to be, uh, aware
of what impact that will have.
I mean, at the end of the day, this is a, you know,
we've gotta make progress.
I do, um, you know, like the fact
that we make the advanced pension payments,
but we gotta make the, the regular payment first.
You know, you don't, you don't pay the, you know, you,
you don't pay your light bill two years in advance
with if you owe the rent today.
Right? So, um, I I just wanna make sure that
what we're thinking about
and what we're doing will align, uh, financially, uh,
for us, even though I, we understand we must, you know, deal
with the pension situation, you know, the 2055 date at 90%,
you know, even though it took us a minute to absorb that,
um, it, it, that would be another hill to climb for us.
And I, I just wanna understand what, what it looks like
for us if it comes to pass.
Yeah, we're reviewing that legislation as we always do
and are compiling analyses.
Okay. Uh, the, the second question, uh, I know we all, we,
we continue to talk about cashflow related to, uh,
advanced payment, and then glad to, uh, see that the,
the revenue reports that, uh, budget will provide, uh, will,
will give us a little more detail into
where things are headed
and where stuff is, uh, where stuff is trending.
Um, that's always one side of the equation.
Uh, we also have to look at the expense side of the equation
and, uh, reducing expenses where, uh, where necessary
and where we can, and still deliver a level of service that,
uh, that, that we would like to see.
Uh, where are we on those two fronts as it relates
to new revenue and expense expense reductions?
I, I would defer to the, um, um,
budget director, our budget director.
I would say though, that we, uh, did a kickoff of some
of the recommendations for EY
and working groups have been established
to implement the recommendations.
Yeah. So for the budgeted, uh, efficiencies, um,
we have been working, uh, since the beginning of this year,
uh, putting together our working groups and,
and, um, you know, working towards those as it relates to
any mid-year changes that need to occur if budget
targets aren't met on either the revenue
or expenditure side, I think that, you know, my,
my office is constantly monitoring, um,
and will be providing that information, obviously
to the mayor and then to your committee.
Um, and we would have to work with IGA
to figure out the broader conversation with city council
around what needs to happen in order for us to, you know,
not end the year in a deficit.
Thank you. Alderman Riley, uh,
al Alderman wack, do you have anything to close?
Uh, no. Chairman, I thank, um, this has been very helpful
and I appreciate you taking this into the committee
and for everyone showing up here today. All right.
Thank you. Uh, seeing that there's no more business
before the committee, can I get a motion to adjourn?
So moved by Alderman Mitchell.
All those in favor signify by saying aye. Aye. Opposed?
And the opinion chair, the ayes have it.
The Committee on Finance subject matter hearing
is hereby adjourned.
Same. But yeah, I missing one call.
Good to see you, sir. Jan,
what's up?