Illinois Government Consultants Incorporated

(Updates with comptroller’s comments in ninth paragraph.)

Jan. 6 (Bloomberg) — Illinois had its general-obligation bond rating reduced by Moody’s Investors Service to A2 from A1, making it the company’s lowest-graded U.S. state.

The downgrade to the sixth-highest level came after a legislative session that “took no steps to implement lasting solutions to its severe pension under-funding or to its chronic bill payment delays,” Moody’s said in a report. Illinois, it said, has “weak management practices.”

Moody’s revised its outlook on the debt to stable from negative, citing the state’s power over revenue and spending, and laws that establish the priority of payment for general- obligation bonds. The downgrade affects $32 billion of debt, according to the statement.

“Although the state has taken positive steps toward fiscal stability, swift bipartisan action to implement further cost reductions and reforms in the upcoming legislative session are needed to stabilize the budget,” Kelly Kraft, a spokeswoman for Democratic Governor Pat Quinn, said in a statement.

The state’s unfunded pension liability in 2010 was $85 billion, and the system has assets to pay 45 percent of promised benefits, according to a study by Bloomberg Rankings. It is the lowest so-called funded ratio of any U.S. state.

‘Calculated Decision’

Last January, Illinois lawmakers approved record increases in personal and corporate-income taxes, generating about $7 billion in annual income. On Dec. 13, they approved breaks for CME Group Inc., which operates the Chicago Mercantile Exchange and Board of Trade; Chicago Board Options Exchange; and Sears Holdings Corp. after threats the companies might leave.

“The state had to make a calculated decision with respect to certain large employers,” Ted Hampton, a senior analyst at Moody’s who co-authored the report, said in a telephone interview. “Imposing tax increases is politically difficult.”

The higher levies addressed about half Illinois’s projected deficit. The state has about $7 billion in unpaid bills, and lawmakers rejected Quinn’s proposal in May to borrow to pay them. Quinn is to present his fiscal 2013 budget Feb. 22.

“Illinois leaders have a responsibility to hear the message being sent,” Republican Comptroller Judy Baar Topinka said in a statement. “The only way out of this mess is to keep cutting spending, provide for a better business climate and, for once, let growth outpace spending. ”

Looking to Sell

An Illinois general-obligation bond maturing in January 2015 traded yesterday at an average yield of 2.07 percent, according to Municipal Securities Rulemaking Board data compiled by Bloomberg. Similarly rated general-obligation debt maturing in three years yielded 1.44 percent, according to a Bloomberg Fair Value index.

Illinois, the fifth-most-populous U.S. state, plans to sell $800 million in taxable and tax-exempt general-obligation bonds as soon as Jan. 11. With the downgrade, Moody’s rates Illinois one step lower than California, at A1.

“There is no fear of the state missing a bond payment,” Topinka said in her statement. “The first payment we make each month is to our bondholders.”

Illinois still has an A+ rating from Standard & Poor’s, its fifth-highest. That’s two grades better than California, at A-.

S&P affirmed its rating, citing the “deep and diverse” Illinois economy that’s anchored by Chicago, the third-largest U.S. city, according to a statement.

Source: Bloomberg BusinessWeek

Chicago community organizer has roots and clout dating to 1960s but current issues hang over his multimillion-dollar empire

The Rev. Leon Finney Jr. is a noted community organizer on Chicago’s South Side, and some of his related multimillion-dollar business operations are under scrutiny. (Abel Uribe, Chicago Tribune / December 9, 2011)

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The Rev. Leon Finney Jr. built a name for himself in the 1960s by fighting slumlords and helping to save his Woodlawn community from being swallowed by the University of Chicago.

The community group he came to lead, The Woodlawn Organization, became a national model as Finney built a network of social programs and gained control of millions of dollars in publicly funded development.

But now Finney’s business dealings are being questioned on a number of fronts.

Federal housing authorities are investigating allegations that the Gary Housing Authority was overbilled by $850,000 for payroll expenses related to public housing projects managed by the Woodlawn Community Development Corp., where Finney is chief executive.

A federal lawsuit filed by Finney’s former chief financial officer alleges a host of financial improprieties, from ghost payrolling to the use of government money for Finney’s private pursuits, including a family-owned restaurant.

In addition, government-mandated audits, court records and other documents obtained by the Tribune show:

•A federal housing consultant lived in a Woodlawn apartment owned by a company run by Finney while in charge of monitoring property management contract awards in Gary. During that time several contracts went to the Woodlawn Development Corp. Court records show the consultant failed to pay $17,000 in rent on the apartment.

•In several instances, government subsidies awarded to one low-income housing development were used to pay the utility bills and other expenses of unrelated properties, a violation of federal rules governing those funds.

•The Woodlawn Organization, headed by Finney’s wife, Georgette Greenlee Finney, spent $132,000 to lease office space from a real estate company owned by Finney, a 2008 audit shows.

Finney, 73, declined to comment on the Gary investigation, as well as most of the allegations made in the federal lawsuit filed by his former chief financial officer, Virgil Savage. His attorney, Devlin Schoop, also declined to comment.

However, Finney acknowledged financial problems at The Woodlawn Organization and its network of nonprofits and property management companies, which have been sued for a host of unpaid bills.

That has led to a scramble to “keep it all together” by shifting money from one organization’s bank account to another’s in an effort to pay bills, Finney said.

Finney’s network of organizations and companies runs seven social services programs and manages or owns roughly 5,000 subsidized apartments in Illinois and northwest Indiana.

“When you have no stockholders to go to get an additional capital infusion, in an effort to try to keep it all working, in instances you borrow from one property to another in order to keep the whole working and you hope that in the interim you can pay it back,” he said.

But, Finney insisted, “No money has gone into my pocket or anybody’s pocket.”

Attorneys with the Gary Housing Authority confirmed the agency is cooperating with an investigation by the federal department of Housing and Urban Development. HUD officials declined to comment.

Gary housing officials said the investigation is largely based on allegations made by Savage, who in 2010 was fired as chief financial officer for The Woodlawn Organization and its affiliated entities after about 2 1/2 years.

In his lawsuit, filed last winter, Savage, 53, claims he was fired shortly after he sent an internal memo to the organization’s board members that accused Finney of using money budgeted for federally subsidized properties for his personal benefit and to pay employees of Finney’s church.

“That’s when our relationship began to sour,” Savage said.

Source: Chicago Tribune

 With a promise of 2,400 jobs for Chicago, ComEd on Wednesday launched the hiring blitz it promised in exchange for a $2.6 billion rate hike that will finance “smart-grid” technology.

Mayor Rahm Emanuel held a news conference with ComEd President Anne Pramaggiore to tout the benefits of legislation denounced by Gov. Pat Quinn as “smart greed” for the campaign contributions the utility lathered on state lawmakers who overrode the governor’s veto.

The hiring will begin with 350 to 400 Chicago jobs this year and up to 2,400 over the next decade, Pramaggiore said.

That rosy figure includes 1,000 construction jobs, much of it tied to regular system upgrades. They include putting some power lines underground, shoring up above-ground lines to insulate them from wind and tree damage, making $50 million in improvements at O’Hare and Midway Airports and upgrading the Crawford and Fisk sub-stations.

Another 1,000 jobs will be tied to energy efficiency and renewable energy programs. Annual spending on those projects is expected to increase by at least $40 million or 26.6 percent, under the smart-grid legislation.

Pramaggiore predicted that 150 jobs would be generated by a $22.5 million Science and Energy trust fund created to support “energy innovation entrepreneurs.”

The final 150 jobs will be created by two companies hired by ComEd to support the smart-grid system that will allow consumers to monitor their energy use.

They are: Silver Spring Networks, the Silicon Valley-based company hired to design and deploy the networking platform and communications system and Choctaw-Kaul Distribution, a Native-American owned distributor that will provide Edison with the power tools and protective safety equipment needed to do the work.

“The jobs cover a wide-range of skills: engineers, work planners, construction workers, communications specialists and workers with manufacturing skills,” Pramaggiore told a news conference at the Robert W. Galvin Center for Electricity Innovation at the Illinois Institute of Technology, 10 West 35th St.

“To support the enhanced workload, ComEd will build a new training center on the Southwest Side of Chicago. Here, we will train splicers, laborers and linemen. And we will use the construction of the training center to help train Chicago’s next generation of architects” with a design competition involving college students at accredited architecture schools.

In his failed campaign to uphold his smart-grid veto, Quinn likened consumer-friendly improvements to the rate-hike bill to putting “perfume on a skunk.”

On Wednesday, Emanuel made the legislation sound and smell rosy.

And the mayor categorically denied that, by embracing smart-grid and the rate hikes that will bankroll the system, he was abandoning his right to hold ComEd’s feet to the fire after the utility’s dismal performance in last summer’s violent storms.

“I don’t think anybody’s ever said Rahm is a very quiet, meek person. That’s never been said. I don’t think [wife] Amy would describe me that way. I don’t think my kids would. I don’t think my family members or my friends would,” the mayor said.

“I will use my voice [when necessary]…They don’t get a pass because they made this investment. They have a resonsibility and I will hold them to that. And they woudn’t expect anything less….This is an essential thing to do. You can’t get from here to there without it. But even if they do this, there will be problems.”

Source: Chicago Sun-Times

In this Sept. 20, 2011 file photo, a phone is held in a car in Brunswick, Maine. Texting, emailing or chatting on a cellphone while driving is simply too dangerous to be allowed, federal safety investigators declared Tuesday, Dec. 13, 2011, urging all states to impose total bans except for emergencies. (AP Photo/Pat Wellenbach, File)

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Tolls could be going up next year for Illinois Tollway drivers.

Officials announced Thursday a plan to increase tolls to pay for a $12 billion project to repair and expand Chicago-area expressways.

Tolls would increase from 80 cents to $1.50 for cash-paying vehicles. For I-Pass users, tolls would rise from 40 cents to 75 cents.

The Tollways wants the rates to take effect Jan. 1. Public hearings will be held next month and the tollway board could vote on the plan Aug. 25.

The 15-year construction project would rebuild the Jane Addams Tollway to Rockford, fix 20 miles of the Tri-State Tollway and add an interchange in the south suburbs. The plan includes converting the Elgin-O’Hare expressway into a tollway with access to O’Hare International Airport.

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Source:  The State Journal Register - The Oldest Newspaper in Illinois

Student athletes from elementary to high school will get better safeguards against concussion injuries under a law Gov. Pat Quinn is set to enact.

A 10 a.m. signing ceremony was set for Thursday at Chicago’s Soldier Field.

The law requires student athletes with concussions to get medical approval before resuming play. It also requires education for coaches, parents, referees and players about concussion symptoms.

Several other states have enacted similar laws.

Repeat concussions and returning to play too soon raises risks for permanent brain damage.

Many athletic directors in the state support the law because it will put schools all on the same page. But some worry about lack of funds to pay for trained staff to monitor athletes and make sure they’re removed from play after a suspected concussion.

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Source:  The State Journal Register - The Oldest Newspaper in Illinois

The newest Jerry Costello in Illinois politics says he’s proud of the family name and will strive to live up to it.

Jerry Costello II was sworn in Monday to fill a vacant seat in the Illinois House in a district that includes parts of Monroe, St. Clair, Randolph and Perry counties.

The son of Congressman Jerry Costello is an Army veteran and former police officer who’s worked as a financial adviser. He’ll complete the term of the newly retired state Rep. Dan Reitz. That term expires in January 2013.

The 42-year-old Smithton resident was picked by Democratic leaders from St. Clair, Monroe, Perry and Randolph counties. Costello’s Illinois House district covers all or parts of those counties.

The elder Costello has served in Congress since 1988.

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Source:  The State Journal Register - The Oldest Newspaper in Illinois

The U.S. Senate has approved more than $146 million for military construction projects in Illinois.

U.S. Sen. Dick Durbin says the projects were included in President Barack Obama’s 2012 budget.

The money has been slated to fund a $10 million training and support facility for the Army National Guard in Normal and changes to the Vietnam Veterans Memorial Army Reserve Center in the southern Chicago suburb of Homewood.

Durbin’s office also says $12.8 million will be used for the Army Reserve Center in Rockford.

The largest chunk of money, more than $107 million, will be used for a new heating system and health clinic at the Great Lakes Naval Station in northern Illinois. 

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Source:  The State Journal Register - The Oldest Newspaper in Illinois

Several Illinois communities will get nearly $5 million in grants to reduce the amount of pollution running into the state’s waterways.

They’re called Green Infrastructure Grants and entities apply in one of three categories — combined sewer overflow, storm retention and infiltration, and small projects.

The money was announced Thursday by the Illinois Environmental Protection Agency.

More than a dozen communities and entities will get the grants.

They include the city of Joliet, which is getting $820,000 for footing tile separation program, and the city of Danville, which will receive $750,000 for a high school campus improvement project.

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Source:  The State Journal Register - The Oldest Newspaper in Illinois