OFFICE OF INSPECTOR GENERAL
ADVISORY CONCERNING INEQUITIES IN CHICAGO'S RESIDENTIAL STREET V : INFRASTRUCTURE MANAGEMENT .
JOSEPH M FERGUSON INSPECTOR GENERAL
VIA ELECTRONIC MAIL
June 13, 2019
Mayor Lori Lightfoot City of Chicago
121 North LaSalle Street, Room 507 Chicago, Illinois 60602
Dear Mayor Lightfoot:
A 2017 audit by the Office of Inspector General (OIG) found that the City perpetuates significant inequities between wards and underfunds residential street infrastructure needs by approximately $228.8 million annually, primarily because it does not follow best practices for multi-year capital planning.' The previous administration disagreed with our findings and declined to reform its residential street infrastructure management. Below, we summarize OIG's audit findings and urge you implement the recommendations.
I. THE ALDERMANIC MENU PROGRAM CREATES SIGNIFICANT FUNDING INEQUITIES, INCLUDING A GAP OF $9.3 MILLION BETWEEN THE BEST- AND WORST-FUNDED WARDS.
The Aldermanic Menu Program ("Menu") is the City's primary means of funding residential street infrastructure, including street and alley resurfacing, street lighting, speed humps, and sidewalk replacement. The City gives each alderman control of $1.32 million in Menu funds annually, regardless of ward size or the amount of infrastructure in need of rehabilitation. Consequently, wards with more miles of residential streets and alleys have a much lower percentage of their needs met by Menu funding. Our audit found that, in 2015, this resulted in a funding disparity relative to need of $9.3 million between the best- and worst-funded wards. We have no reason to believe this gap has changed significantly since 2015, when we estimated that the best-funded ward (46) received 88.5% of necessary funding from
1 City of Chicago, Office of Inspector General, "Chicago Department, of Transportation Aldermanic Menu Audit," April 2017, accessed May 16, 2019, https//icichicacio orq/2017/04/20/cdot-aldermanic-menu-oroaram audi!./
IGCHICACOORG | OIG TIPLINE (866) 448-4754 | TTY (773) 478-2066
OIC I-ILL #19-0492
Advisory Concer ning Inequities in Residential Street. Infrastructure Management
Menu ($218,563 less than necessary), while the worst-funded ward (34) received only 151% ($9.5 million less than necessary) Figure 1 illustrates the percentage of each ward's estimated residential infrastructure need that Menu-funded in 2015. The wards where Menu funding falls short of meeting need must pursue other sources, such as tax increment financing, for basic residential infrastructure improvements.
FIGURE 1:2015 MENU FUNDING MET SIGNIFICANTLY MORE NEED IN SOME WARDS THAN OTHERS
N
0 2 4 8 Miles
I I I I I I I I I
Source OIC calculations based on CDOT project life cycle data and 2015 Menu pricing
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OIC FILE Advisory
ffl9-0492
Concerning Inequities in Residential Slreet Infrastructure Management
MENU UNDERFUNDS CITYWIDE RESIDENTIAL INFRASTRUCTURE NEEDS BY $228.8 MILLION ANNUALLY.
Based on pricing in the 2015 Menu and CDOT's component life cycle data, OIC estimated that the City's residential infrastructure needs total $312 8 million annually.2 Menu, however, provides only $84.0 million per year, leaving a gap of approximately $228.8 million that is only partially met through other sources.'5
To be clear, Menu is the primary, but not the sole, source of funds for residential street infrastructure maintenance. In 2015, the City allocated an additional $27.6 million to other programs that address streets, alleys, lighting, and sidewalks The Department of Water Management (DWM) also restores streets after water and sewer main work, which OIG estimated may have reduced the funding deficit for residential street resurfacing by as much as $78.3 million in 2015. Taken together, however, the other programs and DWM street restoration work still left a gap of $122.9 million in unmet need citywide.
THE CITY ALLOWS ALDERMEN TO SPEND MENU FUNDS ON PROJECTS OTHER THAN RESIDENTIAL STREET INFRASTRUCTURE.
Our audit found that between 2012 and 2015, the City allowed aldermen to designate $15.1 million of Menu funds for projects unrelated to core residential infrastructure. For the purpose of this Advisory, we also analyzed spending from 2016 through 2018 and found that aldermen designated an additional $12.0 million of Menu funds for projects other than residential street infrastructure, for a total of $27.1 million from 2012-2018, as shown in Figure 2. The projects in question were either not included in the Menu catalog provided to aldermen (i.e., they were "off-Menu") or in the catalog but connected to the City's public safety camera program instead of street infrastructure. The off-Menu items included artificial turf and playgrounds at Chicago Park District and Chicago Public Schools facilities, decorative garbage cans, designer bike racks, flower baskets, carpet replacement and automatic doors at libraries, and community gardens. Regardless of whether these items were worthwhile, using Menu funds to purchase them diverted already scarce funding from residential street infrastructure needs.
|109|To understand how OIC estimated the City's residential infrastructure needs, please see the Methodology described in the 2017 audit af https //iqchicago orq/2017/04/20/cdot-aldermanic-menu -or pgr am -audit/.|109|In 2015, the $84 0 million included $66 0 million for project execution ($1 32 million for each of the 50 wards), $6 0 million for design costs, and $12 0 million for subsidized sidewalk cur b ramps See the audit for more detail In the 2017-2021 Capital Improvement Plan, the annual Menu amounts range from $80 0 million to $82 0 million
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OIC FILE 77 19-0492
Advisory Concerning Inequities in Residential Street. Infrastructure Management
FIGURE 2 ALDERMEN SPENT $271 MILLION IN MENU FUNDS ON PROJECTS OTHER THAN RESIDENTIAL STREET INFRASTRUCTURE
2012 2013 ; 2014 > 2015 ' 20.16 2017 2018 Total
.1,934.025: 2,767,984;
;-r,8i8,8i ij:
2,379,8471
1,982-32.4't' 1,132,886; 1,504,800; $13,520,677
963,284; 940,652! : ¦ . 587,385/ 848,693j •1,661,20.7'! 1,052,104; '.' S50;67;4; $6,603,999!
1,87,270 \ 587,148: .' 971,002;. 256,750| 28p',5Q0'• 637,102! 9:66,576 $3,886,3481
231,409; 276,0181 185,023; J.77,566; ¦ "'719,586: 468,187: 1,058,818 $3,116,607!
3,315,988 4,571,802
. 3,562,221-3,662,856 '4;643,61'7 3,290,279 4,080,868
$27,127,631
Source OIC analysis of Aldermanic Menu Program reports5
IV. THE CITY DOES NOT FOLLOW BEST PRACTICES FOR MULTI-YEAR CAPITAL PLANNING OF RESIDENTIAL STREET INFRASTRUCTURE.
Contrary to best practices for multi-year capital planning,6 CDOT said that it did not perform comprehensive, long-term analysis to determine annual residential street infrastructure needs. Rather, the Office of Budget and Management (OBM) set the budget at the level it determined the City could afford, without seeking input from CDOT on how much funding was required to meet citywide need. OBM has allocated $1.32 million annually to each ward for at least the last twelve years. Due to the increasing cost of projects and this stagnant funding level, the actual'buying power of Menu funds has declined substantially over time.
Furthermore, CDOT did not follow capital planning best practices to identify and prioritize projects. In a separate OIG audit of CDOT's pavement management program, the Department stated that it assisted aldermen by providing them with complaint data and a list of streets that were rated poor or very poor during its 2014-15 visual inspection of residential street conditions. But CDOT left project prioritization to
The Miscellaneous category includes all Menu spending labeled"'Miscellaneous-Other" or "Miscellaneous-CDOT" and described in a manner sufficient to determine that the projects were unrelated to core residential infrastructure.|109|A report for each year is available on the City of Chicago Office of Budget and Management web page "Aldermanic Menu Program" drop-down menu, accessed May 15, 2019,
https //www Chicago gov/citv/en/depts/obm html.|109|Government Finance Officers Association (GFOA), "Multi-Year Capital Planning Best Practice," May 2016, accessed May 15 2019, http//www gfoa ora/mulu-year-capital-plannina GFOA describes four basic steps of multi-year capital planning identify needs, determine financial impacts, prioritize capital requests, and develop a comprehensive financial plan
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OIG HILT" 4il9-0492
Advisory Concerning Inequities in Residential Street Infrastructure Management June 13, 2019
aldermanic discretion, and some aldermen chose to prioritize projects unrelated to their ward's residential infrastructure needs for streets, alleys, sidewalks, or lighting.
The City's reliance on aldermanic discretion regarding basic street infrastructure divests CDOT experts of their proper role in planning, coordinating, and prioritizing projects over time. In addition, the annual, rather than multi-year, cycle of Menu decision-making precludes the City from developing the comprehensive, long-term strategy necessary to address residential infrastructure needs in an effective and efficient manner.
V. OIC SUGGESTIONS
To reduce inequities in residential street infrastructure funding between wards and to begin to address unmet needs citywide, we urge the City to stop funding core residential infrastructure through Menu. Instead, you should empower CDOT to fully inhabit its infrastructure management role. CDOT should conduct a comprehensive citywide needs assessment, prioritize projects according to need, and implement a multi-year capital plan for maintenance and improvement of both residential and arterial streets, in line with best practices. While aldermen and constituents should be encouraged to provide input, CDOT's infrastructure professionals are best positioned to develop long-term plans and make cost-effective decisions regarding the City's limited infrastructure resources. If you choose to continue some form of Menu Program, it should be limited to discretionary projects with no program or operational connection to core citywide infrastructure such as street resurfacing.
Responsible, equitable management of taxpayer dollars requires the City to take a comprehensive, long-term strategic approach to capital planning. Chicago's financial concerns make it even more urgent that the City adhere to this fundamental principle of good governance.
Joseph M. Ferguson Inspector General City of Chicago
cc: Candace Moore, Chief Equity Officer, City of Chicago
Tom Carney, Interim Commissioner, Chicago Department of Transportation
Respectfully,
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MISSION
The City of Chicago Office of Inspector General (OIG) is an independent, nonpartisan oversight agency whose mission is to promote economy, efficiency, effectiveness, and integrity in the administration of programs and operations of City government. OIG achieves this mission through,
administrative and criminal investigations by its Investigations Section;
performance audits of City programs and operations by its Audit and Program Review Section,
inspections, evaluations and reviews of City police and police accountability programs, operations, and policies by its Public Safety Section; and
compliance audit and monitoring of City hiring and employment activities by its Hiring Oversight Unit.
From these activities, OIG issues reports of findings and disciplinary and other recommendations,
to assure that City officials, employees, and vendors are held accountable for violations of laws and policies;
to improve the efficiency and cost-effectiveness of government operations; and
to prevent, detect, identify, expose, and eliminate waste, inefficiency, misconduct, fraud, corruption, and abuse of public authority and resources.
AUTHORITY
OIG's authority to produce reports of its findings and recommendations is established in the City of Chicago Municipal Code §§ 2-56-030(d), -035(c), -110, -230, and 240.
Cover image courtesy of iStock.
PROJECT TEAM DARWYN JONES, CHIEF PERFORMANCE ANALYST LISE VALENTINE, DEPUTY INSPECTOR GENERAL
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