CHICAGO – Chicago Mayor Richard Daley said Tuesday he would not seek a seventh term next year in a stunning announcement for the city’s political and business worlds that stands to shakeup its longstanding relationships in the public finance community.
“Simply put, it’s time,” Daley said. “It’s time for me. It’s time for Chicago to move on.”
Daley, 68, announced his decision during a city hall news conference in which he flanked by his wife Maggie, children Nora Conroy, Patrick, and Elizabeth and son-in-law Sean Conroy.
Daley was first elected in 1989 to the seat held by his father Richard J. Daley who died during his sixth term in office in 1976. At the end of this year, the younger Daley will become the city’s longest serving mayor, surpassing his father who died during his 21st year in office.
“Improving Chicago has been the ongoing work of my life,” Daley said. “I love every minute of it. There has been no greater privilege or honor than serving as your mayor, working alongside seasoned professionals, incredibly committed business and community leaders, and some of the most dedicated public employees you ever expect.”
Daley said he had pondered his future in recent months and grew more comfortable with the decision not to run again in recent weeks. Daley’s news was stunning as he had refused to answer questions about his future and provided signs in recent speeches that he intended to run again.
“I’ve had the opportunity to expand, to build, to create, unite and compromise for the betterment of Chicago,” Daley said.
Many city council members – some of them considering seeking the office – were gathered three floors below the press conference for a Finance Committee meeting where they approved an up to $1 billion bond issue for Daley’s $8 billion expansion of O’Hare International Airport.
They received the news that the longtime mayor would not seek re-election from committee Chairman Edward Burke, who interrupted the meeting to read a news alert about the decision. Burke has long held the powerful position as chairman of the finance committee, which has oversight of city bond issues. That could change under a new mayor.
Burke praised Daley and wished him well.
“He probably would want to be remembered principally” as the education mayor “for his willingness to take on responsibility for schools,” Burke said.
Several current and former council members, and other elected officials, have expressed an interest in the mayor’s office as has White House chief of staff Rahm Emanuel, who announced his interest during a televised interview earlier this year.
Daley allies said the mayor’s decision was not driven by his wife’s ongoing battle with breast cancer, the city’s fiscal struggles, or criticism over a rash of crime, despite speculation those issues contributed to his decision. The mayor has also faced a series of ethics scandals over city contracts and a series of former department heads and other city officials have been convicted of wrongdoing.
Fitch Ratings and Moody’s Investors Service recently downgraded the city’s general obligation bond rating one level to AA with a negative outlook and Aa3 with a stable outlook, respectively, due to concerns about the looming $655 million deficit in the $6.3 billion 2011 budget and evaporating financial reserves. Standard & Poor’s rates the city AA-minus with a stable outlook.
Chicago’s balance sheet is being strained by poor collections from economically sensitive taxes as the city contends with rising labor costs. Daley has vowed not to raise property taxes to cut the deficit, but has warned that service cuts may be needed. The budget will be introduced next month to the council.
Daley likely will leave it to his successor to deal with the burden of rescuing the city’s four pension funds, which have $14.6 billion of unfunded liabilities and are collectively funded at just a 43% ratio.
During Daley’s tenure, the city’s GO debt has dramatically increased to $6.8 billion as he sought to raise funding for neighborhood improvements.
From early in his tenure, Daley showed a proclivity for privatization and in 2005 the city entered into a first-of-its-kind 99-year lease of the Chicago Skyway toll bridge for $1.8 billion. He went on to strike leases involving downtown city parking garages and the parking meter system.
Daley has nearly drained reserves set up with proceeds from the $1.15 billion meter lease to help balance the last two budgets, but a $500 million reserve funded with Skyway proceeds remains intact. That reserve helped garner a round of upgrades in 2005. A proposed $2.5 billion lease of Midway Airport fell apart last year due to the international credit crunch.
Daley’s legacy includes his successful efforts to win back control of the Chicago Public Schools from the state in 1995. He appointed his own leaders who helped restore financial and academic credibility to the system leading to a massive $5 billion, mostly bond-financed capital building program.
Daley then turned his attention to the Chicago Housing Authority. He won back control of the agency from federal authorities in 1999 and launched the partially bond-financed $1.6 billion Plan for Transformation. Senior facilities and low-rise buildings are being renovated under the plan and crime-ridden highrises are being torn down and replaced with mixed-use developments supported by private development. The plan is behind schedule due to the housing-market crisis.
Daley in 2001 unveiled what has grown into an $8 billion plan to expand O’Hare and reconfigure its runways to a parallel configuration from an intersecting design that leads to runway closures during poor weather conditions and negatively affects the national air traffic grid. The plan is also designed to expand capacity to an annual 1.2 million flights from the roughly 1 million it can now handle.
The city hopes to complete the overall plan by 2014 even though the airlines have not signed off on the second phase of the project. The up to $1 billion bond sale the City Council will vote on today will help finance the plan.
Daley suffered a stinging defeat when the International Olympic Committee last year rejected the city’s bid to host the 2016 Summer Olympics.
During his tenure, Daley has grown close to business leaders, including the banks that underwrite the city’s bond deals. He has tapped local public finance professionals to serve on boards and enjoyed financial support from broker-dealer parent corporations and law firms for civic projects.
Local minority and women-owned public finance businesses also have strong praise for Daley’s commitment to dole out at least 25% of the city’s bond work to minority-owned firms and 5% to women-owned firms.
“I am deeply grateful to the people of this great city, more grateful than I can fully express,” Daley said. “I have given it my all.”