CHICAGO - Public finance banker Carole Brown will step down as chairwoman of the Chicago Transit Authority board after Chicago Mayor Richard Daley names a replacement so she can focus on her work at Siebert, Brandford Shank & Co.
Brown joined Chicago-based Siebert in June as a senior managing director and head of the Chicago office from Mesirow Financial Inc.
She had previously worked for the last decade at the former Lehman Brothers as a managing director but left soon after its bankruptcy filing last September and the acquisition of the public finance group by Barclays Capital.
Sources close to Brown said she had wanted to resign for some time due to the time-consuming demands of both the post and her banking career.
Daley tapped Brown to lead the board six years ago. During her tenure, she helped steer the agency through difficult financial times and helped win over Illinois lawmakers and union leaders to support legislation that included a sales tax increase, pension reforms, and a $2 billion pension-related bond issue all aimed at shoring up the CTA's operational balance sheet.
While the borrowing helped ease the authority's pension burden and the sales tax has generated new revenues, the recession's impact on revenue collections continue to strain finances.
The CTA's fiscal challenges, including delays in state transit fund payments, prompted Moody's Investors Service on Monday to downgrade the rating on the nearly $2 billion of pension-related bonds backed by sales taxes and a portion of Chicago's real estate transaction tax by one notch to A1.
Brown's is the latest in a series of departures of senior managers at the agency. In January, Daley tapped CTA executive director Ron Huberman to lead the Chicago Public Schools and in February the authority's longtime finance chief, Dennis Anosike, left to pursue other career options.
Former public finance banker Karen Walker was named treasurer in March. Along with Brown, the board's vice chairwoman Susan Leonis also announced her resignation this week.
The CTA faces a deficit in 2010 and has not ruled out service cuts or fare hikes. It had hoped with the sales tax increase to end its diversion of capital funds for operations, but this year will use $128.6 million and its proposed 2010 budget relies on a similar level.
The CTA received $342 million from sales taxes last year, up from $300 million last year and expects $366 million this year.
Absent the tax increase, its sales tax receipts would have dropped by 3.2% last year and 12% this year. The forecast for 2010 is flat with growth expected to return in 2011.
The agency received $30 million from the real estate tax last year and expects $25 million this year. However, revenue from that tax is down dramatically from a high in 2006, which is hurting Chicago's budget as well.
The CTA operates the second-largest transit system in the country with bus ridership of 328 million and rail ridership of 198 million annually, up 5.4% in 2008 from 2007.
Ridership has grown annually by about 2% between 2003 and 2008 although it has dropped slightly so far this year due to the recession and a fare increase.
The authority has warned it has $6 billion in unfunded capital needs, but a new state capital budget and new funding expected from the eventual passage of a multi-year federal transportation funding bill would help chip away at those projects.
Additional funding that could come if Chicago is selected next month by the International Olympic Committee to host the 2016 Summer Games could also help.