11 No Votes on Mayor’s Tobacco Plan, First Vote of the Day 

Ald. Ed Burke (14) made an unusual move by suspending the rules early in the meeting, introducing a substitute ordinance, holding no debate, and calling for a vote on Mayor Rahm Emanuel’s tobacco reforms. The substitute ordinance is the third iteration of the Mayor’s tobacco package. It still increases the city’s smoking age to 21, sets new tax rates on tobacco products, eliminates the use of coupons for those products, and strengthens enforcements on the illegal sale of tobacco. But the tax rates for some products were brought down slightly from the original introduction. The threat of jail time for people caught selling loose cigarettes is gone, and retailers with existing stock won’t have to charge higher rates yet.

When Burke asked the Council to consider the amendment, he said changes had been made to the tax rates on other tobacco products (OTP), existing inventories will be exempt from the new tax rates, and employees over the age of 18 can sell tobacco (even if they can’t buy it). Price floors will be slightly lower on some products. There were also various changes to provisions on factory packaging.

Burke called for a roll call vote, after a brief consultation at the podium, the Mayor skipped debate, going straight to the vote. The measure passed 35-11.

The ordinance slightly amends the set minimum price floors for various tobacco products:

  • $11.50 for a pack of cigarettes, or a pack of little cigars

  • $1.36 per large cigar (down from $1.70)

  • $4.56 per ounce of pipe tobacco

  • $11.29 per ounce for a pouch of roll-your-own tobacco (down from $11.50)

  • $4.94 per ounce of smokeless (chewing) tobacco (up from $4).

The ordinance sets fixed tax rates for these products: 20 cents per cigar, $1.80 per ounce of chewing and loose tobacco, and 60 cents per ounce for pipe tobacco. “To accommodate small businesses that do not cater to youth, the revised ordinance will exempt new taxation on existing inventory, applying the floor only to new inventory,” the Mayor’s Office noted in this press release.

Enforcement penalties remain mostly unchanged. Those caught selling individual cigarettes, colloquially known as “loosies,” will get slapped with a $1,000-to- $5,000 fine for the first offense, and upwards of a $10,000 fine for each subsequent offense. An earlier substitute draft included penalties of up to six months in jail for being caught selling loose cigarettes.

Retailers will also be added to the list of those who could be punished if one of their employees or “other agent of the retail tobacco licensee” is found selling loosies or violates the new regulations, noting, “such licensee shall be punishable in the same manner as if said act had been performed by the licensee personally.”

Licensees who violate the new price floors, coupon prohibition, or package size violations could face fines up to $2,000 for the first offense, up to $3,500 for a second offense within a five year period, and up to $7,500 for the third offense occurred within the same time frame. If a retailer commits two or more violations within a 48-month period, the city can revoke its license.

Under the new tobacco regulations passed, the Commissioner of Business Affairs and Consumer Protection will also be required to provide annual reports detailing enforcement of the new rules to the Council’s License and Consumer Protection Committee on June 1st.

Most of the revenue generated from the tax will still support a universal, one-week orientation program for incoming high school freshman at Chicago Public Schools. The program will, “help them form good study habits, learn the ropes at their new school and get to know their teachers and peers,” the press release from the Mayor’s Office notes. Revenue from the new taxes will also help fund a “more intensive, mandatory two-week summer program” that will provide “remedial academic support and social emotional learning” for 8th graders at risk of dropping out of school.

No votes: Leslie Hairston (5), Sue Sadlowski-Garza (10), David Moore (17), Matt O’Shea (19), Howard Brookins, Jr. (21), Mike Zalewski (23), Jason Ervin (28), Chris Taliaferro (29), Nick Sposato (38), Anthony Napolitano (41), and Tom Tunney (44).

Ald. Brendan Reilly (42), a vocal opponent of the ordinance, was absent. He was one of five aldermen to use parliamentary procedure to block a vote on it at the last City Council meeting.

The Illinois Retail Merchants Association (IRMA), which led the charge against passage of the ordinance alongside Ald. Ervin and other border ward aldermen, maintained it had a compelling case to sue the city for overreaching its taxing authority. “I think that we will look into all of our options at this point,” Tanya Triche, general counsel for IRMA, told reporters after the vote. “The city has always taken the position that the state law didn’t grant the authority to have [an OTP tax]. They have recently taken a different read, but that law hasn’t actually changed.”  

$200M in Water Revenue Bonds Passes with Little Fanfare

After chipping away parts of Mayor Emanuel’s multi-billion dollar borrowing plan earlier this year, aldermen approved the last in a series of bond offerings the administration has said it needs to convert its remaining variable rate debt into a fixed rate.

Without any debate or discussion, or even much notice, Ald. Burke, Chairman of the council’s Finance Committee, asked aldermen to approve an ordinance that would authorize the city to issue $200 million in water revenue-backed bonds.

The bond offering, originally introduced in December as part of a roughly $3.7 billion dollar borrowing plan for this year, was tabled at the January City Council meeting, following vocal objections from aldermen who said the city shouldn’t borrow money to pay banks hundreds of millions of dollars in termination fees.

The revenue from the bond proceeds would pay the cost of restructuring outstanding debt from water bonds issued in 2000 and 2004 by converting those bonds to a fixed rate. The borrowed money will also pay for the cost of terminating the swaps, and the cost of borrowing the money. According to comments Chief Financial Officer Carole Brown made to aldermen in committee, the water bonds are the last remaining variable rate debt the city needs to convert to a fixed rate in order to complete a financial plan Mayor Emanuel announced in May at the Civic Federation. That announcement came shortly after the city’s credit rating was downgraded to junk status. So far, the city has paid out more than $250 million in termination fees to realize that plan, Brown said.

Authorization for the other bond offerings were passed by Council at that January meeting, but none received unanimous support, even after the administration agreed to halve its planned offering of $1.25 billion in general obligation bonds, and added a provision requiring regular briefings from Brown and City Comptroller Dan Widawsky on how the money is spent. The administration has yet to come to the council to get the remainder of the bond offering deal through.

But since that agreement to hold off on the borrowing plan, the water bonds were never brought up again in the Finance Committee, which is likely the reason it went through without a hiccup. Ald. Patrick Daley Thompson and Burke abstained from voting on the deal under provisions of Rule 14.

Meanwhile, at yesterday’s City Council meeting,  Council’s Progressive Caucus introduced a resolution calling for more oversight and transparency in how the city makes “untested financial arrangements” like this bond offering. The resolution calls on the City Council to draft a “Financial Transparency and Accountability Ordinance” that would impose “rigorous review standards for extraordinary financial transactions.”

Other Highlights from Yesterday’s Council Meeting

  • Ald. Scott Waguespack (32) and John Arena (45) voted against a massive redevelopment plan to transform the city’s Lathrop Homes, one of the oldest public housing communities, into a mixed-use residential community with more than 1,200 units, which will be a mix of public housing, market rate, and affordable.

  • Another D&P: Ald. Brian Hopkins (2) and Ald. Michele Smith (43) used parliamentary procedure to block a vote on an ordinance that would authorize the demolition of a historic landmark building at 1938 W. Augusta Blvd., located in the city’s East Village District. In a 6-2 vote at their meeting in November, the Commission on Chicago Landmarks gave preliminary approval of the demolition.

  • Ald. David Moore (17) voted against a zoning change that would allow Noble Network of Charter Schools to build a new high school in the city’s Brighton Park neighborhood. Zoning Chairman Danny Solis (25) said he was “voting no on charter school expansion in the 14th Ward.” Noble plans to build the new school on a vacant lot at the corner of 47th Street and California Avenue. The site was once home to the an RC Cola bottling plant, which was demolished in 2013. The school would accommodate 1,000 high school students and would cost about $20-30 million to build.

  • Moreno Talks Committeeman Race: With one precinct yet to be counted, Ald. Joe Moreno (1) had a slight 211 vote lead over challenger, Maria Teresa Gonzalez, for the 1st Ward Democratic Committeeman race Wednesday morning, and said he remained “very confident” the votes are in his favor. “It’s never been easy going up Joe Berrios, ever. And eight mailers against you, and all that kind of stuff. I’m just glad I have a good organization,” Ald. Moreno told Aldertrack. He later declared victory on his Facebook page.

  • Cardenas talks of “tough” election: Ald. George Cardenas (12) was unsuccessful in his effort to unseat State Sen. Tony Munoz for 12th Ward Democratic Committeeman. “We have a strong base, but the fact is that these one-time voters came out because [the Munoz campaign was] pulling them from different directions [in order] to keep the seat,” Cardenas told Aldertrack. Losing by more than 400 votes, Cardenas chalked up the loss to the flood of negative mailers State Sen. Munoz sent out against him, and suggested foul play may have occurred. “There was a lot of stuff that was done. Machines were broken, tapes were not given out, my people were shut out.” Cardenas did, however, get one win last night: the candidate he backed in the 2nd State House District, Theresa Mah, defeated incumbent State Rep. Alex Acevedo. “Theresa won. We had to split the resources. It was tough on both ends,” Cardenas explained. “So I don’t mind the fact that I didn’t win this time. We’re going to keep at it. I think we have a good message of machine politics of the past, and I think that we won from that standpoint of having the seat that had been under HDO’s [Hispanic Democratic Organization] control for 20 years to a progressive.” As for his relationship with State Sen. Munoz, Ald. Cardenas told Aldertrack “we were never actually friends..[Munoz’s organization] helped my campaign initially…there’s politics in everything…I think we disagree on a lot of things.”

  • Ken Dunkin’s Future in Politics: Commenting on State Rep. Ken Dunkin’sdefeat to Juliana StrattonAld. Walter Burnett (27) suggested that Governor Bruce Rauner might find a place for him in his administration. “Maybe the Governor will give him a job in the state, who knows. The Governor’s folks gave him a lot of money, so I would assume that they are concerned about him.”