Special case: Gov. Rauner creates the nonprofit
Illinois Business and Economic Development Corporation
Letters (reproduced below) sent to Governor Bruce Rauner, the Office of the Speaker, and the members of the Special Committee on Public Private Partnerships: Rep. Lou Lang, Rep. Emanuel Chris Welch, Rep. Ed Sullivan, Rep. John Bradley, Rep. Fred Crespo, Rep. William Davis, Rep. Tom Demmer, Rep. Randy Frese, Rep. Margo McDermed, Rep. Ron Sandack, Rep. Carol Sente, Rep. Keith Wheeler
The Citizen Advocacy Center (CAC) respectfully submits this letter to provide recommendations for the creation and functioning of the Illinois Business Economic Development Corporation that achieve dual public interest goals of creating an entity that provides assistance to the State in pursuing needed economic development while ensuring that necessary protocols and policies are in place to ensure transparency, openness, and accountability to the citizenry. CAC’s recommendations are based on the 20-plus years of insight we have cultivated in addressing Illinois state and local government issues in the context of pursuing optimal civic engagement and government accountability.
CAC is an award-winning, nonprofit, nonpartisan, community-based, legal organization with a mission of “Building Democracy for the 21st Century.” Since 1994, community lawyers have worked to build democracy by strengthening the citizenry’s capacities, resources, and institutions for self-governance. CAC emphasizes civic education & engagement and government transparency & accountability. Through providing community lawyering assistance to the public, CAC identifies gaps in the tools and skills that the public needs to effectively participate in the government decision-making process. CAC also analyzes whether state and local laws and institutions enable and encourage members of the public to meaningfully participate in the government decision-making process. CAC develops best practices and engages in public policy education to enhance civic engagement and advocates in the public interest for reforms to those tools, laws, and institutions that support public participation in the government decision-making process.
CAC routinely works with community members and groups interested in economic development activity, particularly redevelopment in established neighborhoods. As such we have addressed wide range of issues including tax increment financing, redevelopment plans in the planning and implementation phase, and public-private partnerships. CAC began to specifically study nonprofit economic development corporations because of government’s heavy reliance on these entities and the corollary inability of community groups to acquire records of economic development activity conducted by nonprofit organizations in conjunction with government entities under Illinois’ sunshine laws. Simply put, the public does not have the same right or capacity to keep informed and meaningfully participate in economic development issues when activity is conducted through a nonprofit economic development entity. This recurring issue resulted in CAC publishing an article offering recommendations to bridge the divide between economic development and democracy in Illinois (enclosed).
In February 2016, Governor Rauner issued an executive order directing the Illinois Department of Commerce and Economic Opportunity (DCEO) to collaborate with the newly incorporated Illinois Business Economic and Development Corporation (ILBEDC). In his State of the State address and in media reports since, the Governor cited to concerns that the DCEO has limited resources devoted to attracting and retaining business, and to the belief that the ILBEDC will better recruit businesses to Illinois and create and retain jobs here. According to the Governor, ILBEDC is modeled after the best practices of other successful state and local economic development organizations, and will focus on sales, marketing, and exceptional customer service. Similarly, CAC advocates that Illinois adopt best practices associated with transparency and accountability in order to be effective.
Currently, not-for-profit entities that are performing traditional government functions are not per se covered by the Freedom of Information Act (FOIA) and the Open Meetings Act (OMA). The only manner in which their activity falls under Illinois’ sunshine laws is when records are shared with a government entity, or the staff or members of the not-for-profit meet with a majority of a quorum of elected officials of the board of a public body, thereby triggering public notice provisions. CAC urges the Governor and the General Assembly to consider the disservice to Illinois businesses and taxpayers by shifting a government function to a not-for-profit entity that is not covered by Illinois’ sunshine laws. Creating a climate that attracts businesses and encourages private sector investment is not mutually exclusive of providing transparency and accountability in the democratic process in which governments make decisions. Conversely, lack of openness and transparency blunts civic engagement.
When the public is meaningfully included in the planning process and has ample access to information, there is greater likelihood that such projects are deemed acceptable by the public because of increased confidence that the process yielded an outcome that was inclusive of all stakeholders and sought to bring the community together.
Citizen Advocacy Center requests that the Governor and the General Assembly seek solutions that provide clarity with respect to transparency, openness, and accountability of not-for-profit economic development corporations including the ILBEDC. These are outlined in the enclosed legal article, The Goals of Economic Development and the Goals of Democracy: Bridging the Two While Valuing Public Participation.
Many nonprofit economic development corporations voluntarily comply with transparency provisions in Illinois’ sunshine laws to boost public confidence, and while laudable, there is absolutely no enforcement mechanism for which to hold these entities accountable should they disregard their own policies. One path towards clarity is to amend FOIA and OMA so that both apply to entities that include not-for-profit economic development corporations. Currently, Illinois’ FOIA and OMA focus on the structure of the entities, rather than the function of the entities. For example of emphasizing the function of entities, New Jersey defines “public body” as including entities that “perform a public governmental function affecting the rights, duties, obligations, privileges, benefits, or other legal relations of any person.”
As additional safeguards, CAC recommends that the needs of the public should be balanced against the needs of corporations seeking government subsidies. For example, the following language would provide a satisfactory window of time for the public to gather and review information: “No public officer or employee shall enter into a binding agreement with any corporation, partnership, or person who has requested confidentiality of information pursuant to [an act regarding economic development corporations], until 90 days after such information is made public.”
Further safeguards and increased opportunities for public participation include the following:
- Require public hearings on all subsidy deals with adequate protections to ensure meaningful participation;
- Disclose information on all current subsidy applications;
- Require disclosure of subsidy spending by corporations receiving government subsidies and corporate compliance;
- Utilize clawbacks routinely (money back guarantees);
- Utilize and enforce Community Benefit Agreements (CBAs), which ensure community support for projects because they are negotiated agreements between developers and community coalitions that outline projects’ contributions to the community;
- Amend Illinois law to make zoning hearings to be quasi-judicial rather than legislative; and
- Increase mandatory opportunities for public testimony at zoning hearings.
I welcome the opportunity to further discuss CAC’s recommendations and experiences. I can be contacted at (630) 833- 4080 or at firstname.lastname@example.org.