Steve Koch: Investment banker to City Hall insider

on Jul23

23 July 2017 | 8:39 pm

For an investment banker who admittedly “didn’t know s—t” when he walked in the door of City Hall, Steve Koch has quite the track record for his five years at Mayor Rahm Emanuel’s side.

Chicago has finally confronted its $30 billion pension crisis. Corporate headquarters are relocating to downtown Chicago. Navy Pier is getting a facelift. So is the neighborhood surrounding McCormick Place.

And Emanuel is trying desperately to share the wealth of downtown development with long-neglected neighborhoods.

Koch, who is leaving his post as deputy mayor, said he is most proud about the strides the city has made in righting its financial ship.

“We have put ourselves on a payment plan for all four pensions. We’ve put ourselves on a payment plan for the debt we owe. And we have right-sized city government to a point where it is financially sustainable,” Koch said.

“We’re far from done. But we are on the right path. . . . There’s always this tension between how quickly you fix something and how much damage that might cause. I’m proud of the balance we’ve found.”

Koch made no apologies for the $1.2 billion-and-counting avalanche of tax increases to solve the pension crisis. Businesses “don’t like taxes,” but what they despise even more is “a government that is ignoring a fast slide downhill,” he said.

“The same people who say, ‘I wish our taxes weren’t going up’ will say to me, `Thank God the mayor and his administration took our fiscal situation seriously and addressed it.’ People are smart. They know that when you get a credit card bill, you’ve got to pay it,” he said.

Koch said it “makes my blood boil” how the state has shirked it primary responsibility to fund education and used needy kids in particular as a “political football.”

He refused to talk about Emanuel’s plan to tax downtown businesses or high net-worth individuals — or a combination of the two — to put the broke Chicago Public Schools on solid financial footing “until we see what the primary actor in this little drama does.”

“There’ll be some gamesmanship in Springfield. We’ll see where they get. And we will react once they’ve done whatever they’re gonna do. . . . No one should doubt the mayor at his word. He is not gonna let the schoolkids of Chicago suffer. They will start school on time,” he said.

Koch has had his setbacks.

He failed to save the Lucas Museum for Chicago — even after crafting a Hail Mary plan to raise five tourism taxes and authorize $1.2 billion in McCormick Place borrowing to let movie mogul George Lucas build his lakefront museum by demolishing and replacing McCormick Place East.

A rendering of what a Lucas Museum would have looked like at a proposed site at McCormick Place East. Eventually, Chicago lost the museum to Los Angeles. | Provided rendering

“It became a political football where people were irresponsible. They exercised their particular political hobbyhorses in the interest of blocking that museum. I defy people to tell me that’s a good outcome,” Koch said.

“Museums take a long time for people to figure out how wonderful they are. I can’t speak to whether the Lucas Museum is gonna be the next Metropolitan Museum of Art or the next Art Institute or Field Museum. But it would have been a real asset to Chicago.”

Koch also spearheaded construction of Wintrust Arena, the DePaul basketball venue that will double as an event center for McCormick Place.

Emanuel first proposed using $55 million in tax increment finance money to help pay for the 10,000-seat arena.

When the project became a symbol of what critics called the mayor’s misplaced priorities, Koch rearranged the financing so the TIF subsidy purportedly would be used to acquire land for the project and surrounding hotels, instead of to build the stadium.

The Better Government Association and Crain’s Chicago Business recently disclosed that the $55 million TIF subsidy was actually used to rebuild Navy Pier, a major tourist attraction that isn’t in a blighted area, which is where TIF money is meant to be used.

Wintrust Arena is scheduled to open in December. | Courtesy of DePaul Athletics

Days before the BGA story hit, Koch argued that the entire debate was less about the DePaul arena and more about Emanuel’s critics “choosing an opportunity to beat the mayor about the head for some other ulterior objective.”

“They were fighting about TIF money that I don’t think the people objecting really even understood how that affects our taxes, where that money goes, what it can be spent for,” he said.

Koch predicted that those political questions would be “lost in the sands of time” to a “really beautiful building” that will “contribute to the vitality” of Bronzeville, McCormick Square and Motor Row.

“There’s no arena I know of literally in the country where you can walk by on the street, look in through a window and see what’s going on on the floor,” he said.

Koch is handing off the decades-long dream of building an express train between downtown and O’Hare Airport after joining his successor, Robert Rivkin, on a trip to Los Angeles to talk to visionary billionaire Elon Musk about Musk’s Jetsons-like plan to build tunnels to house high-speed rail.

“The Musk idea is a really intriguing one,” Koch said. “It remains to be seen whether it’s workable for us.”

As for the “Mayor 1 percent” label that Emanuel can’t seem to shake no matter how many programs he creates to share the wealth with Chicago neighborhoods, Koch said it’s an unfair image “created by the media.”

“This mayor has been more attuned to the complexity and necessity of addressing all parts of the city than I can imagine anyone else ever being,” Koch said.

“He is incredibly measured and balanced about making sure that we do our damnedest to bring economic vitality to all parts of the city. Whether that’s a neighborhood in deep need, a neighborhood that’s doing just fine or an area of the city that is exploding with growth. . . . If you don’t pay attention to both [downtown and neighborhoods] and make sure that the city as a whole is vibrant, you’re gonna fail.”



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