03/18/2010 05:12 am ET | Updated May 25, 2011

Candidate, Former SEC Chairman Bash Water Deal that Flushed $68 Million Down the Sewer

The Metropolitan Water Reclamation District (MWRD) of Greater Chicago Board of Commissioners last Thursday got a pasting from financial analyst Daniel Kaplan and candidate Todd Connor -- who is aiming to join the board's ranks -- over a botched bond deal that cost Cook County area taxpayers $68 million.

The MWRD cleans sludge. Figures.

Via its elected-commissioners, the AAA-rated MWRD unanimously approved and sold $600 million worth of bonds in August with a 5.72% interest rate. Nearly simultaneously, AAA-rated Johnson & Johnson had comparable bonds out there at an implied 5.33% interest rate.

"Had Chicago's authorities borrowed at the same rate as J&J, they would have saved taxpayers $68.6 million over the lifespan of the bonds," wrote Arthur Levitt, former Securities Exchange Commission Chairman, on on Oct. 22.


Levitt noted that the district treasurer was "really happy" with the results of the bond sale.

"That's like a retailer bragging about how it sold out of merchandise priced at a loss," Levitt added.

In Chicago -- that's politics and bond deals. Tax payers rarely win.

At Thursday's meeting, financial consultant Daniel Kaplan, who offered expert testimony and detailed financial analysis, said: "This was a very lucrative deal for underwriters and investors, and a very poor deal for the taxpayers of the district."

In Chicago, that's politics and bond deals. Taxpayers rarely win.

The water district commissioners tapped Mesirow Financial of Chicago to handle the bond deal. Mesirow was, however, apparently out of its league. Mesirow is not ranked among the top 25 firms in the Securities Data Index, and does not usually handle bond deals of this size.


Well, why was Mesirow selected by MRWD commissioners Barbara McGowan, Cynthia Santos Debra Shore, Frank Avila, Gloria Alitto Majewski, Kathleen Meany, Mariyana Spyropoulos (assumed office after the bond deal vote), Patricia Horton, and Board President Terry O'Brien?

Todd Connor, a former Illinois Inspector General and a Democratic candidate for a MRWD board seat, has also been asking that question and banging away on his drum over the $68 million lost by Cook County taxpayers in the Mesirow deal.

"The problem is that these questions needed to asked before the deal was approved, not after the taxpayers money has been lost," said Connor, frustrated at the board's post-game review of the bond deal on Nov. 5.

Horse long gone. Now firmly close barn door. Typical government response.

"We cannot afford to have elected officials who are interested in backroom business or pinstripe patronage, but rather, we need commissioners who are able to speak up, ask the right questions and make decisions solely based on the taxpayer's interest," added Connor, 31, a former Navy officer.

Connor, who earned his MBA at the University of Chicago and served overseas in the Persian Gulf during Operation Iraqi Freedom as a navigator on the U.S.S. Bunker Hill, has to be one of the most impressive candidates on the 2010 Illinois campaign trail. He combines brains and campaign savvy.

If this former Illinois inspector general who filed nominating petitions with 22,000 signatures snags a seat on the water district board, which manages a $1.6 billion (that's "billion" with a "b") budget that is larger than the CTA's, he can follow paper trails. He can find where other bond deals are buried.

Backing Connor is an impressive list of progressive politicians: Alderman Toni Preckwinkle (D-4th), U.S. Representative Jan Schakowsky, State Senator Jeff Schoenberg (D-Evanston), State Senator Susan Garrett (D-Lake Forest), State Senator Heather Steans (D-Chicago), Cook County Commissioner Bridget Gainer (D-Chicago) State Rep. Sara Feigenholtz (D-Chicago), Alderman Tom Tunney (D-44th), former State Senator Carol Ronen (D-Chicago), State Rep. Greg Harris (D-Chicago), Cook County Commissioner Larry Suffredin (D-Evanston), Northfield Township Committeeman Mike Kreloff, and Cook County Commissioner Roberto Maldonado (D-Chicago).

Connor can clean the water agency's poop deck and clean up its officers' mess. He's got the professional qualifications and the grit. Heck, he has even his own white hat, too. But he needs voters' help to get there.

Otherwise, we Cook County area taxpayers risk another $68 million loss -- or more -- on some future bond deal sluicing down the MWRD's own sewer.

Can we afford that?