The CEO of City Hall

Corporate Chicago loves Mayor Daley and helps him on must-fix problems. Its payback: big tax breaks

by Joseph Weber

When Mayor Richard M. Daley joined 2,200 of the city's corporate elite for sea bass and steak at U.S. Cellular Field a few weeks ago, the $1,500-a-plate affair swiftly turned into a lovefest. Looking over the assembled business leaders, Daley crowed, "No other city has what we have." For their part, executives from the likes of JPMorgan Chase (JPM), AT&T (T), and Motorola (MOT) used the event—a fund-raiser for an afterschool program pushed by Chicago First Lady Maggie Daley—to show fealty to the six-term leader, who is their biggest champion. "He's just terrific," gushed JPMorgan Chase CEO James Dimon. "I wish every city had an executive like him."

Daley can boast of no real experience outside government, of course. Still, businesspeople universally claim him as one of their own. He turned downtown into a gleaming showcase that impresses clients from around the world. He's privatizing city operations and leasing out facilities such as the Chicago Skyway and, if he gets his way, Midway Airport. And he's out to bring the 2016 Summer Olympics to Chicago, aiming to earn the city recognition as a global center every bit the equal of Paris or London.

Daley isn't just the city's biggest cheerleader, though. For 18 years, executives say, he has made the city work. While keeping taxes tolerable, he makes sure the downtown core is clean and alive with flowers and cultural activities. Executives credit him for tranquil race and labor relations. And they give him high marks for making City Hall run smoothly, crucial for the developers who have remade the Chicago skyline during his tenure. Perhaps most important, they enjoy the tax breaks Daley readily doles in the name of job creation.

Keeping Jobs in Town

The mayor showed his business bent last year when he vetoed a "big-box" ordinance that would have imposed higher minimum pay rates on such retailers as Wal-Mart (WMT) and Home Depot (HD). Rallying aldermen and community leaders—and facing down unions—he argued the retailers would just set up shop in close-in suburbs, denying Chicagoans jobs. "He understands that to have a healthy city you have to have jobs, and jobs come from business," says Charles P. Carey, vice-chairman of CME Group (CME), parent of the Chicago Mercantile Exchange and the Chicago Board of Trade. "The guy takes a CEO's approach to being mayor."

A typical morning in Daley's life might rival any CEO's. After speaking at a school-related breakfast downtown, the 65-year-old Daley strides back to his office, chatting en route with striking construction workers, passing office workers and farmers at an outdoor market. At his fifth-floor office at City Hall, he hosts an Italian consular official before popping into a science fair in Daley Plaza. Then Daley ambles back to his office, where organic food evangelist Alice Waters of the Chez Panisse restaurant in Berkeley, Calif., presses him to use his "benevolent dictatorship" to serve better food in the schools. As he takes Waters up a narrow staircase in City Hall to show off grasses and plants on his famed green roof, Daley is warm and attentive. All the while, he is catered to by staffers who jump at his call—just like a CEO.

Known for running through subordinates and displaying a fiery temper when crossed, Daley can be imperious. Years ago, he took over the city schools and public housing authority, convinced he'd do better than either elected boards or the federal government. He long coveted Meigs Field as a park site and famously sent in bulldozers overnight in 2003 to carve up the airport's runway, arguing terrorists might use it. No matter that the city wound up paying a $33,000 federal fine, plus legal costs and $1 million in airport funds it had misappropriated for the demolition work. "That was a hugely popular move," asserts lawyer Philip F. Suse of Baker & McKenzie, adding that many Chicagoans thought, "'Hey, that guy's in charge.'"

Admittedly, Daley's admirers overlook some shortcomings. In fact, if he were a corporate CEO, his job security would be, well, in doubt. Public shareholders would roar at the hiring-and-promotions scandal that has given U.S. Attorney Patrick J. Fitzgerald 45 convictions since 2004, mostly of city employees. High-ranking city officials took bribes, shook down companies for contributions, and traded jobs for campaign work. One former campaign worker was cleared for a job even though he never interviewed for it—because he had died.

Daley's administration is notorious for budget overruns, too. Millennium Park, first projected to cost less than $160 million, wound up costing $500 million. In October, the mayor proposed more big spending—a $5.9 billion budget for 2008—supported by as much as $300 million in higher taxes and fees. But the resulting outcry has forced him to scale back the levies. The business-funded Civic Federation, in "shock and awe" at the plan, is "not convinced all the inefficiencies have been wrung out of the city government," says President Laurence J. Msall. Still, Msall praises such steps as leasing out the Chicago Skyway, which garnered $1.8 billion. Similar plans to lease out operations at Midway and city parking garages should help too, he adds.