The City of Chicago has approved a $1.157 billion lease of the city’s 36,000 parking meters to Chicago Parking Meters LLC, a consortium led by the Morgan Stanley bank.
The 75-year concession agreement, which took effect in January, makes the city’s parking meter system the first publicly owned one in the United States to be given such a long-term concession.
“At the very time that some cities and states are asking the federal government for help in balancing their budgets, we’re creatively working to protect our taxpayers for years to come,” Chicago Mayor Richard M. Daley said in December in a statement announcing the deal.
“Because of our innovative Midway Airport and parking meter transactions,” Daley said, “we’re taking steps that no other city or state is taking to cushion our taxpayers from the bad economy and keep our city moving forward.”
City officials plan to use the proceeds for long-term reserve and revenue replacement ($400 million), mid-term budget relief through the year 2012 ($325 million), a fund to help the needy ($100 million), and a budget stabilization fund to help fill holes in the budget ($324 million).
Morgan Stanley was formerly an investment bank and recently became a regular commercial bank to qualify for billions of dollars of federal bailout money.
Big Rate Hikes
The agreement allows graduated meter rate increases over five years to bring rates closer to market level, reaching as much as $6.50 an hour in the Loop business area, up from $3 an hour.
Some neighborhood parking meter rates already have quadrupled, from 25 cents to $1 an hour. The rates would climb to $2 an hour in 2013.
The agreement also eliminates meter holidays such as Sundays, Christmas, New Year’s Day, and Independence Day.
The mayor’s office stated the increases will be the first in more than 20 years for more than 25,000 of the 36,000 meters. Any additional price increases after those planned for the first five years would be subject to city council approval and are expected to be limited to the rate of inflation.
As part of the agreement, Chicago Parking Meters LLC will upgrade the meters to allow both cash and cashless payment options. Only a handful of the city’s meters have the cashless option now.
The measure passed 40-5. The opposition stemmed from the way the measure was presented and the short time aldermen had to decide the matter.
“They called us in on Monday, gave us a cursory briefing, … gave us a copy of the ordinance the next day, and we voted on it two days later,” said Alderman Toni Preckwinkle (D), who cast one of the dissenting votes. “There was no time to secure any outside analysis. In a democracy, the executive branch proposes, and the legislative branch disposes, but this involves careful review and analysis.”
Alderman Scott Waguespack (D) said an analysis of the proposed increases in meter fees shows the value of the upcoming meter revenue is closer to $4 billion, which would mean the deal was a bad one for the city.
“While the city receives a quick shot in the arm of $1.15 billion, I believe the alternative, a long-term revenue stream from well-managed, city-owned meters, would have been a better deal for the parking meter users and taxpayers,” Waguespack said. “Selling a major asset that is designed as an urban traffic tool while providing a positive revenue stream is simply wrongheaded.”
Proponents of the measure said they needed to move quickly because the value of the deal would decline if the vote was delayed.
“We always get the excuse that any delay will cost us a lot of money,” said Alderman Rey Colon (D). “That always seems to be the standard line. I’m not saying that it’s a terrible deal. There’s a lot to be said about the upfront cash that’s needed [for the city’s budget]. But the meters represent a valuable city resource that’s been underutilized. We could be selling ourselves short.”
Preckwinkle agreed, pointing out the agreement means it will be 75 years before a renegotiation.
Phil Britt ([email protected]) writes from South Holland, Illinois.