City’s parking meter deal keeps looking worse
Investors on pace to recoup entire $ 1.16 billion with 62 years left on lease
Chicago’s parking meter system raked in $ 134.2 million last year, putting private investors on pace to recoup their entire $ 1.16 billion investment by 2021 with 62 years to go in the lease, the latest annual audit shows.
Four underground, city- owned parking garages took in $ 34 million in 2017, while the privatized Chicago Skyway generated $ 99.9 million in cash, separate audits of those assets show.
Not a penny of those revenues, once a mainstay for city government, went to ease the avalanche of tax increases imposed by Mayor Rahm Emanuel to solve the city’s $ 36 billion pension crisis.
That’s because all three of those assets were unloaded by former Mayor Richard M. Daley, who used the money to avoid raising property taxes while city employee pension funds sunk deeper in the hole.
Of the three deals, the 2008 parkingmeter deal has been the biggest political nightmare for Mayor Rahm Emanuel, who inherited it, and for Chicago aldermen who granted lightning- fast approval.
Steep rate increases that forced drivers to stuff their pockets with quarters would have been bad enough. Rates downtown, for example, increased from $ 3 an hour in 2008 to $ 6.50 an hour in 2013.
But broken and frozen pay- and- display boxes and overstuffed and improperly calibrated meters that overcharged motorists made it even worse.
Motorists were initially so incensed by the rate hikes, they vandalized and boycotted meters, leading to a dramatic drop in on- street parking. Parking meter revenues have since recovered nicely.
The latest financial report by KPMG provides even more proof of what a great bit of business it was for the private investors, who hail from as far away as Abu Dhabi.
Chicago Parking Meters LLC revenues increased by $ 2.5 million last year to $ 134.2 million, the audit shows.
The city had been collecting only about $ 23.8 million in annual meter revenue in 2008, the last year before CPM took over the system.
Factoring in the newly reported figure for 2017, private investors who have already extracted $ 927 million from the deal, in part through a refinancing, will recoup their investment by 2021. They will still have 62 years of cash flow left to enjoy.
Buried in the contract, Daley also agreed the city would reimburse investors for every space that became temporarily unavailable for whatever reason.
In 2012, those “true- up payments” added nearly $ 27 million to the parking meter company’s bottom line.
Emanuel was able to tweak that fine print in the deal in 2013. That brought a big decrease in true- up payments, to $ 6.5 million in 2014 and $ 8.6 million in 2015.
But the audit shows that true- up revenues shot up again last year, to $ 21.7 million. That’s a 38 percent increase from the $ 15.7 million make- good payment last year.
Budget and Management spokesperson Kristen Cabanban offered no immediate explanation for the surge in make- good payments.
She simply noted there was “no parking rate increase last year, and as far as I know, there is no discussion [ of] increasing parking rates this year.”
Later Monday, Cabanban issued an emailed statement that reiterated that Emanuel “has been clear from the get- go that he wouldn’t have done this deal.”
But themayor’s hard bargaining “achieved $ 1 billion in savings for taxpayers, instituted free Sunday parking and implemented the Park Chicago parking app,” she wrote.
“We don’t like the deal anymore than anyone else, but by proactively managing the Concession Agreement, we will work to reduce costs where possible and try to get the best deal possible for motorists and taxpayers,” Cabanban said.
Emanuel likes to brag about making “lemonade out of a big lemon” by having settled disputed reimbursement claims fromthe company leasing meters in a way he claims would save tax payers well over $ 1billion over 71 years.
That’s even though some aldermen claimed the mayor made the lemon more sour by swapping three extra hours of paid parking in River North and one extra hour elsewhere for free neighborhood parking on Sundays.
But the annual audit shows that the 75year, $ 1.16 billion lease keeps getting worse for Chicago taxpayers, according to attorney Clint Krislov.
Krislov tried to get the parking meter and garage deals declared illegal on grounds that you can’t legally sell the public way and that the garage deal restricted development in the Loop. Both suits were thrown out of court after the Emanuel administration defended the deals.
“These three deals have so chopped into the revenues the city rightly needs and should have to provide services to the people of Chicago. Like retiree health care. Like extra police. And they keep on getting worse,” Krislov said Monday. “The city could have and should have kept these assets and raised the rates.”