In­vestors nearly $500M ahead af­ter 11 years of 75-year lease

Chicago Sun-Times - - FRONT PAGE - FRAN SPIELMAN

The stay-at-home shut­down trig­gered by the coron­avirus turned the streets of down­town Chicago into a vir­tual ghost town. But pri­vate in­vestors who leased Chicago’s park­ing me­ters had plenty of cush­ion to ab­sorb the blow.

Chicago’s park­ing me­ter sys­tem raked in another $138.7 mil­lion in 2019, al­low­ing pri­vate in­vestors to re­coup their en­tire $1.16 bil­lion in­vest­ment and then some with more than 60 years to go on the 75-year lease.

Four un­der­ground city-owned park­ing garages took in $34.8 mil­lion in 2019, while the pri­va­tized Chicago Sky­way gen­er­ated just un­der $92 mil­lion in cash, sep­a­rate au­dits of those as­sets show.

Not a penny of those rev­enues went to ease the bur­den on Chicago tax­pay­ers that will al­most cer­tainly get worse to fill a $700 mil­lion hole in Mayor Lori Light­foot’s $11.6 bil­lion 2020 bud­get and plug a $1 bil­lion gap next year.

That’s be­cause all three 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 park­ing me­ter deal has been the big­gest po­lit­i­cal night­mare for the two may­ors who in­her­ited it and for Chicago al­der­men who granted that deal light­ning-fast ap­proval.

Steep rate in­creases would have been bad enough. Rates down­town, for ex­am­ple, rose 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 made it even worse.

Mo­torists were ini­tially so in­censed, they van­dal­ized and boy­cotted me­ters, lead­ing to a dra­matic drop in on-street park­ing. Rev­enues re­cov­ered un­til the pan­demic.

The lat­est fi­nan­cial re­port by KPMG pro­vides even more proof of what a great bit of busi­ness that deal was for the pri­vate in­vestors, who hail from as far away as Abu Dhabi.

Chicago Park­ing Me­ters LLC rev­enues in­creased by 4.5% last year — by $6 mil­lion — to $138.7 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 2019, in­vestors have al­ready ex­tracted $1.6 bil­lion from the deal, in part by re­fi­nanc­ing three times.

That’s nearly $500 mil­lion more than their ini­tial, $1.16 bil­lion in­vest­ment with 64 years worth of me­ter rev­enues to go.

The lat­est re­fi­nanc­ing — for $1.2 bil­lion — was com­pleted on June 30, 2019.

The con­tract re­quires the city to re­im­burse in­vestors for every space that be­came tem­po­rar­ily un­avail­able — what­ever the rea­son.

In 2012, those “true-up pay­ments” added nearly $27 mil­lion to the me­ter com­pany’s bot­tom line be­fore Mayor Rahm Emanuel was able to tweak the fine print in 2013.

The new au­dit shows true-up rev­enues that surged by 38% in 2017 dropped to $11 mil­lion in 2019.

Bud­get and Man­age­ment spokes­woman Kris­ten Ca­ban­ban had no im­me­di­ate com­ment about the lat­est au­dit. Scott Burn­ham, a spokesman for CPM, could not be reached.

When Emanuel rene­go­ti­ated the me­ter deal, some al­der­men claimed the mayor made it worse by swap­ping three ex­tra hours of paid park­ing in River North and one ex­tra hour else­where for free neigh­bor­hood park­ing on Sun­days.

Re­sults of the lat­est au­dits were pro­vided to the Chicago Sun-Times by at­tor­ney Clint Krislov.

As the Di­rec­tor of IIT Chicago-Kent’s Cen­ter for Open Gov­ern­ment law clinic, Krislov has re­viewed dozens of trans­ac­tions to date and pro­vides an an­nual anal­y­sis of each year’s re­sults.

Krislov tried to get the me­ter and garage deals de­clared il­le­gal on grounds that the city can’t legally sell the public way. Both law­suits were thrown out af­ter the Emanuel ad­min­is­tra­tion de­fended the deals. “The garages and the Sky­way don’t af­fect peo­ple as much day to day be­cause you don’t see ’em. It’s the me­ters that ev­ery­body fo­cuses on. But all three of them to­gether have de­prived the city of $3 bil­lion that it re­ally needed, re­gard­less of the COVID virus busi­ness,” Krislov said Thurs­day.

Af­ter last year’s au­dit, then-Mayor-elect Lori Light­foot vowed to take a fresh look at the park­ing me­ter deal and try and find some way to either break the lease, shorten it or sweeten the sour terms for Chicago tax­pay­ers.

She called it a “burr un­der your sad­dle” that “keeps rub­bing and rub­bing” but has done noth­ing to re­move it.

Krislov urged the mayor to do some­thing.

“She should chal­lenge the deal on the grounds that it’s an il­le­gal sale of the public right of way and the deal as struc­tured con­sti­tutes es­sen­tially the city tak­ing out a bond for longer than the con­sti­tu­tion­ally per­mit­ted 40 years,” he said.

“You can view this as a one-time lease pay­ment. But it’s re­ally a loan of $1.16 bil­lion that was se­cured by trans­fer­ring the city’s right of way.”


Down­town park­ing rates rose from $3 an hour in 2008 to $6.50 an hour in 2013 af­ter the city made a park­ing-me­ter deal with pri­vate in­vestors.

Clint Krislov

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