It’s pretty difficult to make the notoriously bad parking meter thing even worse, but former Mayor Lori Lightfoot’s administration may have found a way.
And as Fran Spielman of the Sun-Times reported, it could cost Chicago taxpayers $120.7 million to correct that mistake, according to an independent arbitrator.
What happened? Under Lightfoot and during the pandemic, the city reclaimed 4,007 parking spaces managed by Chicago Parking Meters LLC, the investor consortium that paid $1.16 billion for the concession in 2008 — and has since made a fortune from the deal.
Lightfoot’s team justified this by saying that the value of parking spaces had fallen because they were being used less due to the exit restrictions in place at the time.
And that meant, according to the administration, that the annual compensation payment contractually owed to CPM to compensate the consortium for the decommissioning of parking meters anywhere in the city could be reduced or eliminated entirely.
But instead of saving taxpayers money, the poorly thought-out program could fill CPM’s coffers even further – and that at a time when the city can barely pay its current bills.
The arbitrator’s decision suggests that the city miscalculated on the matter. In fact, it was said that the administration knew from the beginning that the plan “would reduce the overall revenue value of the concession (of CPM)” and that the consortium would likely sue because of it.
Chicago Parking Meters CEO Dennis Pedrelli warned Lightfoot CFO Jennie Bennett in a Nov. 18, 2021, letter that the company believes it will be shortchanged.
“CPM is currently assessing the full potential economic impact of the city’s actions,” Pedrelli wrote. “But it is obvious that the measures would give the concessionaire additional compensation claims.”
In some ways, no one can blame Lightfoot for calling for a softening of the crappy 75-year parking deal engineered by Mayor Richard M. Daley and approved by a compliant City Council in 2008.
The billions that now fill the portfolios of CPM investors would surely have been better spent here in Chicago: funding public transit, balancing the city’s budget and providing much-needed services.
And CPM, which could have partnered with the pandemic-hit city, chose not to. The consortium has already made a more than healthy profit on its initial investment by recouping the money first, raking in $150 million last year alone. CPM was not obligated to make any concessions to the city, but doing so would have earned it a certain amount of goodwill.
The big conclusion
But the hard truth is that CPM has a cheap contract. Lightfoot’s team figured they had found a way to attack the deal. In retrospect, they should have heeded the red flag and left it at that, especially since the government knew taxpayers would have to fork out even more money if the plan failed. As the saying goes, he who attacks the king better not miss.
Lightfoot missed the mark. And Chicagoans will ultimately pay the price – perhaps by giving CPM control of currently unmetered parking in return.
The most important lesson is that the city must stop selling, leasing or otherwise giving up control of key assets.
Chicago is bad at it. And the sales never benefit taxpayers in the long run. The Skyway generates more than $100 million in toll revenue annually, not for Chicago taxpayers but for three Canadian pension funds.
Maybe the city has wiser since selling the parking meter and skyway. But is the proposed deal for the lakefront Bears stadium — which was enthusiastically embraced by Mayor Brandon Johnson last spring — substantially different? Not really, we’d say, given the Bears-friendly terms of the proposal, including public subsidies and the Bears’ share of profits from concerts and other events at the new stadium.
Whatever the Fifth Floor can do to get the city out of the parking meter deal without making things worse is good. (We won’t hold our breath. Other administrations have tried and failed.)
Better yet, stay away from these so-called deals in any form.
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