It’s pretty hard to make the notoriously bad parking meter deal even worse, but former Mayor Lori Lightfoot’s administration might have found a way.
And the blunder could cost Chicago taxpayers $120.7 million to make it right, according to an independent arbitrator, as the Sun-Times’ Fran Spielman reported.
What happened? Under Lightfoot and during the pandemic, the city reclaimed 4,007 parking spaces that were managed by Chicago Parking Meters LLC., the consortium of investors that paid $1.16 billion for the concession in 2008 — and has made a mint on the deal since.
Lightfoot’s team reasoned the value of the parking spaces had declined because they were used less due to the stay-at-home measures that were in place then.
And according to the administration, that meant the “true-up” payment contractually due to CPM each year to compensate the consortium for parking meters that are taken out of service any place in the city could be lessened or eliminated.
But instead of saving taxpayers money, the city could up fattening CPM’s coffers even more because of the ill-conceived scheme — at a time when the city can barely afford its existing bills.
The arbitrator’s ruling hints at how the city miscalculated the matter, and even found the administration knew from the start the plan “would reduce the aggregate revenue value of [CPM’s] concession,” and that the consortium would likely end up suing over it.
Chicago Parking Meters CEO Dennis Pedrelli warned Lightfoot’s Chief Financial Officer Jennie Bennett in a Nov. 18, 2021 letter that the company felt it was being shortchanged.
“CPM is evaluating the full potential economic consequences of the City’s action,” Pedrelli wrote. “But it is apparent that the actions would give rise to rights in favor of the Concessionaire to additional relief.”
In one respect, no one can blame Lightfoot for seeking some relief from the abysmal 75-year parking deal, hatched by Mayor Richard M. Daley and approved by a compliant City Council in 2008.
The billions that now fatten the portfolios of CPM investors would certainly have been better spent right here in Chicago, to help fund public transit, balance the city’s budgets and provide much-needed services.
And CPM, which could have worked with the pandemic-stricken city, chose not to. The consortium has already turned a more-than-healthy profit from its initial investment, making money hand over first and pocketing $150 million last year alone. CPM had no obligation to make any concessions to the city, but would have earned some goodwill by doing so.
The big takeaway
But the hard truth is, CPM is sitting on a favorable contract. Lightfoot’s team calculated that they’d found a way to attack the deal. In retrospect, should have heeded the red flag and left it alone Especially since the administration knew taxpayers would be on the hook for even more money if the plan failed. As the saying goes: If you come at the king, you best not miss.
Lightfoot missed. And Chicagoans will end up paying the price — maybe with the city giving CPM control of currently unmetered parking spaces as payback.
The biggest lesson here: The city must stop selling off, leasing, or otherwise handing over control of it major assets.
Chicago is bad at it. And the sales never benefit taxpayers in the long run. The Skyway generates more than $100 million a year in toll revenue, not for Chicago taxpayers, but for a trio of Canadian pension funds.
Maybe the city has wised up since the parking meter and Skyway sales. But is the proposed lakefront Bears stadium deal — enthusiastically embraced last spring by Mayor Brandon Johnson — materially any different? Not really, we’d say, given the Bears-friendly terms of the proposal, including public subsidies and the Bears taking the profits from concerts and other events at the new stadium.
Whatever the Fifth Floor can do to extricate the city from the parking meter deal, without making matters worse, is good. (We won’t hold our breath. Other administrations have tried and failed.)
Better still? Staying away from these so-called deals, in all their forms.
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