In their failed attempt to block Bally’s $1.7 billion River West casino, downtown City Council members warned that the deal was being rushed, just like the one that privatized Chicago’s parking meters, and would end up being “even worse.” ” for taxpayers.
That dire prediction is hard to imagine, considering the results of the latest parking meter audit by accounting giant KPMG.
It shows that Chicago parking meter revenue is almost back to pre-pandemic levels. After dropping to $91.6 million in 2020, they rose to $136.2 million last year.
The increase stems from the recovery of Chicago’s economy and hundreds of new metered spaces in Montrose Harbor and on busy neighborhood streets created as part of Mayor Lori Lightfoot’s 2021 budget.
With 61 years remaining on the 75-year lease, Chicago Parking Meters LLC has now recovered all of its investment of $1.16 billion plus $502.5 million more.
Private investors from as far away as Abu Dhabi would have benefited even more had they not brought in a new investor and borrowed $22 million at 15% to ride out the pandemic. That loan was paid in full last year.
Additionally, four city-owned underground parking garages raised $22 million, up 37.5% from $16.2 million last year.
Thanks to increased traffic and another increase in tolls, the privatized Chicago Skyway generated $114.3 million. That’s a 34.7% increase in revenue and well above Skyway’s $92 million in annual revenue in 2019, the year before the stay-at-home shutdown.
Not a penny of that revenue went to ease the burden on Chicago taxpayers, who had to absorb a $76.5 million increase in the city’s property tax after a $94 million increase in property taxes last year. previous.
Parking meters, downtown garages and the Skyway were dumped by then-Mayor Richard M. Daley, who used the money to avoid raising property taxes while city employee pension funds sank deeper into the hole. .
Of those three agreements, the parking meter lease has been the biggest political nightmare for the two mayors who inherited it and the councilmembers who passed it with lightning speed.
Initially, there were steep rate increases, including parking downtown, which went from $3 an hour in 2008 to $6.50 an hour in 2013. It’s now $7 an hour.
Motorists were so outraged by the rate increases that they vandalized and boycotted parking meters, leading to a dramatic drop in street parking. Revenue eventually recovered, until the pandemic.
The latest audit shows again how good the deal was for private investors.
Although Chicago Parking Meters LLC lost a third of its annual revenue in 2020, the system still made enough money that year to generate a $13 million distribution to investors.
Total revenue was much higher than the $23.8 million in meter payments in 2008, the year before CPM took over the system. This is because the Mayor and City Council, fearful of risking a political backlash by raising meter fees themselves, chose to unload the meters rather than directly contract with LAZ Parking to run a city-owned system. with new technology.
Investors recovered another $6.7 million through a contract provision that requires the city to reimburse investors for each space out of service.
That includes temporary street closures for special events, sewer repairs and other construction projects, and street closures that allowed restaurants and bars to serve more customers outdoors when indoor capacity was restricted, if not prohibited.
In the full 12 years since the meters were privatized, the city has delivered $78.8 million in “true-up” payments, as they are called.
That’s even after then-Mayor Rahm Emanuel amended the fine print in 2013, reducing the city’s liability by increasing the hours and days motorists pay for parking.
Taking into account the recently reported figure for 2021, private investors have already extracted $2.1 billion from the deal, in part by refinancing three times. The last refinancing for $1.2 billion was completed in 2019.
Now that parking revenue is back on track, the company should end up earning at least six times what investors put in over the life of the deal.
The results of the latest audits were provided to the Chicago Sun-Times by attorney Clint Krislov. As director of the IIT Chicago-Kent Center for Open Government Law Clinic, Krislov has reviewed dozens of transactions and provides an annual analysis of each year’s results.
“These three deals turned out to be like payday loans. They were so shortsighted. They took the quick buck, ignoring the fact that they were burdening the city with terribly structured and undervalued deals that will cost the city for decades to come,” Krislov said Thursday.
“The city should have hired a parking operator to update the technology and operate the system for the city. If they had done that and gotten a better price for all three assets, Chicago would have $3-4 billion more today than it does with these three deals combined.”
Scott Burnham, a spokesman for Chicago Parking Meters LLC, declined to comment on the audit.
Although the meter lease is the deal Council members and their constituents love to hate, Krislov once again argued that it “pales in comparison” to the Skyway deal.
A decade after investors gave the city more than $1.83 billion to lease Skyway for 99 years, the rights to operate the privatized highway and rising pocket tolls were sold to a consortium of three Canadian pension plans for $1 billion. more than the original price.
“Canadian pension funds spent $2 billion to buy the Skyway and it’s doing well. It would have worked well for the city if the city had hired an operator to run the Skyway” and collect the rising tolls for the city, Krislov said.
Krislov tried to have the parking meter and garage deals declared illegal because the city cannot legally sell public roads.
In addition, he claimed that the garage deal restricted development in the Loop and subjected the city to giant penalty payments, such as the $62 million the city spent to compensate owners of the Millennium Park and Grant Park garages after they the city allowed the Aqua building, 225 N Columbus Drive, to open a competitor garage.
Both lawsuits were dismissed after the Emanuel administration defended the deals.
As mayor-elect, Lori Lightfoot vowed to review the meter deal and try to find some way to break the lease, shorten it, or ease the bitter terms for taxpayers.
She called it an “under-the-saddle burr” that “keeps rubbing and rubbing,” but her administration has done nothing to remove it.
“We know they’re the ones who call when the phone doesn’t ring, as they say,” Krislov joked, paraphrasing a Randy Travis song.
Turning serious, Krislov said he would have been more than happy to join forces with the City Council to “fight this.”
“If the city administration had said, ‘This is not a legal deal. The city cannot agree to sell the right of way to private parties in this type of deal, ‘we could have been successful in getting the city out of this,’ he said.