Chicago on Tuesday said it agreed to lease its parking meter system to a fund managed by Morgan Stanley in a 75-year, $1.16 billion deal, the latest privatization deal by the city as it struggles to close a yawning budget deficit.
The deal with Chicago Parking Meter LLC, an infrastructure investment fund managed by Morgan Stanley, marks the first time a U.S. city has privatized its parking meter system. It adds to the list of infrastructure assets Chicago has cashed in on with leases of an airport, a toll road, and some downtown parking lots.
Under the deal, the company would get all revenues from payment of the meters while the city would retain the right to all revenues for unpaid parking meters. The deal was put together quickly, and now, six months later, it appears that the deal was put together too quickly. The first signs of serious trouble came when the private company, Chicago Parking Meter LLC, began raising the price on all these meters.
And at 2 p.m. around the Sheraton Hotel on Columbus Drive, a place where normally you can't crowbar your car into a space, there were at least three or four parking spaces. What's up with this?
What's up is that a month ago, when the City of Chicago privatized parking meters, rates were immediately jacked way up, and you now have to feed 28 quarters into the meter to park a car in the Loop for two hours. In exchange for a 75-year lease, the city got $1.2 billion to help plug its budget holes.
But by handing over municipal parking meters to a private company, the city has given its citizens a colossal case of sticker shock. The cost of most meters will quadruple by 2013.
This was all very predictable. By handing all the city's parking meters to a private company, the city created a monopoly on parking meters. This private company is answerable to no one and they own the rights to all the meters. So, they did what any monopoly, answerable to no one, does, they milked their power for all its worth.
Then, these meters began to malfunction on a regular basis.
Professional photographer Cica Friedman got an unintentional snapshot of Chicago's troubled parking-meter system when she went looking for justice over a ticket that she's adamant she did not deserve.
For her effort, Friedman wasted part of a day and got slapped with a $100 fine -- double the original violation. Her problems started with a broken parking meter, she said.
Many other drivers also complain they are not beating the rap caused by bad tickets since City Hall turned over the management of about 36,000 parking meters to a private company in February. Problems have soared, ranging from jammed coin slots to inaccurate parking information posted on meters, to overzealous ticketing, drivers across the city said.
Now, yesterday, things finally came to a head when hundreds of meters all malfunctioned at once.
A Chicago Parking Meters spokeswoman says it remains unclear what caused nearly 250 new parking boxes to malfunction, causing chaos for drivers.
Company spokeswoman Avis LaVelle said it took parking workers most of Wednesday to repair the malfunctioning boxes that sent Chicago residents and parking officials scrambling, the Chicago Tribune reported Thursday.
According to the Chicago Sun Times, powerful Alderman Joe Moore is now a vocal critic against this arrangement. Moore initially voted in favor of allowing the lease and now calls it the worst and most regrettable vote of his political career.
Mayor Richard Daley now admits that it would have made more sense to stagger the transfer of these meters to the private company rather than turning them over all at once. The whole thing has turned into a debacle and it is the citizens that are ultimately paying the price.