folks ALL across this Country the pissed away $$$$$$$$$$$$$$ ...folks we have plenty of $$$ ....but fucking flawed biz models ! fucking flawed !!
Chicago's Parking Meters
In February 2009, the City of Chicago and Chicago
Parking Meters LLC signed a 75-year concession agreement for the long
term lease of Chicago's 36,000 parking meters. The city received an
upfront payment of approximately $1.2 billion. The procurement process
lacked transparency and was rushed, as the city's Inspector General
later concluded. Within months, parking rates soared and many meters
were malfunctioning or mislabeled. Chicago residents complained about
the difficulty of parking in the city, while business owners watched
their retail traffic decline.
On February 13, 2009, the Daley administration
and Chicago Parking Meters LLC signed the largest concession agreement
in US history, for the operation of Chicago's 36,000 parking meters.
The city received an upfront payment of approximately $1.2 billion for
the 75-year lease. The agreement stipulates that Chicago Parking Meters LLC
receives all associated revenue from the parking meter system, with the
exception of fines, until 2084. Chicago Parking Meters LLC
subcontracts with LAZ Parking for the management and
maintenance of all Chicago's meters. This type of long-term lease of
public assets is known as a public-private partnership (PPP or P3).
The Chicago Reader detailed the timeline of events leading up to the final lease agreement. According to records, in February 2008, Chicago issued a Request for Qualifications (RFQ) inviting firms to demonstrate interest in the parking meter lease. In late March,10 groups submitted RFQs, including Morgan Stanley, JPMorgan Chase, Lehman Brothers, and partnerships led by Macquarie Capital Group and Cintra. The city finally received only two official bids for the lease, from Morgan Stanley and Macquarie, but the public and City Council were not informed of the bids. On December 2, 2008, Mayor Daley announced that the city had agreed to lease the 36,000 meters to a newly-formed Morgan Stanley consortium known as Chicago Parking Meters LLC. The City Council still had not seen any documents related to the agreement, but was called together two days later for the sole purpose of approving the contract. Although many members complained of not having adequate information or time to consider the deal, the Council approved the deal with a 40-5 vote. Much documentation of the bidding process, including the actual bid documents, has never been released to the City Council or the public.
Within weeks of the lease implementation in February 2009, meter rates quadrupled in many parts of the city. Many meters have broken because they couldn't handle the number of quarters required by the new rates, and vandalism of meters has greatly increased.
As problems with the parking meters continue to grow, more pubic officials and residents question the financial analysis performed by William Blair & Company to calculate the value of the city's meters. Some officials have stated that the asset might have been worth closer to $3 billion, although there are many important variables in the analysis that are impossible to estimate.
In June 2009, the Chicago Inspector General issued an analysis of the lease deal, concluding that the decision to enter the lease contract lacked "meaningful public review" and neglected the city's long-term interests to solve a short-term budget crisis. Specifically, the IG found, "the City was paid, conservatively, $974 million less for this 75-year lease than the City would have received from 75 years of parking-meter revenue..." The report recommended a new ordinance that would mandate a far more transparent, public, and deliberative process for any future PPPs.
In August 2009, the Independent Voters of Illinois Independent Precinct Organization (IVI-IPO), filed a lawsuit claiming the lease agreement violates the Illinois Constitution, since the city uses public resources to enforce parking regulations and repair the parking meters for the benefit of a private entity. The lawsuit had its first hearing in September 2009 with the judge finding reasonable ground for the suit. Subsequent hearings have been rescheduled several times and the next hearing is currently scheduled for May 14, 2010.
By November 2009, the parking meter company was making more than $1.1 million a week from Chicago's meters and expected total profit of about $58 million from the lease in 2010, according to internal company documents obtained by the Chicago News Cooperative. A second round of rate increases is scheduled for January 1.
By December 31, 2009, Chicago had only $180 million left from the $1.15 billion parking meter deal, contributing to a record budget shortfall for the City. The City is now being forced to consider alternative sources of revenue, rather than relying on long-term reserve funds generated by the parking meter lease. A final budget will be approved by December 31, 2010.
The Chicago Reader detailed the timeline of events leading up to the final lease agreement. According to records, in February 2008, Chicago issued a Request for Qualifications (RFQ) inviting firms to demonstrate interest in the parking meter lease. In late March,10 groups submitted RFQs, including Morgan Stanley, JPMorgan Chase, Lehman Brothers, and partnerships led by Macquarie Capital Group and Cintra. The city finally received only two official bids for the lease, from Morgan Stanley and Macquarie, but the public and City Council were not informed of the bids. On December 2, 2008, Mayor Daley announced that the city had agreed to lease the 36,000 meters to a newly-formed Morgan Stanley consortium known as Chicago Parking Meters LLC. The City Council still had not seen any documents related to the agreement, but was called together two days later for the sole purpose of approving the contract. Although many members complained of not having adequate information or time to consider the deal, the Council approved the deal with a 40-5 vote. Much documentation of the bidding process, including the actual bid documents, has never been released to the City Council or the public.
Within weeks of the lease implementation in February 2009, meter rates quadrupled in many parts of the city. Many meters have broken because they couldn't handle the number of quarters required by the new rates, and vandalism of meters has greatly increased.
As problems with the parking meters continue to grow, more pubic officials and residents question the financial analysis performed by William Blair & Company to calculate the value of the city's meters. Some officials have stated that the asset might have been worth closer to $3 billion, although there are many important variables in the analysis that are impossible to estimate.
In June 2009, the Chicago Inspector General issued an analysis of the lease deal, concluding that the decision to enter the lease contract lacked "meaningful public review" and neglected the city's long-term interests to solve a short-term budget crisis. Specifically, the IG found, "the City was paid, conservatively, $974 million less for this 75-year lease than the City would have received from 75 years of parking-meter revenue..." The report recommended a new ordinance that would mandate a far more transparent, public, and deliberative process for any future PPPs.
In August 2009, the Independent Voters of Illinois Independent Precinct Organization (IVI-IPO), filed a lawsuit claiming the lease agreement violates the Illinois Constitution, since the city uses public resources to enforce parking regulations and repair the parking meters for the benefit of a private entity. The lawsuit had its first hearing in September 2009 with the judge finding reasonable ground for the suit. Subsequent hearings have been rescheduled several times and the next hearing is currently scheduled for May 14, 2010.
By November 2009, the parking meter company was making more than $1.1 million a week from Chicago's meters and expected total profit of about $58 million from the lease in 2010, according to internal company documents obtained by the Chicago News Cooperative. A second round of rate increases is scheduled for January 1.
By December 31, 2009, Chicago had only $180 million left from the $1.15 billion parking meter deal, contributing to a record budget shortfall for the City. The City is now being forced to consider alternative sources of revenue, rather than relying on long-term reserve funds generated by the parking meter lease. A final budget will be approved by December 31, 2010.
Since the privatization of the city's parking meters, rates have significantly increased,
causing many residents to think twice before parking in the city. Many
stores and merchants in the area complain that the rates have decreased
business. Although rates vary throughout the city, the rates in the
central business area known as the Loop increased in the first months to
28 quarters ($7) for 2 hours of parking time. The parking charges also
have been extended to 7 days a week and for more hours during the day.
Many meters are mislabeled and malfunctioning as well. According to the Chicago Tribune, in an area where a quarter is supposed to buy 15 minutes of time, a quarter actually buys only 7 minutes. Meters are mislabeled, contributing to unwarranted parking citations.
These problems are not surprising to many residents, who believe that the leasing process lacked transparency, was rushed, and not well thought out. As described above, Chicago residents and City Council were not included in many crucial steps in the procurement process. Public opposition to the parking meter lease continues, and four out of five voters surveyed in July 2010 disapprove of the way Mayor Daley has handled the contract.
Many meters are mislabeled and malfunctioning as well. According to the Chicago Tribune, in an area where a quarter is supposed to buy 15 minutes of time, a quarter actually buys only 7 minutes. Meters are mislabeled, contributing to unwarranted parking citations.
These problems are not surprising to many residents, who believe that the leasing process lacked transparency, was rushed, and not well thought out. As described above, Chicago residents and City Council were not included in many crucial steps in the procurement process. Public opposition to the parking meter lease continues, and four out of five voters surveyed in July 2010 disapprove of the way Mayor Daley has handled the contract.
The Illinois Public Interest Research Group,
working with US PIRG, issued a report in the fall of 2009 aimed at
preventing further disastrous privatization of public infrastructure and
assets in Chicago and other cities. The report recommends strong public
interest protections such as public transparency of the process,
retaining public control of decisions affecting the public interest,
limiting leases to 30 years or less, and making sure the public receives
the full value for the assets.
In July 2010, Illinois PIRG organized a bake sale in Chicago to raise awareness about the large amount of "dough" the city is losing as a result of its parking privatization deal.
In July 2010, Illinois PIRG organized a bake sale in Chicago to raise awareness about the large amount of "dough" the city is losing as a result of its parking privatization deal.
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