Richard Daley is taking on another job. The former Chicago mayor is joining the law firm Katten Muchin Rosenman LLP in an advisory position. The firm has worked with the city, including on the leases for the parking meters, Chicago Skyway and parking garages, but Daley will not be involved in city-related deals.
The city of Chicago will inject $50 million into the ravaged parking meter fund that once totaled $1.15 billion to help fund the government over the length of the 75-year parking meter lease.
Last week, a jump in meter rates across Chicago was followed by a spike in talk from the city's mayoral candidates about how they would address the 2008 meter lease. That deal gave a Morgan Stanley-backed consortium control of the city's meters through 2084 in exchange for $1.1 billion, the vast majority of which is already spent. Yesterday, three guests on WBEZ's 848 picked up on the topic during a segment about the mayoral campaign and the future of transportation in Chicago. On the show, Aaron Renn, who runs the Urbanophile website, made the case that the meter system could, indeed, be bought back from the Morgan Stanley group at a fair market price. "I think anything is negotiable and we can and should pursue that," he said. Renn pointed out that in getting the meters back, the city would give itself a revenue-generating device:
This notion that we've already spent the money, so we can't give them the money back, so we can't repurchase it, I think is not entirely accurate. We did spend the money on a lot of things maybe we shouldn't have. But, don't forget, even if we had to give the money back we also get the revenue stream back. And that revenue stream, from the meters, could be used to back bonds that could be used to repurchase them.
He went on to suggest how that could possible work: the city could create some kind of parking authority that could float bonds backed by revenues from the purchased-backed meters, in addition to some city-backed debt. Remember, as of this past summer, the Morgan Stanley group was slated to take in during 2010 more than three times the $20 million in meter revenues the city collected before the lease. And after the most recent round of meter rate hikes, it's likely those profits will increase going forward.
To be sure, the other guests on the show were a bit more skeptical that the city could pull off such a transaction. But Renn's idea about how Chicago could remake the notorious meter deal is definitely an interesting one.
Parking meter rates in Chicago yesterday jumped to $5 per hour in the Loop, $3 per hour in the greater downtown area, and $1.50 per hour in the neighborhoods, sparking a round of criticism from the current crop of mayoral candidates about the 75-year lease of the meter system to Chicago Parking Meters LLC.
On New Year's Eve, City Clerk and mayoral contender Miguel del Valle promised to not fight a lawsuit seeking to overturn the deal (which is what the Daley administration is doing) but instead go on the legal offensive. "As mayor, not only will I instruct the city’s lawyers not to defend this lawsuit, I’ll sue the investment company and ask the court to declare this contract illegal," he said in a statement. Carol Moseley Braun offered some strong words about the meter privatization in a release today:
This is a classic investment bank rip-off of the people of Chicago. I won't stand for it. Morgan Stanley and the other investment banks got billions worth of our quarters for only $1 billion. We want our money back, and if elected Mayor, I'm going to cancel this deal.
Moseley Braun told Fox Chicago that she has identified more than $1 billion in savings in the city budget that could be used to refund the Chicago Parking Meters LLC if the deal were to be canceled. But Gery Chico criticized this approach, throwing cold water on talk of suing the firms involved in the deal or canceling it by refunding the $1.15 billion the city gained when the lease was ratified. He said the city should have kept control of the meter system but that it's too late to go back now. "Sometimes we just have to cut our losses and move forward," he said. Here's a clip from a press conference today:
Chico's meter plan revolves around rebuilding the gutted $400 million long-term reserve fund the meter lease was supposed to create.
Terms of the 2008 meter lease means all the money collected in the Chicago's 36,000 meters
flows to the meter partnership, which includes Morgan Stanley, the Abu Dhabi Investment Authority, and Allianz Capital Partners, through 2084; the group could earn up to $9.58 billion in profit from Chicago parkers through that date, according to Bloomberg News, before taxes and other costs. All but $76 million of the up-front money gained through the lease has already been spent or
committed to fill gaps in the regular city budget. The acrimony generated by the meter lease in Chicago is serving as a cautionary tale in a handful of other cities considering similar privatizations.
On Saturday, Chicago's parking meter rates will jump
once again. Folks leaving their car downtown will now pay $5-per-hour for the
privilege, up from $4.25 in 2010. Neighborhood spaces will cost
$1.50-per-hour, up from $1.25 currently. It's the third of five scheduled annual
rate increases written into the city's lease of its meter system to
Chicago Parking Meters LLC. After 2013, rate hikes will be
tied to inflation.
The bump is an annual reminder of how
crappy the parking meter deal really was. Instead of treating the
meters like a transit tool and raising the cost of downtown parking
sensibly over time, the City Council outsourced the task to a politically-connected firm
at a cheap price, forgoing a massive revenue stream. It's no surprise
why so many aldermanic and mayoral candidates are going out of their way
to criticize the Daley administration's lease in particular and promise
more asset sale scrutiny more generally. Now, citizens have to make
sure those pols uphold their pledges.
If Chicago's next mayor wants to sell off any additional city assets
or services, he or she is going to face scrutiny from aldermen in the City Council. Outside of the council chambers this morning,
Illinois PIRG held a press conference to thank the 19 lawmakers who have
signed on to the group's privatization transparency pledge
(PDF), which asks that members "not vote for any future ordinances that
lease public assets or services unless at a minimum there is proper
public discourse and protections to ensure taxpayers receive fair
value." "Before I endorse any candidate for mayor," said Ald. Joe Moore
(49th Ward), one of the signers, "they're going to have to sign on to
these principles." Watch:
The group is also calling on aldermen to revive the "Taxpayer Protection Ordinance"
(PDF), which was introduced in 2009 and gained 13 co-sponsors but is
now stuck in the Finance Committee. That bill would have been useful
when the Daley administration rushed through its parking meter lease two
years ago. To plug the city's 2011 deficit, aldermen are expected today to
approve the mayor's plan to drain the meter reserve fund.
UPDATE (12:47 p.m): Right on cue, mayoral contender Rahm Emanuel has confirmed that he would oppose the sale of Midway Airport, which the Daley administration has been working to swing for a while.
Just about every Chicago mayoral hopeful
is going out of his or her way to criticize the city's long-term parking
meter lease. (It's wildly unpopular, after all.) Gery
Chico has introduced a city ordinance intended to replenish the meter
reserve fund, which the Daley administration has virtually drained in
just two years. Like some lawyers who are challenging the deal in court,
Carol Moseley Braun wants the city to take the parking meters back
from the private company to which the city sold the system. (To repay
Chicago Parking Meters LLC. for its property, however, Moseley Braun
says she would advocate "redoing the contract and selling it to
somebody else.") Rahm Emanuel has even criticized
the outgoing mayor's use of the funds. (He has not yet offered a fix
going forward, however, and remains cordial with clout-heavy William
Blair & Company, the firm that first brought to the Daley
administration the idea of privatizing the system.)
The
meter acrimony doesn't stop there. In the Council Chambers, four city
aldermen -- including Cook County Board President-elect Toni Preckwinkle
-- introduced a resolution to put a question on the ballot asking,
"Shall the City of Chicago re-negotiate the Parking Meter Privatization
Agreement?" It's not just local pols who think the city erred greatly,
either; Bloomberg's Darrell Preston reported
this morning that several cities including Indianapolis, Pittsburgh,
and Los Angeles are using Chicago's experience as a case study of how not to privatize its meters.
We should hope these criticisms aren't just campaign theatrics. Going forward, several city services could be sold off to plug budget gaps. Every single deal should face as much scrutiny as the meters are generating currently.
UPDATE (12:57 p.m.): Moseley Braun has actually launched a website -- TakeBackOurQuarters.com -- devoted to the issue. On the site, she also notes that she would "sue
William Blair for their role in letting this horrible deal go through."
Mayoral candidate Gery Chico tried to refocus attention on the dwindling reserves the City of Chicago gained from the privatization of the parking meter system and Skyway this morning at City Hall. The attorney and longtime supporter of Chicago Mayor Richard Daley introduced an ordinance today that would prohibit the city from using long-term reserves to balance budgets by establishing two "irrevocable trusts" for the money left from the Skyway lease and the $76 million that will remain in the meter fund once the City Council ratifies Mayor Richard Daley's final budget, as is expected. The bill also calls for the city to replenish the parking meter fund at a rate of $16 million annually for 20 years, or until $400 million is back in that pot.
Chico said he introduced the bill now because his campaign needed to properly research a "mechanism that works" to protect and restore the reserves; he also said it was inspired by the recent downgrades of Chicago's bond rating. It's a certainty that the legislation won't be heard before the council's final vote on the mayor's last budget, which depends heavily on one-time reserve funds.
That doesn't mean Chico, who repeatedly served in leadership positions for the mayor over the years, likes Daley's last spending plan, however. He called it a mistake, in fact. "You cannot fill budget holes ... with quick hits like that," he said, referring to the reserves that prop up the 2011 budget. (Chico also criticized the meter lease itself. When asked what his position on the lease was the end of 2008, when the council passed the meter lease at Daley's insistence, Chico, who was then the mayoral-appointed president of the park district board, said he was "focused on park issues. I really did not have a forum to speak on it.")
A side note to this story: Chico, of course, is not an alderman. But his introduction of the reserves ordinance today demonstrates a little-known fact about City Council's legislative process. Anyone is able to offer a bill for council consideration through the City Clerk's Office, presently headed by Miguel Del Valle (one of Chico's competitors in the mayoral primary). Kristine Williams, a spokeswoman for the clerk, wrote in an email that the clerk does accept proposals from residents and will introduce them into council at the next available meeting. Like bills drafted by aldermen, they are referred to the appropriate committee and are dealt with by committee chairs. Williams said the clerk's office encourages residents to work with their aldermen if they want to introduce an ordinance.
In his first extended interview with a member of the Chicago press corps, mayoral candidate Rahm Emanuel promised "an era of reform" but punted on a number of specific questions Sun-Times City Hall reporter Fran Spielman put his way. He wouldn't say whether or not if elected he'd extend Police Superintendent Jody Weis' contract leading that department. Asked how an Emanuel administration would boost city revenues, perhaps by supporting a casino in Chicago or by instituting a city income tax, the candidate responded by saying he would "never sit there and talk about a city income tax until you ask some
fundamental questions about the government. That's a ridiculous thing to
do." Emanuel also declined to say whether or not he would have privatized the city's parking meter system. "It's done," he said.
Emanuel and the other candidates who've tossed their hat into the mayoral ring will likely face questions about the meters again, given the controversy that's surrounded Mayor Richard Daley's 75-year, $1.16 billion lease of the system and the possibility of more privatizations of city assets and functions down the road. Perhaps next time, more specific answers will be forthcoming from Emanuel. We do know that while Emanuel was serving as President Barack Obama's chief of staff, he held two meetings with a principal at William Blair, the company the Daley administration chose, without a competitive bid process, to shepherd through the meter privatization. Whether or not Emanuel and the Blair representative talked about the lease during those sessions isn't specifically known.
Last week, a jump in meter rates across Chicago was followed by a 
Parking meter rates in Chicago yesterday 
On Saturday, Chicago's parking meter rates will 
Mayoral candidate Gery Chico tried to refocus attention on the dwindling reserves the City of Chicago gained from the privatization of the parking meter system and Skyway this morning at City Hall. The attorney and 
In his 