On June 1, city inspector general David Hoffman joined the chorus slamming the $1.16 billion parking meter lease agreement as a loser for taxpayers. The next day Mayor Daley struck back, holding a press conference to offer an impassioned, occasionally coherent defense of the deal.
This testy exchange with reporters turned the spotlight, if only for an instant, on one element of the parking meter agreement that’s so far received very little attention: the battery of well-connected, highly paid financial and legal consultants who executed the deal on the city’s behalf—and who are immune from the regulations that govern most contractors doing business with the city.
aNot only did William Blair advise the city on the deal—it came up with the idea in the first place. Then it provided the city with the only estimate it ever received of what the system was worth and coordinated the bidding process.
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aThe financial advisers were each paid a share of what the city made in cash on the lease deal. William Blair received 0.375 percent of the payout, or about $4.3 million, according to records obtained from the city through a FOIA request. The others, Gardner Rich and Ramirez & Company, each received 0.0625 percent, or $722,813. The attorneys’ fees added up to another $1.3 million. All told, the city paid its legal and financial advisers more than $7 million for their work on the deal.
aTogether the lawyers and financial advisers—not anyone in city government—determined who would control the parking meter system for the next several generations and how much money they’d make off it. But as private entities, none of these firms are required by law to disclose to the public how they arrived at their plan. And none would talk to us for this story.
In fact, the advisers had been working on the deal for months. In his recent press conference, as he tried to ward off criticism that the deal had been rushed, Daley pointed to a placard showing a timeline of the meter privatization process. This was the first time reporters had been shown these dates, and they indicated that the city hired William Blair in June 2007, four months before Sneed tipped us off that something was afoot, to begin “preliminary due diligence.”
For instance, in January Pittsburgh mayor Luke Ravenstahl announced that he wanted to explore leasing his city’s public parking garages and meters in return for cash he could pour into the city’s pension fund. A few weeks later the authority that oversees Pittsburgh’s parking system invited firms to submit proposals for an analysis of the idea. It received nine responses and determined four were qualified. Next a committee made up of city officials, an authority attorney, an authority board member, and a union representative interviewed the firms before recommending a winner at a public meeting of the authority’s board. Board members then approved up to $100,000 for the study.
