When Daley administration officials announced in December that they were leasing out the city’s parking meters for nearly $1.16 billion over 75 years to a consortium of investors headed by Morgan Stanley, they assured the media and anyone else who asked that this was a great deal for taxpayers in economic hard times.
In fairness, even critics of the deal concede that trying to project the value of 36,000 parking meters is hardly a straightforward task. There aren’t really any models, since no municipality has ever forged a deal quite like this. Because the agreement is supposed to last so long, the financial projections are complicated and by necessity somewhat speculative.
Sneed went on: “The sweetener to the deal is already on the books: a provision to raise the parking meter rates, which is clearly a carrot for whomever buys the meters.” Her source also told her the city had already hired legal and financial advisers to help work out a deal.
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DePaul professor H. Woods Bowman, an expert in public finance who in the early 90s served as chief financial officer of Cook County, says the idea didn’t make much sense to him. “The argument in favor of selling public assets is that a lot of the assets aren’t tied to the core functions of the government, or that there are cost inefficiencies associated with them,” he says. “Parking [policy] ought to be a core function of the city, and there are no appreciable operating efficiencies to be gained here. It only costs the city a couple of million dollars a year to run the system.”
In one closed-door budget meeting, Volpe was asked for more details, and “he threw out $2 billion” as a rough estimate of what the city might get in the deal, says Scott Waguespack, alderman of the 32nd Ward. But Volpe, he says, emphasized that the bidding process wasn’t complete.
Waguespack, one of the five nay votes, says he dinged the deal for a number of reasons, including a not-baseless hunch that the city had given up too much for too little. Two of his staffers had used their training in finance to calculate a range of projections for what Chicago Parking Meters would collect over the next 75 years. They concluded that under most scenarios the meters were worth between $2 billion and $5 billion.
Even if investment costs and inflation knocked the total value down by an astronomical amount—say 50 percent—that would still suggest the city got less than half what the system was worth.
