Emanuel to introduce privatization rules to avoid repeat of parking meter debacle

SHARE Emanuel to introduce privatization rules to avoid repeat of parking meter debacle

Mayor Rahm Emanuel is finally delivering on his campaign promise to establish rules of the road for privatizing city assets and services to make certain that the parking meter debacle is never repeated.

A similar privatization ordinance championed by the anti-Emanuel Progressive Caucus has been languishing in a City Council committee for years.

During a campaign forum on ethics reform in December, Emanuel was asked why he doesn’t support that ordinance. He responded with a promise to introduce a privatization ordinance of his own that would “codify” the process he used to evaluate and ultimately reject privatizing Midway Airport after one of only two bidders left the runway.

At the City Council meeting Wednesday, the mayor plans to introduce an ordinance endorsed by AFSCME and the Better Government Association that will be co-sponsored by Ald. Roderick Sawyer (6th), the Progressive Caucus member who also chairs the council’s Black Caucus.

The 75-year, $1.15 billion deal that privatized Chicago parking meters is widely despised for several reasons. The City Council was rushed into a deal that locked in steep rate hikes because then-Mayor Richard M. Daley had already counted on the revenue to balance his budget. The transition to private management was poorly executed, with parking meters jammed with quarters. And Chicago taxpayers ended up getting the short end of the stick — with millions in hidden reimbursement costs — while private investors made a killing.

The proposed privatization ordinance is aimed at addressing all of those concerns even though there are no privatization proposals in the pipeline.

The ground rules would apply to privatization of city assets valued at a minimum of $400 million with terms that last at least 20 years. The city’s chief financial officer would be required to issue a request for qualifications; identify an independent adviser to evaluate the deal; and notify chairmen of the City Council’s Budget and Finance Committees 90 days before a City Council vote.

The city also would be required to hold a public hearing and accept public comments using an online inbox. Seven days before the final council vote, the appropriate City Council committee would hold a hearing. Summary information and the independent adviser’s report would be made public.

Privatization of city services would be covered if the proposed service contracts are valued at $3 million or more. Construction, engineering and demolition contracts would be exempt because those services are viewed as critical to maintaining government operations.

The city’s budget director would prepare a “cost effectiveness” study that outlines the potential benefits to Chicago taxpayers. Unions representing city employees who perform the service and stand to lose their jobs would have 10 business days to provide a written response. That would be followed by at least one Budget Committee hearing.

If an asset is ultimately privatized, annual performance reports would be required of the contractor and oversight would be maintained by Inspector General Joe Ferguson. Services that are privatized would be subject to twice-a-year performance reports by the overseeing department.

The ordinance also takes aim at Daley’s decision to privatize the parking meters and spend most of the proceeds to balance his last few budgets.

The city would be required to invest 10 percent of the proceeds “not used for investment earnings, expenses, debt service, public infrastructure, or pension payments” into an “intergenerational fairness fund” to be invested by the city treasurer.

The fund could not be touched until the lease was half over or by a three-fourths vote by the City Council. The asset would have to be returned to the city at the end of the lease in a “state of good repair.”

Emanuel has talked repeatedly about his inability to make “lemonade” out of a “lemon” of a parking meter deal — not even by trading free Sunday parking for additional parking meter hours in the downtown area.

But he’s hoping the new ground rules would, at the very least, prevent another lemon.

“Looking back at the city’s parking meter lease – which was unequivocally a bad deal for taxpayers and the city – it is clear that a number of things could have been done differently to achieve a better result,” the mayor said in a press release.

“This ordinance would insert accountability and transparency into the process to ensure that any potential privatization in the future would be appropriately evaluated, publicly debated, and, if accepted, would be subject to ongoing oversight.”

Sawyer added, “It is important to protect Chicago taxpayers from poorly vetted privatization deals. . . . Residents expect their elected officials to be good stewards of city resources; this ordinance introduces very important protections for working families and taxpayers to ensure we meet this expectation.”

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