IG says taxi medallion auction could have reaped $18M but not yet completed

A new report by Chicago’s inspector general contended Tuesday that an auction of 50 taxi medallions that normally could have reaped the city at least $18 million by November 2013 has yet to be completed after more than a year — although city officials were unable to reveal why.

The City Department of Business Affairs and Consumer Protection had planned to close bidding on 50 new taxi medallions on Oct. 18, 2013, but afterward exercised its right to extend the “finalization” of the auction and has yet to complete that process, the report by Inspector General Joseph Ferguson said.

Asked why the auction process had not been finalized after more than a year, the department’s commissioner, Maria Guerra Lapacek, said that there was a public bid, but “the whole process hasn’t been finalized” and therefore she could not comment on it.

The IG report noted that the city set a minimum $360,000 bid for each of the 50 taxi medallions it auctioned off in October 2013. That means, normally, the process would have reaped the city at least $18 million.

In addition, the report said, “historically, winning bids have been declared and sales finalized within one month of bid closing.” But as of this week, the sales still had not been finalized, the report said.

Asked the status of the millions that the city could have gotten from the auction, Lapacek said Tuesday, “We legally cannot comment on this.”

A footnote in the IG report noted that the department provided the IG with “confidential information” supporting the department’s compliance with “parts of the auction closing procedures.” But the footnote said the IG could not release the information “due to its impact on medallion sales.”

But “full compliance” could not be verified because sales still had not been finalized, the IG report said.

Rachel Leven, a spokeswoman for Ferguson, said she could not say if the city had received any revenue from the 2013 medallion sales because “it’s confidential.”

But she said the city’s refusal to publicly explain the “indefinite suspension of a public process risks undermining public confidence in the transparency, accountability and integrity of that process.”

In its news release about the IG report, the city Department of Business Affairs and Consumer Protection touted IG findings that the department had inspected 99.5 percent of taxicabs at least as often as required under the Municipal Code.

The audit also noted that a broken brake-testing machine had prevented the department from conducting some taxi brake tests according to department standards.

But city officials said they used two certified brake specialists to check the brakes instead and are updating their standards to allow such checks.

Not every jurisdiction uses a brake machine for such checks, Lapacek said.

Lapacek, who became commissioner in January 2014, said her department took the IG audit “very seriously” and “we have accepted all of the recommendations to the best of our ability.”

Contributing: Fran Spielman