The private investors who run Chicago’s parking meters are doing better than expected, and now they’re demanding an additional $14 million they say they’re owed under obscure provisions of the wildly unpopular 2008 deal that privatized metered parking and caused rates to soar, records show.
Disputing the claim, City Hall says Chicago Parking Meters LLC is seeking a “windfall to which it is not entitled.”
The $14 million bill stems from parking revenues the meter company says it lost when the city took meters out of service last year because of street repairs, festivals and other city-sponsored activities, according to documents obtained by the Chicago Sun-Times.
This is the second time in a year that the company has hit City Hall with a claim for a big parking tab. The Emanuel administration already is in arbitration over a $13.5 million claim over free parking that Chicago Parking Meters says it provided to people displaying disabled-parking placards or license plates in 2010.
That makes the total disputed amount more than $27 million.
The parking meter company took in more than $80 million from meters across Chicago in 2011, according to documents it filed this week with city officials.
Chicago Parking Meters’ financial performance last year slightly exceeded projections of Wall Street analysts, who have rated the company a smart investment, said Matthew Hobby, an analyst with the Standard & Poor’s ratings agency.
For $1.15 billion, paid upfront, the City Council approved a plan championed by then-Mayor Richard M. Daley in 2008 that privatized Chicago’s 36,000 meters for 75 years. In a deal that was widely criticized for selling taxpayers short, Chicago Parking Meters was given the right to set meter rates and keep all meter revenues until 2084. Drivers have since seen sharp increases in parking rates.
After leaving office a year ago, Daley, along with his former corporation counsel and two top press aides, went to work for Katten Muchin Rosenmann LLP, the law firm that handled the parking meter deal for the city.
Since the meter deal took effect, city officials have paid the parking meter company more than $2 million in what they call “true-up adjustments” to make up for parking spaces taken out of service.
The amount billed for those adjustments skyrocketed in the first nine months of the 2011 budget year, to $14 million – a sum Emanuel is refusing to pay. The company hasn’t submitted its claim for the last three months of the year yet.
In an April 5 letter to Chicago Parking Meters chief executive officer Dennis Pedrelli, Emanuel’s chief financial officer, Lois Scott, blasted the way the company calculated those adjustments for last year, calling its invoices “legally and factually erroneous.”
Scott said that, under the parking meter deal, City Hall should be determining how much money Chicago Parking Meters is owed for those out-of-service meters – something the Daley administration had allowed the company to do.
Emanuel aides declined to comment Thursday.
In addition to those adjustments, the Sun-Times reported in December that the parking meter company claims it also should be paid for potential revenue that’s lost to drivers who use – and sometimes misuse – disability license plates and placards to park for free in metered spots.
The meter company figures it’s owed $13.5 million for such free parking between February 2010 and February 2011. The Emanuel administration is disputing that. The case is now before an independent arbitrator. A disabled-parking bill for the year that ended in February hasn’t been submitted yet, though city officials expect it soon.
Emanuel-backed legislation that would end free metered parking for all but the most seriously disabled people has passed the Illinois House and is moving through the Senate. If passed, it is expected to drastically reduce the amount of money the city would have to reimburse Chicago Parking Meters.
In the financial statement it filed with the city Monday, Chicago Parking Meters said “the company believes that all of the true-up revenue amounts are collectible” and that the arbitration case “will ultimately result in receipt of the” disabled-parking bill.
Avis LaVelle, a former Daley spokeswoman who is Chicago Parking Meters’ public-relations consultant, said company officials would have no comment for this story.
The parking meter company reported 2011 revenues of more than $108 million – a figure that appears to include the bills City Hall is challenging.
Faced with widespread technical problems after the takeover of the parking system in early 2009, the company’s early returns fell short of expectations. But it rapidly rebounded, posting revenues of about $45 million in 2009 and more than $70 million the following year. Analysts have said they expect that number to hit $162 million by 2020.
Partnerships assembled by New York-based financial giant Morgan Stanley hold a 50.1 percent stake in Chicago Parking Meters. The rest of the company is owned by German financial company Allianz and the investment arms of the emirate of Abu Dhabi.