Mayor Rahm Emanuel once bragged he’d made “lemonade out of a big lemon,” and would save taxpayers $1 billion over 71 years, when he settled reimbursement claims from the company leasing Chicago’s parking meters.
But the results of the latest annual audit of the deal Chicagoans love to hate shows the company that took over the meters is still raking in tremendous revenues.
Chicago’s parking meter system took in another $132.7 million in 2018, putting private investors on pace to reap a hefty return on their initial $1.16 billion investment with 65 years to go on the 75-year lease.
Two other privatization deals also have resulted in windfalls for private companies. Four underground city-owned parking garages took in $34.1 million in 2018, while the privatized Chicago Skyway generated just under $99 million in cash, separate audits of those assets show.
Not a penny of the combined nearly $266 million in revenues, once a key source of funding for city government, went to ease the $2 billion avalanche of tax increases imposed by Emanuel to solve the city’s pension crisis.
That’s because all three assets were unloaded to private companies by former Mayor Richard M. Daley, who used the money to avoid raising property taxes while city employee pension funds sunk deeper in the hole.
Of the three deals, the 2008 parking meter deal has been the biggest political nightmare for Emanuel, who inherited the contract when he became mayor, and for Chicago aldermen who had quickly signed off on the deal.
Steep rate increases caused groans from parkers when rates downtown, for example, increased from $3 an hour in 2008 to $6.50 an hour in 2013.Motorists were initially so incensed by the rate hikes, they vandalized and boycotted meters, leading to a dramatic drop in on-street parking. Parking meter revenues have since recovered nicely.
The latest financial report by KPMG provides even more proof of what a great deal it was for the private investors, who hail from as far away as Abu Dhabi.
Chicago Parking Meters LLC revenues dropped just slightly last year — by $1.5 million — to $132.7 million, the audit shows.
The city had been collecting only about $23.8 million in annual meter revenue in 2008, the last year before CPM took over the system.
Factoring in the newly reported figure for 2018, the company has already extracted $1.2 billion in parking-meter revenues from the contract.
CPM’s net income after operating expenses last year was $89.3 million, documents show. That figure does not include debt payments or investment losses. The company distributed $49.5 million to its private investors last year.
Buried in the contract: Daley also agreed the city would reimburse investors for every parking space that became temporarily unavailable — whatever the reason.
In 2012, those “true-up payments” added nearly $27 million to the parking meter company’s bottom line.
Emanuel was able to tweak that fine print in 2013, leading to a big decrease in true-up payments that went as low as $6.5 million in 2014.
But the audit shows true-up revenues that surged by 38% in 2017 remained relatively high last year, at $17.3 million.
Budget and Management spokeswoman Kristen Cabanban had no immediate comment about the latest audit. Scott Burnham, a spokesman for Chicago Parking Meters LLC, also did not immediately comment.
Documents show the other companies that took over the Skyway and the parking garages also recorded millions of dollars in net income after operating expenses last year. The Skyway Concession Company LLC netted $49.1 million, while Millennium Parking Garages LLC took in $7.9 million. Those figures also don’t include debt service or investment losses.Representatives of those companies could not be reached for comment Tuesday.
Results of the latest audits were provided to the Chicago Sun-Times by attorney Clint Krislov.
As the Director of IIT Chicago-Kent’s Center for Open Government law clinic, Krislov has reviewed more than 50 such transactions to date, and provides an annual analysis of each year’s results.
Krislov tried to get the parking meter and garage deals declared illegal on grounds that the city can’t legally sell the public way.
He further claimed the garage deal both restricted development in the Loop and subjected the city to giant penalty payments, like the $62 million the city spent to compensate the owners of the Millennium Park and Grant Park garages for allowing the Aqua building, 225 N. Columbus, to open a competing garage.
Both lawsuits were thrown out after the Emanuel administration defended the deals.
“This is like payday borrowing against the city’s future obligations,” Krislov said.
“If the city had just hired LAZ Parking directly to do the pay-and-display system, the city would probably have $2 billion-to-$4 billion more over the course of the deal above the merely $1.16 billion it got up-front.”
Although the parking meter deal has been a political piñata, Krislov said the Skyway deal is an even more egregious example of a bad deal getting worse.
In 2015, the Skyway was re-sold to Canadian pension funds for $1 billion more than the city had received for its 99-year lease a decade before. The only silver lining for Chicago taxpayers was a $21 million fee to record the title transfer.