Parking meter firm revenues spike as Trump plans more private deals
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If you take him at his word, President Donald Trump scorns no city in his realm more than Chicago.
But Trump is eager to follow at least one trail blazed years ago by Chicago’s leaders: the privatization of public assets.
The Washington Post reported Tuesday that the Trump administration is “drafting plans to privatize some public assets such as airports, bridges, highway rest stops and other facilities.”
Unless that’s fake news, Trump should first consider all the very real and negative consequences of Chicago’s privatization deals, especially the infamous 2008 lease of the city’s parking-meter system.
The recently filed annual financial report for Chicago Parking Meters LLC provides yet more proof of what a great bit of business it was for the private investors, who hail from as far away as Abu Dhabi.
The parking-meter company’s revenues increased more than 8 percent last year, to $131.7 million, according to the independent auditors’ report submitted to Mayor Rahm Emanuel’s administration on April 28.
Most of that revenue is due to a clause in the deal that allowed the meter company to sharply raise parking rates. The city had been collecting only about $20 million a year in revenues from the meters when it was running them.
Factoring in the newly reported figure for 2016, the parking-meter company has reaped more than $886 million in revenues in the first eight years of the deal with Chicago.
At this clip, it won’t be much longer before the revenues for the private investors surpass the $1.15 billion they paid the city for the right to profit from the meters for the next 75 years.
Making matters worse, the cash-strapped city already has spent nearly 90 percent of the upfront payment it received under the deal, public records show.
Buried in the contract, then-Mayor Richard M. Daley also agreed the city would reimburse investors for every space that became temporarily unavailable for whatever reason.
In 2012, those “true-up payments” from the city added nearly $27 million to the parking-meter company’s bottom line.
Emanuel was able to tweak that fine print in the deal in 2013. That brought a big decrease in true-up payments, to $6.5 million in 2014 and $8.6 million in 2015.
But the parking-meter company says true-up revenues shot up again last year, to more than $15.7 million.
A spokeswoman for the city said true-up payments increased “because of street closures related to construction, special events, etc.”
And the parking-meter deal was not the only privatization dream that turned nightmarish for Chicago’s taxpayers.
The city had to shell out $62 million in 2015 to settle a lawsuit brought by the private company that invested in the public parking garages under Millennium Park.
Under the terms of that transaction, the city was not supposed to allow new competitors to open anywhere near the privatized garages. Daley and the City Council approved a public parking facility a block away, in the Aqua building, breaking the terms of the contract.
Chicago’s privatization pushes have been stymied only at Midway Airport, which both Emanuel and Daley have tried unsuccessfully to convert into the first major airport in the country to go private. Trump’s privatization push could revive those long-frustrated plans for Chicago’s second airport.
Transportation Secretary Elaine Chao said St. Louis officials already are working with the feds to privatize that city’s airport, the Washington Post reported.
“You take the proceeds from the airport, from the sale of a government asset, and put it into financing infrastructure,” Chao said.
Having spent his whole career until now in business and entertainment, Trump feels the private sector can manage things better than government.
But for the public to benefit as much as investors, Trump would have to bring far more artistry toward forging privatization deals than we’ve seen so far from Chicago’s Democratic politicians.