Parking meters, garages took in $156M — but city won’t see a cent
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Chicago’s parking-meter system took in $121.7 million last year, while four underground city-owned garages reaped another $34.7 million — with not a penny of that money going to the cash-strapped city government.
Instead, the $156.3 million pot of parking cash went to private investors who control the meters and garages under deals cut by former Mayor Richard M. Daley and rubber-stamped by the City Council.
Of the two deals, the 2008 meter privatization drew more widespread public outrage, in part because of steep rate hikes phased in over its first five years. Rates downtown, for example, increased from $3 an hour in 2008 to $6.50 an hour in 2013.
Rates across the city haven’t increased since then. Neither City Hall nor the meter company will discuss whether future rate increases might be in store.
Molly Poppe, a spokeswoman for Mayor Rahm Emanuel’s finance department, would say only that City Hall sets pricing for metered spaces. Chicago Parking Meters, the private company that controls the system, “does not have the right under the contract to require the city to set any particular parking meter rate,” Poppe said.
A spokesman for the meter company declined to comment.
Chicago Parking Meters — formed by banking giant Morgan Stanley and other financial partners — paid the city $1.15 billion to manage the meter system and pocket the money fed into it for the next 75 years.
The city took in $23.8 million from the meters in 2008, the last year before CPM took over the system.
In the seven years since, the meter company has reported a total of $778.6 million in revenues. It’s on pace to make back what it paid the city by 2020, with more than 60 years of meter money still to come.
Meter revenues, though, have dipped slightly each year since the high mark of $139.5 million reported in 2012. That sum was bolstered not only by the escalating rates, but also by payments the city had to make to CPM every time metered spaces were taken out of commission for any reason, including street repairs, public events and free parking for the disabled.
The meter company billed city taxpayers a total of $48.2 million for these out-of-service payments for 2012, records show. If such payments had continued over the life of the deal, they alone would have vastly exceeded the $1.15 billion the city got from the meter company up front.
In the wake of the meter rate hikes, a growing number of able-bodied people had been using relatives’ handicapped placards — or fake or stolen ones — to cheat the meter system, according to an investigation by the Chicago Sun-Times in partnership with retired Chicago police Lt. Robert Angone. A new state law that took in effect in 2014 set up a two-tiered placard system that allows only people who can’t physically feed meter payboxes to have free-parking rights.
Before 2014, CPM had billed the city as much as $21.5 million a year for the free disabled parking. Now, the number of people using placards to park for free is so insignificant that the city owed the company nothing last year, records show.
In 2013, Emanuel also renegotiated parts of the meter deal. The tweaked agreement changed the process for calculating “true-up” penalties — which compensated CPM when the city removed or blocked off metered spaces for anything from sewer-line replacements to movie filming.
True-up bills from the company fell from $26.7 million in in 2012 to $6.5 million in 2014. Citing the reduced true-up tabs, Emanuel proclaimed the renegotiations will save taxpayers $1 billion over the following six decades.
But the reworked deal doesn’t guarantee that such payments won’t increase in the future. In fact, the city’s true-up bill increased to $8.6 million last year as more meters were taken out of service.
City officials say that’s because of an upswing in construction projects. Poppe, the spokeswoman for Emanuel’s finance department, said construction firms pay fees to the city to cover the meter costs.
Despite the changes to the agreement, Wall Street analysts expect the meter system to continue to deliver for CPM’s investors. After management costs and other expenses, the company reported net operating income of $76.2 million last year.
“While the city believes they will earn some savings through these changes, the fact that the concession agreement remained largely intact after being devised under one administration and tested under a new mayoral administration speaks to the sanctity of the agreement,” Moody’s financial ratings agency concluded in a report last year.
The garage agreement has also sent a stream of money into the coffers of private investors.
Two years before the meter deal, the city gave Chicago Loop Parking — another entity led by Morgan Stanley — the rights to four parking garages under Millennium Park and Grant Park for 99 years. In return, the city received $563 million.
Last year, the garages produced $34.7 million in revenue, the highest annual total since 2008, audits show. After expenses, their net operating income was $8.4 million.
Over the nine years of the deal, the facilities have generated $292.6 million in revenue for their private operators.
Meanwhile, the Emanuel administration spent more than $62 million in 2015 to settle a lawsuit involving the garages. Under terms of the original agreement, the city wasn’t supposed to allow new competitors near them — yet Daley and the Council let the owners of the Aqua building open a public garage just a block from one of the city garages.
The city spent years fighting the suit before a series of rulings against it prompted the payout.
Last week, the rights to the garages were sold to a group of foreign investors.
Contributing: Dan Mihalopoulos