Parking is a premium commodity in Chicago. And in the Loop, one has become accustomed to paying dearly for the privilege of parking.
But in Chicago these days, finding a place to park your car has become embroiled in scandal. In his quest to fill up empty city coffers, Mayor Daley and his rubber-stamping city council have been trying to sell off city assets like there's no tomorrow; thus, with the gleam of gold in his eye, Daley leased the parking meter commodity for the next 75 years to a private firm (somehow, Morgan Stanley is involved in this deal, not sure how!) for the sum of $1.5 billion.
The deal meant parking rates would go up dramatically, leaving Chicago with some of the highest parking meter rates in the country (to pair nicely with the highest sales tax in America.)
Not the best deal for consumers - but a good deal for a city dealing with a significant budget shortfall, right?
Not according to the city's inspector general, who issued a report yesterday lambasting the deal.
The Chicago Sun-Times reports:
"Chicago’s 36,000 parking meters were worth nearly twice as much as the $1.15 billion Mayor Daley got when he rammed through a 75-year lease in a few days without analyzing what the system was worth, the city’s inspector general has concluded."
Apparently, the city signed the deal before conducting an assessment of what the lease would be worth.
Thus, the private firm got a bargain - a steal, really. From the intro to the Inspector General's report:
"In other words, by giving up control of the parking-meter system for 75 years, the City relinquished future parking-meter revenue that has a present value of approximately $2.13 billion. This means that the City received about $974 million less for the parking-meter system than it was worth to the City – or alternatively, that the City leased the system for a price that was 46% lower than its value to the City."
Daley's peeps are saying that the report is tossing around "dubious figures." What's dubious is leasing an asset for nearly a century without putting in the due diligence to determine what a fair market value would be. Charging half-off out of desperation is a very bum deal for the "city that works."
Links to more stories about this issue here:
The Inspector General's Report
Chicago Tribune story on the report
Sun-Times opinion piece on the deal
City press release from March 2009, addressing issues resulting from the transition to the new meters.
April story in the Chicago Reader, covering the problems with the deal