The Wonders of Privatization
[Richard A. Chapman, Chicago Sun-Times]
It seems that in 2008, the city of Chicago sold its parking meter concession to a private investment company, Chicago Parking Meters, for 75 years for a one-time payment of $1.15 billion.
Is that a good deal for the city? To have an idea, we would need to know what the annual revenue is. A sidebar in a Chicago Sun-Times article today has the numbers. The city took in $23.8 million in 2008. Chicago Parking Meters has taken in $45.6m, $71.2m ,and $82.8m in the three full years since.
Which brings us to the point of today’s Sun-Times article. (Hat tip: Atrios.)
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.
I’m thinking Chicago Parking Meters got a pretty good deal. I’d love to pay a little over a billion up front — if I had the change sitting around — and get their rate of return. Plus, it will keep growing.
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.
Who did ante up that billion?
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.
What could Mayor Daley have been thinking?