The 75-year, $1.16 billion deal that privatized Chicago parking meters was so lopsided in favor of private investors that a $15.5 million settlement to resolve their most recent claims is a comparative victory.
That was the story line on Monday as the City Council’s Finance Committee agreed to pay that amount — plus $7.2 million in attorneys’ fees — to resolve claims that stemmed in part from a pandemic-era scheme devised by former Mayor Lori Lightfoot.
“This is our first win in a series of losses on this deal — and it still doesn’t feel like a win,” said former Finance Chair Scott Waguespack (32nd), who cast one of only five votes against the parking meter deal that Chicagoans love to hate.
The settlement is further proof that the Council “rushed through a deal that wasn’t fully open, wasn’t fully transparent” and “should have been shelved,” Waguespack said, a deal created simply to help then-Mayor Richard M. Daley avoid raising property taxes.
Waguespack noted that private investors from as far away as Abu Dhabi have already raked in nearly $2 billion— and a record $160.9 million last year alone — with 58 years to go on the deal with Chicago Parking Meters LLC.
“It’s very frustrating to read that document and see … how ironclad this deal is and how legal minds look at it in favor of CPM pretty much no matter what happens,” Waguespack said. “It’s so tight that it exceeds the death and destruction of a pandemic. … Even a pandemic … once in a century couldn’t break it open.”
Ald. Ray Lopez (15th) was incredulous to learn that CPM did not seek a forgivable Payroll Protection Program loan like “every other business” did during the pandemic. Instead, the company is turning to the same taxpayers broadsided by the lopsided deal to compensate the company for its losses.
“All of Chicago needs to know that these are not people who have our interests at heart — who willfully are trying to stick it to us at every turn,” Lopez said.
Noting that CPM generates $8 million a year in credit card processing fees, Lopez said, “If they’re gonna look at us as their proverbial cash cow, perhaps we should start looking at the same.”
Downtown Ald. Brendan Reilly (42nd) asked Deputy Corporation Counsel Jim McDonald who Mayor Lori Lightfoot consulted before she tried to devise a way to try use the pandemic to the city’s advantage. Her goal was to reduce or eliminate so-called “true-up” payments requiring the city to compensate Chicago Parking Meters each year for meters taken out of service.
Lightfoot’s plan called for the city to reclaim 4,007 parking spaces as the pandemic shutdown dramatically reduced the value of those spaces, then return 2,646 of those spaces to CPM two months later, keeping 1,361 spaces for the city.
“We may have consulted Katten Muchin, the outside firm that drafted the concession agreement,” McDonald responded to Reilly.
Reilly countered, “We may have sought the counsel of the folks that crafted this horrible deal? That’s not an encouraging answer. I’d say that’s probably the last law firm we’d want to approach for legal advice on a contract that’s been killing taxpayers for quite some time now.”
CPM initially demanded $322 million to resolve three legal claims stemming from: the city’s alleged failure to enforce meter violations as required under the concession agreement; the suspension of parking tickets during the height of the pandemic; and a subsequent dispute over the distribution of meter revenue between the city and private investors.
The pandemic dispute was resolved by the $15.5 million cash payout, plus $7.2 million in legal fees. The city gets to keep $26.2 million in parking meter revenue.
The other two issues were resolved at no cost to the city. The city agreed to hire 10 more parking enforcement aides for one year at a cost of roughly $520,000. But each of those $52,000-a-year employees is likely to write enough tickets to generate $490,000 in revenue, McDonald said.
Pedestrian and Traffic Safety Chair Daniel LaSpata (1st) noted that, “Anyone in this room could talk about where their neighbors would like to see more enforcement activity.”
LaSpata said he would “prefer not to see this company … being the one designating where that enforcement action happens.”
McDonald said it “makes sense” for the city to collaborate with CPM because the company has enforcement personnel of its own. But he added, “Enforcement is definitely the city’s prerogative. CPM has no contract rights to tell us where our personnel must be.”