Chicago Parking Meter Lease Deal: The Gift That Keeps On Giving

Former Chicago Mayor Richard Daley has been heavily criticized for a one-sided, 75-year lease his administration negotiated with a private company to operate the city's parking meter assets. Under the deal, Chicago received an upfront payment of $1.15 billion for a lease agreement that allows the private company to operate, maintain and retain all of the revenues derived from the city's parking meters throughout the life of the lease. A separate Illinois law has long required municipalities to provide free parking to handicapped and disabled persons. The lease agreement allows the private company to submit a bill annually for the amount of revenues it reports it lost due to persons parking at meters who paid nothing because of their disability. Not surprisingly, the number of people claiming to be disabled has increased along with the higher parking meter fees being charged by the private vendor. The latest eye-popping bill sent to the city, $13.5 million, which Mayor Rahm Emanuel is disputing and refusing to pay according to the Sun-Times. Apparently, one in every 13 vehicles is now occupied by a disabled person:

Using a formula outlined in the 521-page meter deal championed by former Mayor Richard M. Daley, Chicago Parking Meters calculated that drivers who displayed disabled-parking placards and plates got $17.9 million worth of free parking for the yearlong period.

The formula calls for Chicago Parking Meters to absorb some of that cost, based on a percentage of its annual revenues. But, for 2010-2011, the formula capped the level of free disability parking that the company had to provide at $4.4 million — with the city’s taxpayers left to pick up the $13.5 million difference, according to documents obtained by the Sun-Times.

Mayor Rahm Emanuel, who succeeded Daley on May 16, is disputing the bill and has yet to pay anything to Chicago Parking Meters.

Still, a mayoral spokeswoman concedes that the company’s audit “illustrates that the city has long been losing parking revenue as a result of” disabled-parking cheating and said, “It is time to reform the process of issuing placards and enforcing the law.”

A Sun-Times investigation last month found widespread disability-parking abuses in Chicago. The number of parking tickets and court cases involving placard abuse is on the rise, with able-bodied people using relatives’ placards, fake placards and even stolen placards to park for free.

“Their crime hurts every Chicago taxpayer,” Emanuel spokeswoman Kathleen Strand said.

There’s now one disabled-parking placard in circulation for every 13 passenger vehicles throughout Cook County.

An interesting, though not surprising, passage references unsuccessful attempts by the Sun-Times to reach former Mayor Richard Daley at the law firm where he and several of his former top aides now work:

Daley, his former corporation counsel and two former press aides now work at Katten Muchin Rosenman LLP, the law firm that handled the negotiations that led to the city’s trading its right to collect all meter revenues until 2084 in exchange for an upfront payment of $1.15 billion to City Hall. Katten got $662,760 in fees on the deal, the Sun-Times has reported. The firm did not respond to requests for comment.

Daley's law firm got paid $662,760 to negotiate the much larger 75-year lease agreement for Chicago's parking meter lease deal. According to an Indianapolis Star report on Indianapolis' parking meter lease deal, the administration of Mayor Greg Ballard paid Ice Miller $950,000 for the legal work it performed on the city's parking meter lease deal with ACS and its partners. Noted urban specialist Aaron Renn observed that the agreement Indianapolis originally reached with ACS looked like a cut-and-paste job of the Chicago lease agreement. Given the substantial reliance on the Chicago lease agreement used by the Ice Miller's attorneys, it is appalling that their bill was nearly 50% higher than Katten's legal bill, but I degress.

In Chicago, without the reimbursement for the disabled parking from the city, Chicago Parking Meters, LLC pocketed $72.3 million in parking meter revenues according to the Sun-Times:

If the city paid that amount in full, it would boost the company’s meter collections by about 19 percent — from $72.3 million to nearly $86 million for 2010. A more exact percentage can’t be determined because the company reports its finances for the calendar year, not the Feb. 28-to-Feb. 28 year used to calculate the “exempt persons annual excess loss” under which it’s seeking the additional payment from the city.

Yet another sign of members of the Daley administration cashing in on the deal:

Avis LaVelle, a former Daley press secretary who serves as a spokeswoman for Chicago Parking Meters, declined to comment.

Similarly, an employee of Mayor Greg Ballard's office, part of whose job was to sell downtown businesses and residents on the deal, went to work for ACS shortly after the Ballard administration announced it had awarded the company the 50-year lease agreement.

For now, Emanuel and the Chicago city council are trying to resort to tougher penalties against those who fraudulently use disabled parking placards to avoid paying the metered fees, which are currently as high as $5.75 an hour in the Loop. State legislation is also under consideration that would narrow the breadth of the exemption.

To date, the major complaint against Indianapolis' new parking meters installed by the private operator has focused on drivers complaining that the machines don't operate correctly. Drivers purchase time on the electronic meters, only to return a short time later to learn they weren't credited with the time they purchased and discover a hefty parking ticket on their windshields.