Successful Negotiation of Revised Parking Meter Deal
Finance Committee Chair Pat Dowell (3), Ald. Nicole Lee (11) and Ald. Scott Waguespack (32) announced on Tuesday that they have completed successful negotiations for a revised parking meter deal with Stonepeak Partners that includes numerous new benefits for the City of Chicago. In addition to Alders Dowell, Lee and Waguespack, Ald. Walter “Red” Burnett (27) and Ald. Gilbert Villegas (36) also played a key role in negotiations, along with representatives from the City and special counsel for the City Council.
The original deal to privatize the parking meters, passed in 2008, has been much maligned in the years since. I have called it the worst deal in the history of all municipal deals in the U.S.
Stonepeak attempted to buy the City’s parking meters earlier this year, but the proposed deal stalled amid objections from alders. The Mayor also attempted to buy the meter system back without public notice, but also bid $850 million more than the next lowest bidder. That attempt at a purchase was also followed by months of a non-disclosure agreement that kept all details out of the public record and away from any oversight by the City Council while running out the clock on the sale deadline. Since then, a group convened by Chairwoman Dowell met to seek a more amenable agreement. If the sale is not made by September 30th, Chicago Parking Meters could immediately force arbitration and seek other legal measures that would likely end up with the City being forced to approve the deal as it presently exists and pay legal fees.
The terms of the agreement we negotiated include:
Omni Sale: A commitment from buyer Stonepeak to sell Omni Air International, confirmed via a certified document, following federal approvals. Stonepeaks’ ownership of Omni sparked concern among the City Council earlier this year, given the long-time role Omni has played in Homeland Security/ICE operations that have severely impacted Chicago residents.
Transfer Fee: A transfer fee of $75 million to the City at the closing of the sale. Any future transfer will require that the City receive an additional transfer fee of 2 percent of the sale price. Any revenue from the current or any future transfer fee will be directed to the City’s pension liability.
Profit Sharing: Profit sharing for the City equal to 5 percent of CPM’s net operating income annually. This is expected to yield $376.2 million for the City of Chicago over the course of the remainder of the agreement. That revenue will also be directed to the City’s pension liability.
Future Transfer Procedure: A future transfer procedure that requires that in any future transfer of the asset, the Chief Financial Officer will have 30 days to review the approval request from CPM and submit a recommendation to the City Council. The City Council will then have up to 90 days to consider the approval request and approve or disapprove the proposed transfer.
Temporary Event Closure: A temporary event closure plan allowing that for seven annual events, the usual hourly threshold for closure payments from the City will be increased from six hours to 10 hours. If closure payments are due for any of these events, the payments will be made by the City from available settlement credits or, if credits are unavailable, from convenience fee or reserve meter revenue.
EV Charging: CPM and the City will examine establishing certain non-metered blocks as potential electric-vehicle charging stations. Once such blocks are designated by the City, CPM will operate these blocks, and the revenue generated will be shared between the City and CPM.
Enforcement Staff Protections: The Concession Agreement will include a section prescribing appropriate standards for treatment of the enforcement staff, both internally and in interactions with motorists.
Chicago Residency: CPM will be required to ensure that at least 50 percent of its employees and the employees of LAZ working on the metered parking system are Chicago residents. CPM also will be required, in connection with its annual reports on this requirement, to specify the percentage of such City residents who are residing in socio-economically disadvantaged areas of the City (as identified under rules promulgated by the City's Department of Planning and Development pursuant to Section 2-92-390 of the Municipal Code).
Data Sharing: CPM will be prohibited from sharing its information about users of the system with immigration enforcement authorities.
Meter Overpayment: CPM will be prohibited from collecting parking fees from motorists parking at metered spaces while such spaces are temporarily closed, or during time periods outside the hours of operation for such spaces.
In 2008, I was one of five who voted against the original deal, citing the infrastructure and management issues as well as providing the only alternative financial estimates that proved the deal was worth at least the $5 billion we estimated in 2008. While I have been one of the loudest critics of the deal ever since it was passed, I have worked to find ways to lessen the financial burden the deal put on taxpayers of Chicago. I realize this always seemed to be an ironclad deal based on years of lawsuits, arbitration, and settlements, but through our negotiations with the sellers and buyers, we were able to break it open and make significant changes. There is much more work to be done on the deal once the first part passes Council, but I am certain that is absolutely the best pathway we could get, and I look forward to our hearings in the Finance Committee and the full City Council.