Money on the Table…
One of my biggest complaints (there are many) about Public Private Partnerships on parking is that it is difficult for the city to determine just how much money is being left on the table. According to Bloomberg Morgan Stanley and its partners may earn as much as 10 times what they paid for the on street lease. Yep, as much as $9.5 BILLION. WOW!. That’s 80 cents for each dollar of revenue. Just to put it in perspective, Standard Parking earned 4.84 cents per dollar of revenue last year.
So for a quick upfront payment of a billion, Chicago left as much as $8.5 billion on the table. I realize many feel it’s impossible for the public sector to generate the kind of revenue that the private sector can, but cities such as Indianapolis are rethinking their PPP and looking at a revenue sharing process and also writing in escape clauses so they can bail on the lease down the road if they feel it’s in the best interest of the city.
Mayor Daley and the City of Chicago moved very quickly in cutting their deal. Maybe a tad too fast. The deal has become a hot potato in the city’s mayoral election, with all three major candidates, including former senator Carol Moseley Braun and Former White House Chief of Staff Rahm Emanuel have spoken out strongly against the lease, with Moseley-Braun calling for breaking it and lending her name to a lawsuit against the city concerning the lease.
Ah, parking – the third rail of local politics.