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Chicago is Whining, Parking Revenue Flowing

Headline in the Chicago Sun Times:

Parking meter deal keeps getting worse for city as meter revenues rise

This goes to the 2008 deal where Mayor Daley of Chicago basically sold (leased) the on street parking operation to a group of investors for just a tad over one billion dollars. The system was collecting about 30 million a year. The city received the billion and has be whining about the deal ever since.

As soon as the private sector took over the operation, the income began to skyrocket. Today the parking operation is generating about $130,000,000 per annum. But the rates have only doubled. So why is an extra 60 mil a year being collected?

The current mayor (Rahm Emmanuel) is complaining about the terms of the agreement. It seems that if the city decides to close a street or block some parking spaces (for a parade or whatever), then the city has to reimburse the private company that contracted for the parking system for the lost revenue. Politicos think this is unfair. Those of us who work for a living understand.

Let’s see. I’m leasing some space that you own. You decide a year later that some of the space is needed for other purposes. Now I can’t use that space. But I’m still supposed to pay for it?  I don’t think so.

The real problem is two fold.

First, the city was not able to collect all the money from the parking operation nor able to efficiently write the citations required to force that collection. The private company understand that money and collecting same is important and does it.

Second, it is extremely difficult for politicians to raise parking fees. It takes a lot of political will. Private companies, particularly if there is no competition, can do so at will. Understand however, that they didn’t do so at will. The schedule for fee increases, at least for the first few years, was built into the contract. All agreed to up front by the city of Chicago in exchange for one billion dollars.

The citizens of the windy city are upset. The deal was inked basically in the dark of night, shepherded through the approval process in two weeks. Now those same citizens are complaining about the deal and continue to do so.

Hizzonner the Mayor says it’s not his fault. He was not in office at that time. That well oiled machine that makes Chicago “the city that works” didn’t think the deal was important enough to see the light of day, and after all, 30 million a year isn’t that much when compared to a billion.

Did Chicago get screwed? No, of course not. They sold an asset, got paid, and have to live with the result.

The deal isn’t changing as the headline in the Sun Times says. The efficient private sector is doing what it always does. Its maximizing the bottom line. Cities should take a lesson from that.

JVH

 

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