The profit came out of $91.6 million in meter revenue in 2020, down 33% from the year before, a new audit shows. With 62 years to go on a 75-year lease, the private company has already recouped its entire $1.16 billion investment and $500 million more.
Chicago parking meter revenues should bounce back to pre-pandemic levels and then some as the city roars back to life and installs hundreds of new meters in Montrose Harbor and busy neighborhood streets tied to Mayor Lori Lightfoot’s 2021 budget.
But even before that comeback, private investors who leased Chicago’s parking meters managed to survive the darkest days of the pandemic and still make a $13 million profit.
Even as many city residents kept their cars close to home as they worked remotely, Chicago’s parking meter system generated $91.6 million in revenue in 2020, a new audit shows. That’s only down 33% from the $138 million the year before.
With 62 years to go on the 75-year lease, Chicago Parking Meters LLC has already recouped its entire $1.16 billion investment and $500 million more.
What’s more, four underground city-owned parking garages took in $16.2 million, down from $34.8 million in 2019. Thanks to another increase in tolls, the privatized Chicago Skyway generated $84.8 million, down just 7.8% from $92 million the year before, separate audits of those assets show.
Not a penny of those revenues went to ease the burden on Chicago taxpayers forced to absorb a $94 million property tax increase in 2021 and annual increases after that tied to the consumer price index.
That’s because all three assets were unloaded by former Mayor Richard M. Daley, who used the money to avoid raising property taxes while city employee pension funds sunk deeper in the hole.
Deal dates to 2008
Of the three deals, the 2008 parking meter deal has been the biggest political nightmare for the two mayors who inherited it and for Chicago aldermen who gave it lightning-fast approval.
There were steep rate hikes initially, including to park downtown, which went from $3 an hour in 2008 to $6.50 an hour in 2013. Those meters are now $7 an hour.
Motorists were initially so incensed by the rate hikes, they vandalized and boycotted meters, leading to a dramatic drop in on-street parking. Revenues recovered until the pandemic.
The latest financial report by KPMG provides even more proof of how great the deal was for the private investors who hail from as far away as Abu Dhabi.
Although Chicago Parking Meters LLC lost a third of its annual revenue last year, the system still generated enough money to spin off a $13 million distribution to investors. The revenue total was way higher than the $23.8 million in meter payments in 2008, the year before CPM took over the system.
The company’s operating costs dropped during the pandemic — from $7.3 million to $4.7 million. And investors were able to recoup another $6.8 million through a provision of the contract that requires the city to reimburse investors for every space taken out of service.
That’s in part because throughout the pandemic, the city has closed streets and taken scores of meters out of service to allow restaurants to serve customers outside after they were forced to stop serving patrons indoors during the height of the pandemic.
Still, it’s less than those “true-up payments” were before, like in 2012, when they added nearly $27 million to the meter company’s bottom line before then-Mayor Rahm Emanuel was able to tweak the fine print in 2013.
$2.1 billion and counting
Factoring in the newly reported figure for 2020, private investors have already extracted $2.1 billion from the deal, in part by refinancing three times. The latest refinancing — for $1.2 billion — was completed in 2019.
If, as expected, parking revenues return to $100 million-a-year levels, the company should end up making nearly six times more than investors put in.
Results of the latest audits were provided to the Chicago Sun-Times by attorney Clint Krislov. As the director of IIT Chicago-Kent’s Center for Open Government Law Clinic, Krislov has reviewed dozens of transactions to date and provides an annual analysis of each year’s results.
“People looking for fast cash usually get a bad deal — and they did get a bad deal on all three of these,” Krislov said Friday.
“These sales of assets have already cost the city $5 billion to this point and will, over the course of the deals, deprive the city of two or three times that. Cash the city needs and could have had for itself. That’s the most infuriating part. The city could have hired the same people to do this for them and financed the improvements itself.”
Skyway deal worse, lawyer says
Although the parking meter lease is the deal aldermen and their constituents love to hate, Krislov argued it “pales by comparison” to the Skyway deal.
A decade after investors gave the city more than $1.83 billion to lease the Skyway for 99 years, the rights to run the privatized highway and pocket escalating tolls were sold to a consortium of three Canadian pension plan for $1 billion more than the original price.
“That was a $1 billion profit over 10 years that the city would have had,” Krislov said.
“They’re making a 23% annual return on their initial investment. And that has 85 years to go.”
Krislov tried to get the meter and garage deals declared illegal on grounds the city can’t legally sell the public way.
He further claimed the garage deal both restricted development in the Loop and subjected the city to giant penalty payments, like the $62 million the city spent to compensate the owners of the Millennium Park and Grant Park garages for allowing the Aqua building, 225 N. Columbus Dr., to open a competing garage.
Both lawsuits were thrown out after the Emanuel administration defended the deals.
Shortly before taking office, then-Mayor-elect Lori Lightfoot vowed to take a fresh look at the parking meter deal and try to find some way to either break the lease, shorten it or sweeten the sour terms for taxpayers.
She called it a “burr under your saddle” that “keeps rubbing and rubbing,” but her administration has since done nothing to remove it.