Editor’s note: We asked readers to share their thoughts about Chicago’s parking meter deal. Here are their letters.
Chicago may have a once-in-a-generation opportunity to improve one of its most controversial financial transactions. The proposed assignment of the parking meter lease to a new owner requires City Council approval, creating a rare window to determine whether the agreement can be strengthened before ownership changes hands. Chicago should view this not as a routine approval, but as an opportunity to seek a better outcome for taxpayers.
Rather than simply approving the transfer, the city should assemble a team of experienced municipal finance professionals, investment bankers, infrastructure investors and legal experts to determine whether the lease can be financially reengineered. Their assignment should be to prepare a revised term sheet that lowers long-term financial and public costs, improves operating flexibility and creates measurable public value.
No one should assume the city can dictate new terms. But neither should it allow the prospect of litigation to end the conversation before it begins. A change in ownership creates a rare opportunity to explore whether a mutually beneficial restructuring is possible. If a better agreement can be achieved, this is the moment to pursue it before the opportunity disappears for another generation.
This is more than a contract assignment. It is a leadership test. If you want to be mayor, don’t just tell us what went wrong. Show us how you would make it right. Assemble the financial, legal and negotiating talent needed to determine whether a better deal is possible.
Chicago deserves leaders who solve problems, not simply inherit them.
— Tim Carew, Chicago
Daley belongs in Hall of Shame
In 1979, a friend of mine broke up with his girlfriend. He spent the rest of his life agonizing over that decision. He’d have done better to just move on.
Of course, Chicago’s parking meter deal was a travesty. That, the Skyway sale and the decision to stop making contributions to the Chicago Teachers’ Pension Fund (which was nearly fully funded in the 1990s) all seemed to be part of Mayor Richard M. Daley’s plan to have money to throw around, increasing his popularity and getting him reelected.
I’ve always said there should be a Chicago Hall of Shame. We can put Daley’s bust next to those of the McCaskeys.
Nonetheless, it’s time to move on. Mayor Brandon Johnson’s plan to offer a price for the meters well above what others offered should be a cautionary tale. It’s not just the prospect of overpaying, but also the probability that the city would run the program less efficiently than a private company, placing another financial burden on a city that can’t afford it. However, that doesn’t mean the city shouldn’t use whatever leverage it has over the sale to strike a better deal, though I suspect that leverage is limited.
As to attorney Dan Webb threatening to bankrupt the city if it tries to use that leverage, there is still room in the Hall of Shame.
— Gene Sweet, Chicago
Negotiate for more flexibility
Chicago has an opportunity. We can’t reverse or terminate the awful 2008 parking meter deal put in place by the Richard M. Daley administration. It was and continues to be an albatross around the neck of taxpayers. Any thought of Chicago bidding to buy back the meters is pure fantasy, given our weak financial condition.
But the proposed Stonepeak transfer does provide an opportunity to make an awful deal slightly less awful. The transfer requires a vote by our City Council. I would use that leverage to wrangle some concessions from the proposed purchaser Stonepeak. Let’s ask to unwind the “true-up” provisions that penalize the city for removing meters and get more flexibility to manage streets and relocate meters for construction and festivals, for example.
Stonepeak is eager to close the deal, and if the consortium leasing the meters wants to sell the lease, they can adjust the price (which is of no concern to Chicagoans). This requires our City Council to hold firm in the face of threats of the litigation or perhaps even the commencement of litigation.
In moments like this, City Council members should put aside their differences and come together for the common good of their constituents. The stakes are high, but the parties involved in the sale are motivated and would certainly take a slightly altered deal to no deal at all.
This wouldn’t make a bad deal good, but it would at least provide Chicagoans with a little relief from a miserable situation.
— Dean Gerber, Chicago
To Daley, everything was for sale
When I come to Chicago and see parking meters lined up alongside the curbs, I can’t help thinking about the legacy of Mayor Ricard M. Daley and his own peculiar art of the deal. In his hands, everything was for sale, even if, in the long term, it wasn’t profitable for the city he supposedly loved.
Those parking meters are a lasting reminder that short-term fixes have lasting consequences.
— Bob Ory, Elgin
No valuation of asset is needed
Ald. Jason Ervin’s proposal to create a public infrastructure trust whose first task should be getting an independent valuation of the parking meter concession demonstrates why the city is in such dire financial straits. There is no need to spend taxpayer dollars to get a third-party valuation of the asset. We already have a very precise one. It’s worth the $2.5 billion that a private party using its own private investment capital has already negotiated for the purchase of the parking meter lease. Or roughly $700 million less than the city administration’s offer.
— Kevin Jarchow, Chicago
Reacquiring meters a bad idea
In a July 19 editorial (“Ald. Ervin’s outside-the-box parking meters plan deserves City Council attention”), the Tribune Editorial Board argues that the City Council should pay attention to Ald. Jason Ervin’s plan to have the city outbid Stonepeak for the parking meters currently being leased by Chicago Parking Meters LLC. I agree that the council should consider Ervin’s plan — for about five minutes.
Chicago withdrew its original $3.2 billion bid for the meters not only because the acquisition’s size would further imperil the credit rating of a financially shaky city. The city also realized that, given changes in commuting and transportations patterns, the revenue streams are too uncertain to justify such an investment, regardless of the financial condition of the buyer. The revenues would be even more uncertain under city ownership due to political pressure to keep parking affordable. Potential bond investors would certainly be aware of this, increasing the cost of, or rendering impossible, the debt financing necessary to make the deal work for its equity holders, i.e., the pension funds in this case.
More obvious, if taking out CPM would be too risky for the city, why would it be any less so for the pension funds, which are financially even more rickety? One could logically argue that a deal that doesn’t make sense at $3.2 billion might make sense at $2.5 billion, but $2.5 billion constitutes close to 20% of the combined assets of all four of Chicago’s pension funds. The deal would be done with lots of leverage, so the actual investment of the funds would be far less than its total cost. However, especially given the political risks to the meters’ revenue streams, bond investors would demand some kind of financial backstop, and neither the pension funds nor the city is in a position to be backstopping bond investors in bonds with such obvious risks and commensurate yields.
Imagine the outcry if workers’ pensions were to be further imperiled in order to bail out bond investors.
The editorial board argues that skeptical aldermen would need guidance from outside financial experts when considering Ervin’s scheme. Would these be the same financial experts who came up with the mayor’s $3.2 billion bid when the winning bid was $700 million lower?
The city is in no position to take back its parking meters. The pension funds are in an even worse position. Some will urge aldermen to keep an open mind, but this is clearly a situation in which sensible people should not let their minds be so open that their brains fall out.
— Mark M. Quinn, Naperville
Classic maneuver by the machine
I propose an investigation into everyone who voted for the abominable parking meter contract, as well as an audit of where the money went. This was classic Chicago Democratic Party maneuvering. I also propose an ordinance requiring that no city contract exceed a term of three years.
It is no wonder the Chicago Bears are planning to leave Illinois. The citizens of Chicago and Illinois do not trust their leadership to manage taxpayer money in a way that keeps teams in the city.
Has a graduate student or journalist written a book detailing what may be the worst contract deal in history? I will be waiting for that book.
In the meantime, go White Sox!
— Roberto Garcia, Chicago
Consider boycotting the meters
The Montgomery, Alabama, bus boycott changed minds about racial injustice. An organized boycott of Chicago’s parking meters by users could force the current entity leasing the meters to want to sell the meters back to Chicago. Why? To end monetary losses that they would incur after profiting from their investment in such a short time.
In my opinion, anyone who examines the terms of the contract has to acknowledge that this contract was foolish. The incentive to boycott should be the promise of lower rates in the future, instead of higher profits for the present or future lessee.
— Rudy U. Martinka, Elmhurst
Submit a letter, of no more than 400 words, to the editor here or email letters@chicagotribune.com.
