Nearly two decades after a $1.15 billion deal privatized Chicago's parking meters, a window has opened to seize the valuable asset back from private investors.
Mayor Brandon Johnson’s administration is at least exploring the idea. But the mere discussion of the multibillion-dollar acquisition raises more questions than it answers.
Chief among them is whether a city already saddled with more debt per capita than any big city in the nation should borrow billions more to buy out the 57 years that remain on the parking meter deal that Chicagoans love to hate.
“The original deal was a disaster for taxpayers, and we have to make sure that we don’t compound that disaster,” said Ald. Bill Conway (34th), vice-chair of the City Council’s Finance Committee.
Conway, a former investment banker who still teaches finance at DePaul University, said the leveraged buyout would use meter revenue as collateral on the loan.
Whether or not the “math works” would depend on the interest rate on the borrowing and the annual growth in parking meter revenue. That would come amid a fast-changing landscape for parking demand that factors in self-driving vehicles and robot deliveries and congestion fees that discourage people from driving Downtown.
The meters generated roughly $160.9 million in 2024, audits show.
“Do we think we could grow that over the next 57 years? If we were to think that we could grow that at, say, 3% a year, what kind of value does that have?" Conway asked. He also wondered whether the city could save money by no longer having to pay "true-up" costs which are due to the investors to keep them whole whenever meters are taken out of service.
Based on “previous missteps,” Conway said he has “little trust” that the mayor’s office can “put together a good deal,” let alone “provide the collaboration necessary” to get an acquisition agreement through the City Council on the heels of the budget stalemate.
“Look at how hard they tried to get together a city-run grocery store, and they couldn’t seem to pull it off," Conway said. "And now you’re talking about a multibillion-dollar deal."
Ald. Scott Waguespack (32nd) cast one of only five “no” votes against the parking meter deal in 2008.
Waguespack said he has known since last summer that Morgan Stanley, Allianz Capital Partners and the Sovereign Wealth Fund of Abu Dhabi were looking to unload Chicago parking meters and inviting potential bids.
Waguespack said he has serious questions about the city's ability to enter the competition.
“Do we have $2.5 billion or $3 billion that we could put together to purchase the meters? Yeah, we probably could, but think about the interest on that,” Waguespack said. "It would be astronomical.
“And I’d be very concerned about the administration doing this, because you’re not gonna have [departing Chief Financial Officer] Jill Jaworski at the table. A lot of the people who have worked on this before are out the door. And there’s a lack of transparency in the way they’ve done everything from the budget to procurement.”
Citing non-disclosure agreements, senior mayoral adviser Jason Lee was tight-lipped about the possibility of taking back the parking meters.
Lee would only say that the mayor would speak with the City Council “at the right time.”
“I don’t know if you have a choice as a mayor but to look at stuff that comes across the desk. It doesn’t mean you do anything. But, you’ve got to look at everything. You can’t just say, `I’m not gonna look,’ because you never know,” Lee told the Sun-Times.
Chicago Parking Meters LLC refused to comment.
Steve Koch served as deputy mayor under former Mayor Rahm Emanuel, who managed to tweak the fine print in the parking meter deal by reducing the city’s liability and by increasing the hours and days motorists pay for parking.
Instead of buying back the meters, Koch said the city would be better off leveraging the authority it has to approve an ownership transfer. That way, the mayor's office could negotiate certain changes that benefit the city before allowing a deal to go through.
“I would tell them there’s a fart in hell’s chance of selling this thing unless you deal with us first, and here’s the concessions we want,” Koch told the Sun-Times.
The parking meters, the Downtown garages and the Chicago Skyway were all unloaded by then-Mayor Richard M. Daley, who used the money to avoid raising property taxes while city employee pension funds sank deeper in the hole.
Of those three deals, the parking meter lease has been the biggest political nightmare for the three mayors who inherited it and for Council members 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. It’s now $7 an hour.
Motorists were so incensed by the rate hikes that they vandalized and boycotted meters, leading to a dramatic drop in on-street parking. Revenue eventually recovered — until the pandemic.
Koch noted that Daley “front-loaded money and back-loaded obligations” on the parking meter deal.
“You need to try to unwind all that,” Koch said. “You need to unwind the true-up provisions. You need to get greater flexibility for the city to manage streets. You need greater flexibility in moving around meters. It’s 20 different things.”
Even though there’s talk about it, Koch said he does not believe the city will pull the trigger on a meter buy-back.
“It would require a huge amount of capital. … You’d be under political pressure to alter rates, to do a bunch of things. I don’t know why you’d want the distraction. Get what you want through the leverage of approval, and move on,” Koch said.
The 75-year, $1.15 billion deal that privatized Chicago parking meters was so lopsided in favor of private investors that a $15.5 million settlement to resolve their most recent claims was a comparative victory.
That was the story last year when the City Council agreed to pay that amount to resolve claims that stemmed in part from a pandemic-era scheme devised by former Mayor Lori Lightfoot.
“This is our first win in a series of losses on this deal — and it still doesn’t feel like a win,” Waguespack said on that day.
