From Chicago Sun-Times · · 2m
Chicago Parking Meters Deal Compromise
Chicago City Council faces Sept 30 deadline to approve $2.53 billion Stonepeak Partners parking meters deal after 2008 privatization backlash.
In brief
Chicago City Council faces Sept 30 deadline to approve $2.53 billion Stonepeak Partners parking meters deal after 2008 privatization backlash. Chicago City Council must approve Stonepeak Partners' $2.53 billion bid for parking meters by Sept 30, with a $75 million transfer fee and 5% net income share to taxpayers…
2008 Parking Meters Deal
Chicago City Council must approve Stonepeak Partners' $2.53 billion bid for parking meters by Sept 30.
“The City Council is facing a Sept. 30 deadline to either approve New York investment firm Stonepeak Partners’ $2.53 billion bid to acquire Chicago parking meters, or roll the dice in arbitration and in court.”
2008 Privatization Deal
In 2008, then-Mayor Richard M. Daley leased city’s 36,000 parking meters for 75 years to a private consortium for $1.15 billion.
“In 2008, then-Mayor Richard M. Daley leased the city’s 36,000 parking meters for 75 years to a private investment consortium for $1.15 billion.”
2008 Deal Consequences
Parking rates rose from $3 an hour in 2008 to $6.50 an hour in 2013, with broken meters causing widespread complaints.
“Rates downtown, for example, rose from $3 an hour in 2008 to $6.50 an hour in 2013. But broken and frozen pay-and-display boxes, along with overstuffed and improperly calibrated meters that overcharged motorists, made it even worse.”
2008 Deal Costs
City paid $15.5 million to compensate investors after pandemic-era scheme authorized by former Mayor Lori Lightfoot.
“Last year, Chicago taxpayers were forced to spend $15.5 million to compensate the investment team that leased the meters, thanks to a risky pandemic-era scheme authorized by former Mayor Lori Lightfoot.”
Current Bid Situation
Mayor Brandon Johnson abandoned $3.2 billion bid after determining risks of undoing parking meter deal outweighed rewards.
“Without consulting the Council, Mayor Brandon Johnson submitted a $3.2 billion bid that turned out to be hundreds of millions of dollars higher than the competition. But the mayor ultimately abandoned the offer after determining the risk of undoing the parking meter deal was not worth the reward, either financially or politically.”
Stonepeak Partners Bid
New York investment firm Stonepeak Partners emerged as winner with $2.53 billion bid pending City Council approval.
“After the city dropped out, New York investment firm Stonepeak Partners emerged as the winner with a $2.53 billion bid, pending City Council approval by a revised, Sept. 30 deadline.”
Council Compromise Terms
City receives $75 million transfer fee at closing and 5% of net income going forward.
“They negotiated an agreement that calls for the city to receive a $75 million transfer fee at closing and 5% of net income going forward, or $376.2 million over the course of the agreement.”
Stonepeak Additional Agreements
Stonepeak agreed to sell Omni Air International and explore non-metered city blocks for electric vehicle charging.
“Stonepeak has also agreed to sell Omni Air International, an airline that has provided long-haul deportation flights for the Department of Homeland Security during President Donald Trump’s deportation campaign. And it has agreed to explore creating entire non-metered city blocks as `potential electric vehicle charging stations with charging revenues shared with the city.'”
Council Approval Challenge
Council needs 26 votes to approve deal, with alderpersons considering additional concessions.
“With aldermanic elections less than five months away, some alderpersons may want to push the envelope to see if they get some kind of a break for motorists.”
Legal Risk of Rejection
City could face financial catastrophe if deal is rejected, with arbitrator warning of billions in liability.
“Former U.S. Attorney Dan Webb, who represents the investment group, wrote a letter to the mayor in June warning the city could face `financial catastrophe' if the sale to Stonepeak Partners is rejected.”
2008 Deal Impact
City paid $15.5 million to compensate investors after pandemic-era scheme authorized by former Mayor Lori Lightfoot.
“Last year, Chicago taxpayers were forced to spend $15.5 million to compensate the investment team that leased the meters, thanks to a risky pandemic-era scheme authorized by former Mayor Lori Lightfoot.”
Mayor's Role
Mayor Brandon Johnson abandoned bid and threw political hot potato to City Council.
“Mayor Brandon Johnson abandoned the city’s bid, washed his hands of the matter and threw the political hot potato in the City Council’s lap.”
Council Action
Finance Chair Pat Dowell and veteran alderpersons negotiated compromise to make lemonade from lemons.
“Finance Chair Pat Dowell (3rd) said she and other veteran alderpersons `took the bull by the horns and did the work' to try and, as she put it, `make lemonade out of lemons.'”
Next Steps
City Council must approve Stonepeak Partners' deal by Sept 30 or face legal penalties.
“The City Council is facing a Sept. 30 deadline to either approve New York investment firm Stonepeak Partners’ $2.53 billion bid to acquire Chicago parking meters, or roll the dice in arbitration and in court.”
What Happens Next
Council approval could cost city millions if deal rejected, with legal risks of financial catastrophe.
“If the city breaches the 75-year lease with the result that the sale to Stonepeak collapses, that will destroy value measures in the billions of dollars for which the city will be held legally responsible”
The bottom line
Chicago City Council must approve Stonepeak Partners' $2.53 billion bid for parking meters by Sept 30, with a $75 million transfer fee and 5% net income share to taxpayers.
