By on August 24, 2009

Motorists have been hard hit by the increase in the cost of parking in in Chicago, Illinois that began with a deal struck in February. In the central business district, for example, the cost to park for an hour doubled from $1 an hour to $2 and will quadruple to $4 an hour by 2013. Meters must also now be fed 24 hours a day, seven days a week. The hikes came after Mayor Richard J. Daley (D) leased the city’s 36,000 parking meters to Morgan Stanley for 75 years in return for an up-front payment of $1.15 billion. The Independent Voters of Illinois-Independent Precinct Organization (IVI-IPO), a liberal government reform group, fought back last Wednesday by filing a lawsuit hoping a judge would find the parking meter contract unlawful.


“This is a horrible deal for Chicago taxpayers,” IVI-IPO spokesman Owen Brugh said. “But IVI-IPO intends to hold the city accountable. Even the city of Chicago has to follow the law.”

The suit claims that the city has no legal right to use public resources to enforce parking regulations and repair the privately owned parking meters for the benefit of a private entity. This arrangement, the suit contends, violates Article 8, Section 1 of the Illinois Constitution which that states “public funds, property or credit shall be used only for public purposes.”

The group also argues that state law giving Chicago the right to “regulate the use of streets and other municipal property” does not give the city authority to lease those streets until February 29, 2084. The suit claims such long-term contracts are inherently invalid because they deprive future city councils of any control over the way the streets and parking meters are regulated.

IVI-IPO is upset that although Daley’s administration will have $1.15 billion to spend now, future generations of motorists could pay more than $3.5 billion in parking charges. If the city makes any improvements to city streets that eliminates a parking space, such as adding a crosswalk or bus stop, taxpayers must pay “damages” to Morgan Stanley.

IVI-IPO asked the Cook County Circuit Court to prohibit the Illinois Secretary of State from suspending the driver’s license of anyone who failed to pay a privately issued parking ticket. The group also wants an injunction that prohibits Chicago from spending any public money for the benefit of the parking meter program.

Morgan Stanley operates the meters under the name Chicago Parking Meters, LLC. A copy of the suit is available in a 700k PDF file at the source link below.

Source: PDF File IVI-IPO v. Lux (Illinois-Independent Precinct Organization, 8/19/2009)

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30 Comments on “IL Voter Group Sues to Overturn Chicago Parking Meter Privatization...”


  • avatar

    When are Americans gonna wake up and fight back against privatization of services that should be headed by the government?

  • avatar
    Robstar

    This is one of MANY reasons I’m glad I moved 40 miles outside of the city to Gurnee. 10.25% sales tax is another. The violence (read chicagobreaknews.com for a week and you’ll see what I mean) from the south/west sides has moved to the lincoln park ($$$) area.

    People use to tell me that I was nuts for going from a 7 mile commute to a 35 mile one. Believe it or not, the time to commute is the same!

    Hopefully I will see Chicago as a great place to live before I die (statistically in about 40 years) but I’m not holding my breath.

    Flashpoint> Daley snuck this one under the radar really quickly so people wouldn’t have a chance to get outraged/protest.

  • avatar
    TZ

    # Flashpoint :
    August 24th, 2009 at 8:11 am

    When are Americans gonna wake up and fight back against privatization of services that should be headed by the government?

    Probably about the same time that anti-government sentiment declines.

    Which would be right about never.

  • avatar
    danms6

    When are Americans gonna wake up and fight back against privatization of services that should be headed by the government?

    Maybe it’s a little early in the morning for me, but did you really just compare paying a parking meter and paying for open heart surgery?

  • avatar
    Corvair

    Supporting Robstar: This deal was rammed through the City Council with virtually no debate, because the Morgan Stanley offer ‘had to be decided on immediately, or it would expire’. Sounds an awful lot like our current Congress in Washington, DC.

    This isn’t the first Chicago privatization. They’ve already sold off the Chicago Skyway (connection to I-80 in the south) to a Spanish firm, and then some municipal parking garages to Morgan Stanley. The user fees on both of these are already heading for the stratosphere. Before the credit crunch hit, there was talk of selling off Midway Airport.

    Unfortunately, cities have an incentive to pursue this strategy. They get their money up front, and the private company can raise the fees to outrageous levels without the political consequences that elected officials would suffer.

  • avatar
    psarhjinian

    When are Americans gonna wake up and fight back against privatization of services that should be headed by the government?

    Never. The market is always better. It never makes a mistake. May His Holiness, St. Ronald Of California call the wrath of of God** down upon you for suggesting otherwise.

    That said, parking enforcement is probably one of those things that it’s safe (or at least worthwhile) to outsource to a subcontractor. I wouldn’t give the private sector certain things (health care, the military, education, utilies, self-regulation) but things like parking enforcement and garbage collection (but not disposal) are fine by me.

    ** “God: the only government we need”. I wish I didn’t see that bumper sticker as often as I do.

  • avatar
    johnthacker

    Unfortunately, cities have an incentive to pursue this strategy. They get their money up front, and the private company can raise the fees to outrageous levels without the political consequences that elected officials would suffer.

    The city could have insisted on lower rates if it wanted. And the City Council has to approve further rate hikes after the initial period. The city definitely saw this as a way to raise rates while shifting the blame, since it had not raised rates in years. In many cities, the public parking meter rates are low– but then the spaces are always full and you can never find an open meter when you need one, especially at peak time. Artificially low rates lead to shortages.

    It’s not like this was a sweetheart deal to one bidder after a closed process; there were ten initial companies bidding, of which six were qualified, of which two would agree to all the concessions the city imposed. The final two bids, from Morgan Stanley and Macquarie, were both over a billion, but Morgan Stanley’s was $140 million more.

    Also amusing that the picture shows an old-style meter; over one-half of the meters have been replaced with one of the multi-space meters that takes credit card now, and they say they’ll finish by the end of the year.

    education

    Yeah, we wouldn’t want to be as free-market crazy as Sweden, would we?

    utilities

    Yeah, we wouldn’t want to lower child mortality rates around the world, would we?

  • avatar
    johnthacker

    This isn’t the first Chicago privatization…. Unfortunately, cities have an incentive to pursue this strategy.

    Yeah, for example, Chicago has the incentive that the bond agencies have repeatedly raised its bond rating as these privatizations have continued and it has decreased debt, even while cutting the bond rating of the state of Illinois, as well as other cities and states around the country. Not Texas, though, that state has also been privatizing a lot and has also gotten higher bond ratings as a result.

    But I’m sure some people don’t believe in bond ratings anyway.

  • avatar
    RichardD

    This has nothing to do with the privatization that Ronald Reagan supported. Reagan didn’t actually privatize that much. He just sold off Conrail, which the government never should have owned in the first place (see: Citibank, Chrysler, GM). He wanted to sell the post office (see: UPS, FedEx) and Amtrak. This also has nothing to do with ensuring people can find a place to park.

    This is solely about ensuring big spending liberals — whether Democrat (Daley) or Republican (Mitch Daniels) — can spend now with other people’s money (OPM). Politicians love OPM. Except in this case, the other people’s money refers to people who aren’t yet born. Usually state & local governments aren’t able to deficit spend into the billions like this.

  • avatar
    Robstar

    There have been numerous references to studies via editorials in the local paper pointing to the fact that economic researchers have estimated that Daley sold the meters for just over 1/2 of market value.

    Great businessman, eh?

  • avatar

    this is nuts. I can’t believe that chicago–CHICAGO!–would fall for this “BUY NOW, BECAUSE THIS SPECIAL OFFER EXPIRES IN JUST 24 HOURS!” crap.

  • avatar
    jkross22

    It’s for quick cash, baby! Like most municipalities, Chicago is hurting, and just like GM, they’re going to try to get that cash, even if it means selling everything not bolted to the ground.

  • avatar
    GasGuzzler

    The irony is thick. Morgan Stanley is a TARP recipient, and the deal to privatize the meters occurred during the financial meltdown, when taxpayers were providing a number of subsidies in addition to TARP.

    So, in a nutshell, we the taxpayers gave MS money to purchase our meters. In return, we pay higher meter fees, which are in effect for longer periods of the day (up to 24/7). Also, we take a one-time payment, which will be used to shore up the budget for a short period of time, thereby depriving the future of any revenue that would have been generated by the meters.

  • avatar
    spyspeed

    Soon, the sidewalk in front of your home will be fair game. Pay up or the leaseholder will fence it off.

  • avatar
    wellsnj26

    Is $2 an hour parking really breaking the bank for any car owners in Chicago? Commuters and residents are mostly renting their spaces by the month. Zoned street parking is free. We do have a relatively comprehensive and reliable public transportation system, which anyone can use for under $3. Suck it up! We have bigger problems.

  • avatar
    Slocum

    I think the upfront payment for Daley to spend now in exchange for a lease until 2084! is just the kind of Chicago politics that we’re learning to love on a national level ;)

    That said, charging market rates for street parking makes sense. The private vendor isn’t going to charge such exorbitant rates that its spaces sit empty and its revenues shrink as the parking business is taken over by private lots and garages. And this way, when I visit Chicago, I’ll probably be able to find a street parking spot, which would be a nice change.

  • avatar
    RichardD

    @ wellsnj26:

    It’s $2 today. It’s $4 in three years — and it goes up from there. The cost of parking is slightly more than one-half the minimum wage? Yeah, that’s excessive.

    “We do have a relatively comprehensive and reliable public transportation system, which anyone can use for under $3.”

    You might pay $3, but it costs $5-6 or more per trip to run that bus/subway. The extra money to subsidize your ride comes from raping motorists. See parking meters.

  • avatar
    hal

    my problem isn’t with the lease deal (not a bad idea if done right) or the increase in parking charges (which were too low) but the length of the lease. I can see 10 or even 20 years but 75 years is way too long for a lease of this type and of course this being Chicago there is no real public consultation.
    Public transport does require direct subsidies but it also provides benefits that offset those subsidies including boosting property values which results in increased city revenues. Road construction is subsidized too but hey we need to get places.

  • avatar
    Robstar

    $2-$4/hour is excessive.

    I pay sub $4/work day for all-you-can-eat-parking in Evanston next to $2700/month 1BR rental condos.

    On top of that, meter parking is $0.75/hr. Even better is when I work on Saturday from 6-8am, parking at meters is FREE.

  • avatar
    Tiger Commanche

    The privatization was so quickly and poorly executed that coin meters could not handle the doubled prices. Twice as many quarters had to be plugged into the same old meters, and motorists were ticketed when they could not put any more coins into expired meters. This compounded the feeling of unfairness that many Chicagoans already had.

  • avatar
    hal

    I won’t say Evanston parking is too cheap because I can always find a spot but it’s not Chicago. Compare the cost of garage parking or leasing a spot in your building to the cost of the same downtown, they are not the same either.

  • avatar
    Robstar

    hal> Even compared to City garages, it’s too expensive!

    $4/hr = $36/day. Figure 8 hours + 1 hour for lunch (that is assuming it takes you 0 time to get to/from your car)

    What is a downtown all you can eat pass…$220…or 6+ days of meter parking.

    at $2/hour, it’s 12 days of downtown parking.

  • avatar
    sfdennis1

    Chicago’s parking rates may have been slightly undermarket before the (scam) lease-off, but what really has A LOT of Chicagoans pi*sed off is the many 24/day meters and new rule pay-to-park Sundays that really make parking much more challenging for residents.

    This is not in all neighborhoods, but in many of the most congested, free overnight parking on major streets, and free Sundays made the crazy parking situation a little more sane for local residents. Now finding a (high cost) monthly garage is almost mandatory.

    Shop owners and retailers are also angry, saying that that this has diminished business for them as well, many people just don’t want to deal with the parking situation, and avoid the city.

    I could see this costing Daley his mayorship at the next election, and I’d say he brought it on himself. Privitization done WRONG.

  • avatar
    sfdennis1

    Chicago’s parking rates may have been slightly undermarket before the (scam) lease-off, but what really has A LOT of Chicagoans pi*sed off is the many 24/day meters and new rule pay-to-park Sundays that really make parking much more challenging for residents.

    This is not in all neighborhoods, but in many of the most congested, free overnight parking on major streets, and free Sundays made the crazy parking situation a little more sane for local residents. Now finding a (high cost) monthly garage is almost mandatory.

    Shop owners and retailers are also angry, saying that that this has diminished business for them as well, many people just don’t want to deal with the parking situation, and avoid the city.

    I could see this costing Daley his mayorship at the next election, and I’d say he brought it on himself. Privitization done WRONG.

  • avatar
    sfdennis1

    Chicago’s parking rates may have been slightly undermarket before the (scam) lease-off, but what really has A LOT of Chicagoans pi*sed off is the many 24/day meters and new rule pay-to-park Sundays that really make parking much more challenging for residents.

    This is not in all neighborhoods, but in many of the most congested, free overnight parking on major streets, and free Sundays made the crazy parking situation a little more sane for local residents. Now finding a (high cost) monthly garage is almost mandatory.

    Shop owners and retailers are also angry, saying that that this has diminished business for them as well, many people just don’t want to deal with the parking situation, and avoid the city.

    I could see this costing Daley his mayorship at the next election, and I’d say he brought it on himself. Privitization done WRONG.

  • avatar
    Lokkii

    +1 Charging market rates for street parking makes sense. The private vendor isn’t going to charge such exorbitant rates that its spaces sit empty and its revenues shrink as the parking business is taken over by private lots and garages.

    One of two things is going to happen:

    If the street parking prices are too high, people will find alternatives. Either cheaper parking garages/lots will open or people will take their businesses elsewhere.

    Historically, though, it’s been choice #2 – Downtown dies as customers stop shopping downtown, and businesses move to the suburbs.

  • avatar
    Happy_Endings

    This is one of MANY reasons I’m glad I moved 40 miles outside of the city to Gurnee.

    Gurnee isn’t that great either. You’ve got all the tourists going to the mall or GA. And then there’s the red light camera at Hunt Club and Grand Ave.

    Even at $5 an hour, it’s still cheaper to park at a meter than in a lot for a Cubs game. Oh wait, the time limit…

    I know people who live near the Yellow line so I just park at their place and walk to the Dempster station. Only problem is that the Yellow line ends at 10:30, even on weekends.

  • avatar
    quasimondo

    When are Americans gonna wake up and fight back against privatization of services that should be headed by the government?

    I don’t understand what all the kvetching is about. This government can’t do anything right, so why should we trust them to collect meter fees? It’s for the best that we hand this sort of thing over to a competent private enterprise entities who clearly are able to operate more efficiently than any government could ever hope to.

  • avatar
    Porsche986

    I am going to echo many of the complaints in the above comments and add an observation.

    I also live in Chicago in the Buena Park / Lakeview neighborhood and close to Wrigley Field pictured above.

    My observation is that this new parking meter crap has magically created additional parking spots. Seriously. One of two things is going on here… either people were parking their cars and leaving them a lot more than the metered time without a ticket from the police, or the fact that the private company is REALLY good at keeping an eye on the fee receipts on the dashboards of the cars and people have gotten burned by the expensive tickets.

    I don’t think the city had the legal right to sell the meters off, and I hope they win their suit.

  • avatar
    Robstar

    Happy_Endings>

    Great America = has their own private parking lot with a billion spaces. I can walk there in 15 min.

    Gurnee Mills = All free parking.

    On top of that they both bring in tons of outside tax revenue for Gurnee.

    There is A red light camera there….and the yellow IIRC is 4+ seconds, unlike the sub 3 in Chicago.

    On top of that the traffic outside of Sat night/Sunday night (great america traffic) is 100x better than Chicago.

    on top of that, there is a pace bus 4 blocks from my house that takes me to the metra station (30 min away) which I can then commute to downtown in an hour.

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