Mark these five words: “Manifestly contrary to public policy.”
They’re a collective Hail Mary but they could save the people of Chicago billions of dollars from the parking meter disaster, a rip-off of such stunning scale and audacity that it beggars belief. And it gets worse and worse and worse.
Let’s first briefly review for those not yet up to date with a horror that has a direct impact on your property tax bill, perhaps the state of your pension plan and all manner of other fiscal ramifications for each and every Chicagoan.
In 2008, then-Mayor Richard M. Daley, with the approval of poodles on the City Council who failed to do due diligence, agreed to sell a 75-year lease on 36,000 parking meter spots for $1.16 billion to an entity that calls itself Chicago Parking Meters LLC and is made up of various parties including Morgan Stanley-related entities and, indirectly and also among others, the sovereign wealth fund known as the Abu Dhabi Investment Authority.
Daley also agreed to a whole series of tightwad rules that handcuffed the city when it came to removing meters for, say, special events such as outdoor dining, changing the hours of paid parking, or making any other changes that might result in less revenue for Chciago Parking Meters. In each and every case, Chicago has had to lay out more cash.
Why did Daley make this colossal error? He wanted to close a budget shortfall and thought that a private company could more easily jack up rates than an elected official likely to anger voters. And he probably believed that $1.16 billion sounded like a whole lot of money.
Wrong. Former Mayor Lori Lightfoot once told this board that the decision was one of the worst public policy mistakes in the history of municipal governance and she was absolutely correct. The investors, if that’s the right term, have recouped that amount within the first 10 years of that 75-year lease. They’ve now made hundreds of million dollars in additional profit. By the end of this deal, they are likely to have raked in a total of $9 billion.
That is not a typo. $9 billion for $1.1 billion. Nice deal if you can get it.
Imagine the impact of $9 billion on the health of our city.
You’d think that if you were Chicago Parking Meters, you’d keep as quiet as possible as you counted your money. But no. The issue came up again because the ruthless, money-grabbing group filed a lawsuit in April demanding the enforcement of an arbitration panel’s ruling that determined the Lightfoot administration had attempted to pull off a tricky scheme to try to reduce how much money the investors made. It was a novel and complex plan involving moving some meters out of ownership and then back again as their value fluctuated during the pandemic years and also involves Mayor Rahm Emanuel’s mostly failed attempt to renegotiate this deal in 2013. Some observers think Emanuel’s efforts back then may actually have made the situation worse for Chicago for reasons we won’t go into here other than to note he was right to try. The recent Lightfoot plan likely failed too, possibly costing the city more than $100 million. Lightfoot’s excellent chief financial officer, Jennie Bennett, got some grief around town this week from editorialists elsewhere in the city who said she should have left the deal alone.
Nonsense. Something had to be done. Hindsight is 20-20. We say Lightfoot was right to try. This deal has 59 years to go, longer than anyone on this board will be alive. Barring a miracle.
That brings us back to the potentially miraculous five words above: manifestly contrary to public policy.
This is a complicated area and we don’t claim legal expertise. But, in simple terms, U.S. courts can and have overruled arbitrators and deemed contracts invalid if they are found to be harmful to U.S. citizens.
The argument the city would have to make here is that the relinquishment of so crucial a financial tool resulted in genuine harm to Chicagoans, as in sucking away billions of dollars of their money. It would have to argue that while the deal may appear to be a deal (which is how previous challenges have been batted away), the harm to the public good was so great that the public servants actually making the deal were agreeing to something so egregious and terrible for Chicagoans that the deal itself was invalid.
One hypothetical analogy might be that no Chicago mayor could legally execute a contract that would give all citizens a bad virus in return for a big payment into city coffers. It would so demonstrably harm the public good as to be not something a mayor could legally do.
A long shot? Sure. Chicago Parking Meters would argue that this defense is not supposed to be a protection against being out-negotiated and making a bad but perfectly legal deal. The city might have made an error, its lawyers will say, but there were risk factors to both parties and things happened to work out nicely for Chicago Parking Meters, which fulfilled its side of the bargain. The city might have been naive, incompetent and terrible at math, but it still signed on the dotted line and too bad, suckers.
Or is it?
It’s worth noting in this regard that prior attempts to try to get out of this deal have involved the city side talking speculatively about the massive future profits, even if this arrangement was far from the norm in terms of its stunning 75-year duration.
Enough time has gone by now for us all to see the millions of dollars in actual, factual profits, real and excessive dispersals from what should be the public purse, as well as the billions to come. The totality is clearly harmful to the public good. That’s our view, anyway.
The city is in bed with ruthless operators as their recent legal challenge proves. They care nothing for the good of the city or its future, and they’ve hardly offered any kind of compromise or even the tiniest gesture of goodwill.
The deal is of a size and an import that means each and every elected mayor of this city must fight it with every available weapon. Times and opinions change, and this egregious profiteering is immoral.
Chicago Parking Meters could not be a less sympathetic entity. We don’t see it buying many tables at galas, putting its name on buildings, nor supporting in any major way the city’s educational or social programs. We also don’t see it otherwise making substantial goodwill donations to the city it fleeced. How about it, Abu Dhabi Investment Authority?
And how about Chicago takes a cue from the hard-core antagonists and renews its determination to right this wrong.
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