Could The City Still Buy Back Control Of Its Parking Meters?

CITY HALL — If anyone knows what will happen next with Chicago’s parking meters, they’re not talking. 

That was the case again Monday, when the City Council’s finance committee delayed voting on a proposed sale of the city’s meter rights by one group of private investors to another. 

Ald. Pat Dowell (3rd), the finance chair, didn’t offer specifics about what caused the deferral or when the committee would vote, only saying it would likely be later this summer or early fall.

“Discussions have ensued between the city and the parties involved in this item,” Dowell said. “The Committee on Finance has received some communication related to that fact. And consequently, we’re going to hold this item pending further discussion.” 

Her comments left a lot of questions unanswered. And by that time, various theories, scenarios, bits of news and outright rumors about the parking meters were already swirling around council chambers. 

Earlier in the meeting, word spread that the Chicago Tribune had posted an opinion piece by Ald. Jason Ervin (28th) on the meter sale. In it, Ervin followed many of his colleagues in declaring his opposition to the transfer of meter rights from Chicago Parking Meters LLC, an entity led by investment bank Morgan Stanley, to Stonepeak Partners, a New York-based firm. 

But Ervin went a step further and proposed the city form a new entity, a “public infrastructure trust,” to reacquire control of the meter system. 

Ervin chairs the council’s budget committee and is a close ally of Mayor Brandon Johnson.

The mayor himself has refused to weigh in on the proposed sale to Stonepeak. But for weeks some alderpeople have suggested Johnson is quietly seeking another opportunity to buy back the meter rights — for a lower price than the $3.2 billion the city offered last year before walking away.

If the council votes down the sale to Stonepeak, the city could have another bite at the apple, the thinking goes.

But when a Tribune reporter asked Ervin if the mayor’s team was involved in his proposal, the alderman got angry and responded with an F-bomb. He was still upset when he spoke to other journalists in a meeting area behind council chambers. 

“That’s insulting. That’s what I blew up about. To say that I don’t have the ability to think of something on my own without the mayor, that’s terrible,” Ervin said. “I’ve had no conversations with them in relation to what I talked about today.”

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The mayor’s office declined to comment on Ervin’s idea, or on other proposals to reclaim the meter rights. The mayor’s team also wouldn’t talk about the delay in holding a vote. Johnson has said oversight of the deal between the investor groups is the council’s responsibility alone. 

Spokespeople for CPM and Stonepeak wouldn’t comment on the record either.

Everyone is staying quiet because the stakes are high and no one wants to get outmaneuvered.

Stonepeak is in line to control Chicago’s metered spaces and all the revenues they produce until 2084 — potentially billions of dollars.

Chicago Parking Meters doesn’t want to lose the $2.5 billion it would get from a sale to Stonepeak. One of CPM’s lawyers has warned the city of a legal battle with “irreparable consequences” if the council doesn’t sign off.

Yet city leaders across the political spectrum are wary of voting for another parking meter deal, especially with an election season looming. 

City Council opponents of Mayor Johnson are irked that his team put in a bid of more than $3 billion last year to buy back the meter rights, then abandoned it — all in secret. 

Council progressives are opposed to helping Stonepeak because the firm owns a company that’s provided deportation flights for the U.S. Department of Homeland Security. 

And the mayor has appeared aloof, letting the City Council handle a deal that would help more wealthy investors make more money off Chicagoans.

After nearly two decades, Chicago’s parking meter privatization deal is still politically toxic.

In case you haven’t heard: In 2008, former Mayor Richard M. Daley agreed to lease the city’s 36,000 meters to Morgan Stanley and its partners in return for about $1.2 billion up front. By the end of 2025, the company reported about $2.2 billion in total revenues — with 58 years of the deal to go.

When Chicago Parking Meters decided to sell the meter concession last year, the company required everyone interested in bidding to sign a confidentiality agreement. With the help of consultants and outside lawyers, the Johnson administration worked on a bid behind closed doors for months. 

Most alderpeople said they first learned about the city’s bid after ABC 7 reported on it in January, and Johnson publicly spoke about it four days later. The mayor said he decided to drop the bid because the cost was too high, but didn’t share any details, including exactly how much the city offered or how it arrived at that figure. 

Stonepeak then became the highest bidder and agreed to buy out Chicago Parking Meters. Under terms of the 2008 contract, the City Council has to approve the sale.

As alderpeople demanded information during a June 25 hearing, Stonepeak managing director James Wyper blurted out that the city had offered about $3.3 billion for the meter rights, $800 million more than Stonepeak’s $2.5 billion bid. 

The revelation fueled more skepticism about the mayor’s bid process — and also about Chicago Parking Meters and its agreement with Stonepeak. On June 30, with the deal in apparent danger, CPM waived all confidentiality requirements for the city.

More than a week later, the mayor’s office finally released more details of its bid and dealings with CPM.

The city’s acting chief financial officer, Steven Mahr, wrote in a memo shared with finance committee members that the city actually submitted three offers for the meter rights last fall. While running the numbers with financial advisers, the city concluded it would have to offer “several hundred million dollars” more than other bidders, because a sale to the city would force Chicago Parking Meters to pay “tax liabilities” that the company could avoid by selling to another private-sector business. 

After the city made its first bid of $2.8 billion on Oct. 7, it “was selected to move onto ‘Round II,’” Mahr wrote. The city then increased its bid by $50 million, to $2.85 billion, but the process wasn’t over yet — Chicago Parking Meters indicated that all the bids were in the same range and asked the city to produce a “Best and Final Offer.” 

Chicago Parking Meters told the city that its offer “was not the high bid in terms of value to the seller.” The company let the city know exactly what it needed to come up with: “The seller’s representatives also communicated that any Best and Final Offer’ by the City less than $3,000,000,000 would be insufficient to win the bid.”

On Dec. 5, the city bid $3.2 billion, and three days later city officials were informed that they’d won the opportunity to buy the meter rights back, according to Mahr. 

City officials then re-examined how they would pay for it. The city would have to borrow the money, which wouldn’t be easy, and repay it with meter revenues, fines from parking tickets and other revenue sources for decades to come. 

The mayor and his team viewed those income streams as risky or unreliable over time, especially if driving habits change. Given its already-poor financial health, the city could be weighed down by the additional debt, officials concluded. 

And so, in January, Johnson announced that the cost of the buyback was too high for the city, Mahr wrote.

On Monday, a number of alderpeople on the finance committee said they had not yet looked closely at the memo or other bid materials, even though they had demanded the mayor’s office produce them. 

But Ervin said that “if the door is open,” the city should keep exploring what it can do to regain control of the meters. Even if the cost seems high now, the city might lose out more down the road, he said.

“We have consistently been hosed around this thing,” he said. “If somebody’s going to make those dollars, let it be some city entity.”