City Will Repay Meter Company Entire $1.16 Billion By Lease End
Told ya so.
When the Chicago parking meter lease deal was being jammed through the Chicago City Council in just over 36 hours in December, 2008 The Expired Meter warned how bad the deal was.
Certain provisions within the nearly one inch thick parking meter lease contract leaped out at people who actually read the document–provisions that could and would spell trouble down the road.
Alderman Scott Waguespack (32nd) knew about this stuff too. As one of the few (if not only), city council members who actually read the lease agreement and took the time to understand it, he foresaw what would happen.
“This is right on par with what we knew would happen,” said Waguespack initially in an interview this past Friday. “Any alderman (who voted for the meter lease deal) that still says they didn’t know that this was going to happen is ignoring reality.”
But when pressed, even Ald. Waguespack admits the meter lease deal is worse than even he predicted.
“Yes,” he simply said when asked if the deal has exceeded even his expectations of failure.
City Will Give Back Entire $1.16 Billion By Lease End
With the Sun-Times report that Chicago Parking Meters, LLC has billed Chicago $14 million for contractually obligated revenue just for 2011, bad has skipped worse and jumped directly to financial nightmare.
Because if you do the calculations based on this figure, by the end of the 75 year lease term, Chicago looks to pay CPM more than the original $1.16 billion lump sum payment it received in 2008 for the rights to operate Chicago’s metered parking system.
In other words, over the length of the contract, CPM will get their entire initial investment of $1.16 billion back through givebacks while reaping many billions of dollars in profits from Chicago drivers who pay the highest meter rates in the entire nation.
It’s simple math really.
Even if you take the 2011 figure of $14 million and simply multiply it by 73 years you get just over$1 billion. That’s billion with a B.
While this compensation revenue billed by CPM was under $6000 for 2009 and $2.1 million for 2010, realize that as meter rates go up over time, the bill for closures will rise as well.
$14 million in 2011 will inevitably grow each year and certainly be a larger number by 2084 when the meter lease deal mercifully ends.
Closures or True-Up Revenue is the main problem. True-Up Revenue is essentially any time a street with metered parking is closed or metered parking spots were unusable or metered spots were removed, the city would have to pay.
This could be for an assortment of things including street repair, utility work, private construction or even street festivals. Any time this would happen, the new lease holder, Chicago Parking Meters, LLC could bill the city for the entire day of lost revenue at those unusable metered parking spots.
It didn’t matter if the metered spots, under normal use were occupied with cars only a fraction of the day, if a spot was closed the city had to pay for 100% of the revenue for that day for as long as the parking spot was closed.
In addition, even though it looks like free parking for the majority of disabled drivers will go away soon via a bill pending in the Illinois State Senate, bills for this provision in the contract won’t go away completely either.
In other words, Chicago will end up repaying CPM the entire $1.16 billion and more it got for signing away the city’s meters for 75 years–a net loss for the city.
Alderman, Contract, Facts: Chicago Will Have To Pay Meter Company Bill
Despite Mayor Rahm Emanuel’s laughable pronouncement he won’t pay these bills, don’t believe for a second that CPM won’t get their moola.
CPM’s documentation of closures using photographs, copies of dated no parking signs, and even the city’s public database of closures will prevail in the end.
“The problem is we signed off on the document that outlined how True-Up Revenue was calculated,” says an exasperated Waguespack. “The city signed the contract and unless he (Mayor Emanuel) breaks the contract and says he’s not going to do it, it will go to arbitration. No arbitrator is going to say the city is right in this case–there’s no way.”
Waguespack says the city has been intimately involved with the process documenting True-Up revenue from the very beginning.
“If you looked how involved the Department of Revenue has been in this process–there’s no way we can’t pay,” Waguespack explains. “It’s the Department of Revenue that calculates the True-Up costs.”
But it even goes deeper than this Waguespack says.
According to Waguespack, the same city attorneys who signed off on the meter lease deal contract four years ago are still consulting Mayor Emanuel on the contract today.
“It’s the same people who reviewed the contract for the city in the first place,” says Waguespack. “Did they suddenly have an epiphany? I don’t think he (Emanuel) realized what kind of nightmare this was.”
Even though Chicago will be paying out the nose every year for the privilege of having a company reap billions of dollars off the backs of motorists, drivers will still have the honor of paying the nation’s highest parking meter rates and bask warmly in the realization that Mayor Daley screwed them over for 75 years.
