How a 2008 Decision Still Shapes Today’s Budget Crisis

Commentary by: Emma Young, writer, community activist, free spirit

For those who criticize Mayor Brandon Johnson for the current budget crisis, I just wanted to remind them that up until 2008, parking meters all over the city were a robust source of income. In 2008, outgoing Mayor Richard Daley sold the city's parking meters in a 75-year contract.  Subsequently, the mayors that followed had increasing budget problems. Added to Brandon Johnson's problem is a governor who will not cooperate in supplying state funding which has traditionally helped the city.  

Here are the facts:

In 2008, the City of Chicago entered into a 75-year lease agreement with Chicago Parking Meters LLC (CPM), a consortium led by Morgan Stanley Infrastructure Partners, along with Allianz Capital Partners and the Abu Dhabi Investment Authority. The deal granted CPM exclusive rights to operate and collect revenues from the city's 36,000 parking meters in exchange for a one-time payment of $1.15 billion. 

Is the Contract Reversible?

The lease agreement is legally binding and has proven difficult to challenge. Although a 2009 lawsuit questioned the legality of the deal, arguing that it unlawfully delegated governmental authority to a private entity, the courts largely upheld the agreement. The contract includes stringent terms that penalize the city for actions that reduce meter revenue, such as removing meters for street repairs or public events. 

Can the City Reclaim the Assets?

Reclaiming the parking meters would be challenging and costly. Any attempt to terminate the contract prematurely would likely require the city to compensate CPM for lost future revenues, which could amount to billions of dollars. Past efforts to alter the agreement, such as during the COVID-19 pandemic when the city temporarily reclaimed some parking spaces, resulted in legal disputes and financial penalties. 

While the contract is heavily tilted in favor of CPM, some legal experts suggest that the city could explore avenues to renegotiate or challenge the agreement, especially if it can be demonstrated that the deal was made under questionable circumstances or is contrary to public policy. However, such efforts would face significant legal hurdles and potential financial liabilities.

In summary, the 75-year lease of Chicago's parking meters to CPM is a binding agreement that has already proven financially advantageous for the private investors involved. Reversing or renegotiating the contract would be a complex and expensive endeavor for the city.