Mayor Richard M. Daley today announced the City of Chicago received a winning bid of $1.157 billion from Chicago Parking Meters, LLC, for a 75-year concession agreement to operate Chicago's metered parking system made up of approximately 36,000 parking spaces. The transaction would make Chicago's the first major publicly-owned system in the United States to be subject to a long-term concession.
"At the very time that some cities and states are asking the federal government for help in balancing their budgets, we're creatively working to protect our taxpayers for years to come," Daley said in a news conference held at City Hall.
"Because of our innovative Midway Airport and parking meter transactions, we're taking steps that no other city or state is taking to cushion our taxpayers from the bad economy and keep our city moving forward. This agreement is very good news for the taxpayers of Chicago because it will provide more than $1 billion in net proceeds that can be used during this very difficult economy," he said.
The winning bidder -- Chicago Parking Meters, LLC -- consists of Morgan Stanley Infrastructure Partners A Sub LP (76% ownership), Morgan Stanley Infrastructure Partners LP (23%) and several other entities sharing 1% ownership. LAZ Parking will serve as the operator for Chicago Parking Meters, LLC.
Mayor Daley said he proposes allocating the nearly $1.2 billion in net meter proceeds into four distinct funds, including:
As part of this agreement, the City will implement graduated meter rate increases over a period of five years that will bring rates closer to market level. After that, any increases will be subject to the approval of the city council and are expected to be at the rate of inflation.
These increases will be the first in more than 20 years for more than 25,000 of the 36,000 meters.
This agreement also mandates the private operator to make system upgrades in the near future that will provide cashless payment options far sooner than the city would be able to complete. And by the middle of 2011, all meters must have both cash and cashless payment options.
Under the agreement, the City Council retains the right to revise the meter increases, change the number of meters or the hours of operation. But to the extent the City takes action that negatively impacts meter revenue, it will be obligated to make the private operator whole.
Although the approximately 36,000 meters are located throughout the city, about 25% of the meters are located in two downtown wards. 19 wards each hold less than 1% of the parking meters, and two wards contain no parking meters at all.
"I don't know of any city or state in the nation - or the federal government for that matter - that, in the space of three months has reached major and groundbreaking agreements like those for Midway Airport and our parking meters," said Mayor Daley.
The City Council Committee on Finance will consider the proposed agreement and use of proceeds tomorrow, and the full City Council will consider the agreement at a special meeting on Thursday, December 4, 2008.
"During the toughest economy our nation has faced in over fifty years, it is more important than ever that we manage our budget in ways that are both responsible and creative," Daley said.
"The funds from this historic parking meter agreement will strengthen our city's finances for the long term, give us the ability to continue investing in people's needs and most importantly, protect our city and taxpayers from a worsening economy," he said.