Chicago Outsources Parking Reform to Morgan Stanley
The Chicago City Council has approved by a vote of 40-5 a deal to privatize the city's 36,000 metered parking spots for the next 75 years, trading meter revenues for an upfront payment of $1.15 billion.
Under the agreement with Morgan Stanley Infrastructure, meter rates will rise substantially and some meters will operate overnight and on Sundays. Chicago currently nets $20 million a year from its meters, and revenue should triple or quadruple given planned meter rates. The deal is by far the largest of its kind in the US and continues Chicago Mayor Richard Daley's privatization of city transportation infrastructure, including Midway Airport and the elevated Chicago Skyway.
The agreement is interesting from a transportation reform perspective because the higher meter rates, applied through modern meters, will help sharply reduce double-parking and cruising traffic. This means less air pollution, less time wasted in traffic, and more potential street space for sidewalk extensions, bikes and buses.
Despite these benefits, Chicago's privatized road to parking reform has serious flaws. The concession will cost future taxpayers several hundred million to even a billion dollars in foregone parking revenue -- a lot to pay to outsource the political will to raise rates. Additionally, none of the upfront payment will be dedicated to transportation improvements. The bulk of the money will go to balancing the budget and fiscal "stabilization" with $100 million earmarked for social programs.
Chicago will soon have the highest meter rates in the United States. The 8,100 meters in the Loop Central
Business District will rise 50 cents to $3.50/hour next month and $6.50 by 2013. Neighborhood rates will quadruple
to $1 an hour next year and reach $2 by 2013. (San Francisco's SFpark is also raising rates, though it's not clear how fast and by how much.)
Daley’s press press release further details how meter rates will be set:
- 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.
- By the middle of 2011, all meters must have both cash and cashless payment options.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.
Despite its problems, the Chicago deal should send a loud message to New York, and other big US cities, that they are leaving huge sums of potential public revenue untapped, and contributing to traffic congestion and air pollution by leaving meter rates too low.