A new audit finds that the city of Chicago loses millions of dollars a year on the 75-year lease of its parking meters — while the meters’ owner, Chicago Parking Meters LLC (CPM), makes hundreds of millions.
Accounting giant KPMG and First reported by the Chicago Sun-Timesthe audit found that the city “paid $78.8 million in ‘correction’ payments” over the full 12 years that CPM owned the meters.
It also found that CPM has now recouped its entire $1.16 billion investment in the deal, with $502.5 million left over which they still have 61 years of ownership. Meanwhile, citizens of the city are struggling with expensive parking rates, which rose from $3 an hour in 2008 to $6.50 in 2013 and are now $7 an hour.
The audit findings renewed calls for the city to renegotiate leases for parking meters. The lease was signed in 2008 by then-Mayor Richard M. Daley. The lease gives CPM, a consortium of private investors, the right to operate the city’s parking meters for 75 years. A substantial stake in CPM was sold to Soon after the Abu Dhabi Investment Authority.
The lease has been disputed from the start. Critics argue that the leases are too long, giving private companies too much control over the city’s parking system.
“In their rush to make a quick buck, they ignore the fact that they’ve brought a very poorly structured, valued Undervalued deal that will cost the city for decades to come.” Thursday’s Sun Times.
“The city should hire a parking operator to update the technology and run the system for the city. If they did that, and got better prices for all three assets, there would be more Chicago today than those three deals combined $3 to $4 billion.”
Meanwhile, the city has defended the lease, saying it brings much-needed revenue to the city. The city also argued that the leases help improve the city’s parking system.
The audit results could increase pressure on the city to renegotiate parking meter leases. Whether the city is willing to do so remains to be seen.
In April, a three-judge panel of the Chicago-based U.S. Court of Appeals for the Seventh Circuit unanimously decided maintain dismissal Chicago drivers are suing, arguing that expensive parking meters stem from a 75-year, $1.1 billion contract with a private company that violates U.S. antitrust law.
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