A City Council committee poised to reject a New York investment firm’s $2.53 billion bid to acquire Chicago parking meters instead postponed that politically-volatile vote Monday under threat of a lawsuit by the current owner.
In a July 3 letter to Mayor Brandon Johnson, Finance Chair Pat Dowell warned that the proposal by Chicago Parking Meters LLC to unload the 57 years that remain on the lopsided deal “has not secured the support necessary to advance from committee at this time.”
Chicago Parking Meters is a consortium that includes Morgan Stanley, Allianz Capital Partners and the Sovereign Wealth Fund of Abu Dhabi. They want to sell the time left on the deal to Stonepeak Partners and have threatened to sue the city if the deal is rejected.
“Significant questions remain regarding Stonepeak’s ownership structure, regulatory and legal history, operational practices and the potential implications of this transfer for the city of Chicago,” Dowell wrote.
“These are fundamental considerations for any legislative body asked to approve the transfer of a public asset of this magnitude.”
During Monday’s Finance Committee meeting, Dowell told her colleagues that there would be no vote on the proposal by Stonepeak Partners to acquire Chicago parking meters for what’s left of the deal famously engineered in 2008 by then-Mayor Richard M. Daley.
Budget Committee Chair Jason Ervin (28th), the mayor’s most powerful City Council ally, said he hopes to use the delay to push an alternative plan.
It would create a public infrastructure trust similar to the one created, then abandoned by now former Mayor Rahm Emanuel to acquire the parking meters, using a mix of investments by the four city employee pension funds and municipal bonds.
“That was then. This is now. We have a meaningful asset that can be utilized, and it also potentially strengthens our pension funds and it works to bring that value back to Chicagoans—not let the money go half-way around the world,” Ervin told the Sun-Times.
“Other pension funds are investing in this. Why wouldn’t we afford that same opportunity to our four pension funds in the city of Chicago?”
Johnson ultimately abandoned his $3.2 billion bid to take back Chicago parking meters after determining that the risk of undoing the parking meter deal that Chicagoans love to hate was not worth the reward either financially or politically.
It would have been required to pledge to siphon other major sources of revenue the city depends on “if parking habits shifted, alternative modes of transportation become more common” and “driver/commuter behaviors” changed.
That’s a distinct possibility amid a fast-changing landscape for parking demand that includes everything from self-driving vehicles and robot deliveries to congestion fees that discourage people from driving Downtown.
“If parking meter revenue was not sufficient to cover the principal and interest payments, then spending on other infrastructure projects or critical services would have been impacted,” the mayor’s office memo to the City Council stated.
Against that backdrop, Ervin was asked Monday to explain how he would bankroll the proposed Infrastructure Trust purchase.
“If we create an opportunity, there would definitely need to be some financing done by the city….Looking at all options, that would probably include pension obligation bonds, general obligation bonds. Even maybe some revenue bonds along TIF and other things,” Ervin said.
“It’s just an opportunity that we need to explore, we need to look at and not let this opportunity pass us by.
The City Council was facing a July 24 deadline to either authorize the sale to Stonepeak or reject it and risk a lawsuit by Chicago Parking Meters LLC, a consortium that includes Morgan Stanley, Allianz Capital Partners and the Sovereign Wealth Fund of Abu Dhabi.
It’s unclear whether there is any flexibility in that deadline.
Civic Federation President Joe Ferguson warned that Chicago taxpayers would pay a heavy price for rejecting Stonepeak’s $2.53 billion bid.
“One is a lawsuit on the basis of the no vote because it really puts the city on the precipice of breach. The second is…the city’s reputation as a party with whom the private sector, the investment community, bond purchasers can say actually keeps its word. It is a demonstration of…further volatility that makes the city appear to be a less reliable partner in major financial matters,” Ferguson said.
Ferguson urged the Council to take Stonepeak up on its offer to work with the city to modify that portion of the widely-despised parking meter deal that requires the city to compensate Chicago Parking Meters LLC for every parking space taken out of service either for a special event or construction project.
“That’s something that could be worth $5 million, $10 million, maybe more a year. And the fact that they’re willing to even look at that suggests that this is a party that understands the history of this deal, the volatile politics around it and actually cares to be something of a good corporate citizen,” he said.