Ignoring fears that Chicago was “buying high after selling low,” Mayor Brandon Johnson’s most powerful City Council ally on Wednesday forged ahead with his 11th-hour plan to create a public infrastructure trust to take back the city’s parking meters.
Budget Committee Chair Jason Ervin (28th) formally introduced his long-shot ordinance that would create a nine-member public trust to pool pension and city funds and match the $2.5 billion winning bid submitted by Stonepeak Partners, a New York investment firm, for the city’s parking meters.
At the City Council meeting Wednesday, the ordinance was shunted off to the Rules Committee by Ald. Anthony Beale (9th), Ervin’s archrival, in an attempt to slow it down. But Ervin is moving full-speed ahead anyway.
Ervin, whose wife, City Treasurer Melissa Conyears-Ervin, sits on the boards of all four city employee pension funds, said financial and pension experts he refused to identify have volunteered to examine the feasibility of acquiring the 57 years that remain on the parking meter deal Chicagoans love to hate.
Now that a second extended deadline gives the City Council until Sept. 30 to accept of reject Stonepeak’s offer, those unidentified advisers have the time Ervin believes they will need to decide whether it makes sense to take back the parking meters that former Mayor Richard M. Daley has been accused of all but giving away for a fraction of what future parking revenues were worth.
The current owner, Chicago Parking Meters LLC, is a consortium that includes Morgan Stanley, Allianz Capital Partners and the Sovereign Wealth Fund of Abu Dhabi. That gorup has doubled its initial $1.15 billion investment with nearly six decades to go on the deal.
“It’s very clear that, if Stonepeak is willing to spend $2.5 billion, there is some level of value there to do that,” Ervin told the Sun-Times.
“People in the market think that it’s a worthwhile investment to do. Otherwise, you wouldn’t have such notable people in business pursuing this transaction. Not only did Stonepeak pursue it. Several infrastructure trust individuals pursued this transaction.”
Civic Federation President Joe Ferguson told the Sun-Times last week that “resurrecting” then-Mayor Rahm Emanuel’s failed infrastructure trust “at this moment… looks like a stall tactic.”
Ferguson noted that Ervin is “one of the closest allies of the mayor” and that he “got particularly prickly” when asked whether he was doing the mayor’s bidding.
“This is not the moment to be spitballing all sorts of really complex ideas… We’re still at ‘sell low and buy high’ for something that really is a speculative undertaking,” Ferguson said.
“We don’t know how automobiles and parking [are] going to be working for the next 57 years,” Ferguson continued. “We can be pretty sure it’s not gonna work the way it has in the past, or the way it works in the present. So this is a really risky revenue stream and that revenue stream mostly has to go to simply paying back the debt. Forget about making more money.”
Ervin’s ordinance would establish the trust as an independent corporate entity empowered to acquire and manage infrastructure assets that “produce predictable cash flow, inflation protection, diversification and returns that match long-term public obligations.”
It would be overseen by a board with nine voting members. Three would be appointed by the mayor. Six would be ex-officio voting members, including the city treasurer.
Prior to any acquisition, financing or sale of any asset, the trust “shall engage one or more independent advisors to prepare a report” to the City Council, which must sign off on the acquisition. The report must be delivered to the Council 90 days before a final vote.
“If the state of Washington’s pension funds are investing in this, why wouldn’t the city of Chicago’s pension funds also be looking at a similar type of investment?” Ervin said. “If we can help boost our funded ratios in pensions, create a long-term revenue stream for our pensions, this is a win-win. Would we like to have it happen this way? Of course not. But this is the hand we’re dealt.”
Ferguson said the City Council would be better off taking Stonepeak up on its offer to work with the city to reduce the annual “true-up” payment that must be made to the parking meter owner whenever parking spaces are taken out of service for special events and construction projects.
“See what you can get before you go to this place where you’re really just rolling the dice with potentially really huge financial consequences to the city and to the taxpayers,” he said.