Downtown office occupancy is still only half of what it was before the pandemic, but Chicago parking meter revenues have made a comeback and then some.
Results of the latest parking meter audit by accounting giant KPMG shows meter revenues reached a record $140.4 million last year, up from $136.2 million in 2021 and $91.6 million during the stay-at-home shutdown of 2020.
The increase stems from a rebounding Chicago economy and hundreds of metered spaces at Montrose Harbor and on city streets added as part of former Mayor Lori Lightfoot’s 2021 budget.
That allowed private investors from as far away as Abu Dhabi to rake in record cash.
With 60 years left on the 75-year lease, Chicago Parking Meters LLC now has recouped its entire $1.16 billion investment and $530 million more.
A separate audit of last year’s performance by four city-owned underground parking garages shows the garages took in $30.6 million last year, up from $22 million in 2021 and $16.2 million in 2020.
Downtown garage revenues pretty much mirror that performance: an all-time high of $34.8 million in 2019, then a rock-bottom $16.2 million in 2020.
Thanks to higher traffic and an increase in tolls, the privatized Chicago Skyway generated $120 million in revenue last year, up from $114.3 million in 2021, the Skyway’s 2022 audit shows. That’s well over the $92 million in annual Skyway revenues in 2019.
The Skyway was sold last year for the second time in seven years. But the $2 billion sale of the two-thirds stake owned by Canadian pension plans to Atlas Arteria Ltd., an Australian toll road company, was structured in a way that deprived the city of an expected windfall of real estate transaction fees.
The pension plans “sold shares of the company that owns the concession rather than recording a change in ownership” of the Skyway, said attorney Clint Krislov, who specializes in privatization deals and has reviewed dozens of transactions.
“When the three Canadian pension systems bought it, they recorded the transfer and it got the city $28 million. This time, they apparently structured it so they didn’t have to record it,” Krislov said.
Former Mayor Richard M. Daley directed the original sale of the 99-year Skyway lease in what came to be known around City Hall as the Great Chicago Sell-Off.
The Skyway deal allowed operators to regularly increase tolls. The rate for cars on the shortcut from Chicago to Indiana is now $6.60 while rates are much higher for vehicles with more than two axles. Drivers of cars paid $2 in 2004.
The parking meters, the downtown garages and the Skyway were all unloaded by Daley, who used the money to avoid raising property taxes while city employee pension funds sunk deeper in the hole.
Of those three deals, the parking meter lease has been the biggest political nightmare for the mayors who inherited it and for the City Council members who gave it lightning-fast approval.
There were steep rate hikes initially, including to park downtown, which went from $3 an hour in 2008 to $6.50 an hour in 2013.
Motorists were so incensed by the rate hikes, they vandalized and boycotted meters, leading to a dramatic drop in on-street parking. Revenues eventually recovered — until the pandemic.
The latest audit proves once again how great the deal was for the private investors.
Even though Chicago Parking Meters LLC lost a third of its annual revenue in 2020, the system still generated enough money that year to spin off a $13 million distribution to investors. The 2022 distribution to investors was $28.7 million.
The revenue total was way higher than the $23.8 million in meter payments in 2008, the year before CPM took over the system. That’s because Daley and the City Council, afraid to risk a political backlash by raising parking meters rates themselves, chose to off-load the meters instead of hiring LAZ Parking directly to administer a city-owned system with new technology.
The 75-year-lease requires the city to reimburse investors for every parking space taken out of service when streets are closed for special events, sewer repairs and other construction projects or to alllow restaurants and bars to serve more customers outdoors.
Those reimbursements, known as “true-up” payments, totaled $78.8 million in the first 12 full years after the meters were privatized.
That’s even after then-Mayor Rahm Emanuel tweaked the fine print in 2013, reducing the city’s liability by increasing the hours and days motorists pay for parking.
In 2022, there was no such compensation.
In fact, the city received a $1.02 million credit, apparently because new meters added to the system more than off-set the number of meters taken out of service. That was not the case in 2021, when investors received a $6.7 million reimbursement.
Results of the latest audits and an analysis of them were provided to the Chicago Sun-Times by Krislov, former director of IIT Chicago-Kent’s Center for Open Government Law Clinic.
Krislov tried to get the meter and garage deals declared illegal on grounds the city can’t legally sell the public way.
He further claimed the garage deal both restricted development in the Loop and subjected the city to giant penalty payments, like the $62 million the city spent to compensate the owners of the Millennium Park and Grant Park garages after the city allowed the Aqua building, 225 N. Columbus Drive, to open a competing garage.
Both lawsuits were tossed out after the Emanuel administration defended the deals.
As mayor-elect, Lightfoot vowed to take a fresh look at the parking meter deal and try to find some way to break the lease, shorten it or sweeten the sour terms for taxpayers.
She called it a “burr under your saddle” that “keeps rubbing and rubbing,” but her administration ultimately did nothing to remove it.
Krislov said he would be more than happy to join forces with Mayor Brandon Johnson’s administration to try again.
“We challenged this deal once. I think there is yet another possibility. But we have seen no cooperation from the city to this point,” Krislov said.
