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the urban politician Dec 2, 2008 2:57 PM

Last Spring I was trying to find the location for the boathouse in Hyannis, Massachusetts to catch a ferry to Nantucket Island. The guy on the phone, in his New England accent, said "if you can't find us then you don't deserve to go to Nantucket!" :haha:

Weed out the weak. Chicago's time has come to stop catering to the Orlando crowd and just let things be, I say..

the urban politician Dec 2, 2008 3:12 PM

No mention yet of the 4 planned BRT routes that depend on this transaction being completed:

City reaches deal to lease parking meters
December 1, 2008 at 7:05 PM | Comments (4)
The city has reached a deal for the long-term lease of Chicago's parking meter system -- a key step in balancing the city's budget, City Hall sources said today.
Mayor Richard Daley has scheduled a 10 a.m. Tuesday news conference at his office, where he is expected to provide details of the deal. Aldermen are scheduled to consider the deal, which requires their approval, at a meeting of the City Council's Finance Committee on Wednesday.
Daley administration officials opened sealed bids today from private companies that want to operate the city's parking meters, the sources said. Officials declined to say who submitted the winning bid and how much that bidder offered.

But the city is counting on $150 million from the deal to help plug a $469 million budget deficit this year and in 2009, according to administration officials. And the administration expects further proceeds from the deal to help pay for city government for several years.

The parking meter deal follows the 2005 privatization of the Chicago Skyway and the recent long-term lease of Midway Airport to a private operator for $2.5 billion

arenn Dec 2, 2008 3:51 PM

It's one thing to lease facilities to pay for one time or capital upgrades, but I'm not convinced that selling the family silver to cover operating deficits is a wise long term move.

Mr Downtown Dec 2, 2008 4:50 PM

Quote:

Originally Posted by the urban politician (Post 3947017)
Weed out the weak. Chicago's time has come to stop catering to the Orlando crowd and just let things be, I say..

Yes, making life difficult for prospective patrons has been a successful business strategy in so many industries . . .

lawfin Dec 3, 2008 12:47 AM

ALthough I am not oppossed to the increase in parking meter rates. One does have to wonder with all the new revenue streams: Midway, Skyway, Increased tourism from Millenium Park, Increased tax revenue from new high value property in the central area (residential and commercial), increased sales tax rate (perhpps offset by decrease in aggregate sales???), advertisement revenue on buses / trains etc....

Where is all this extra cash going and how come it does not seem to be helping stem the tide of an increased deficit?

Seriously, where is the dough going?

pip Dec 3, 2008 1:15 AM

^state law mandates that 90% go to infrasructure for the sale of properties or things, Midway

the increase in sales taxes is Cook County not the City ofChicago

inreased taxes from real estate in downtown? Real estate transfer taxes have ground to a halt partially offsetting.

Millenium Park and tourism. Recently tourim is doan and the tourists that do come spend less.

All revenue into the City is way down except the sales of assetts

revenue from adds on CTA busses and trains is a drop in the bucket to the Governors elderly ride free, loss of 30 million a year in the reduced fares intake, and sales for the extra sale's tax is down or nowhere near expected because of the economy that was appropiated for the cta.

the urban politician Dec 3, 2008 2:18 AM

I'm surprised that there has been very little discussion about metered parking rates increasing significantly in Chicago in the next few years (and for the first time in 70 yrs in some places, according to the Tribune).

There's a BLOODBATH going on in the Tribune commentary section, and everybody is after Daley. I can't begin to estimate how many commentators vowed to move out of the city and never visit again :haha:

Any thoughts? I dunno, I guess some more transparency with how this money (and the money from other windfall leases) is used would be nice, and for once I'd like to see Daley use some of this money for transit. But all in all, is increasing the cost of parking such a bad thing? Perhaps higher turnover in the meters will actually make parking more available for businesses.

denizen467 Dec 3, 2008 2:30 AM

Quote:

Originally Posted by the urban politician (Post 3947017)
"if you can't find us then you don't deserve to go to Nantucket!" :haha:

Weed out the weak. Chicago's time has come to stop catering to the Orlando crowd and just let things be, I say..

There's a place for that kind of attitude - places whose selling points are tranquility or exclusivity, of which Nantucket is one. It's not quite compatible with Chicago's positioning though. I appreciate the thought that Chicago should aim for Manhattanness and not sacrifice naturally-evolved hard edged urban experience for visitors' creature comforts. However, (1) tourists seeking that will often just opt to go to Manhattan, and (2) tourists coming here are likely Midwesterners and may have different preferences than people from the Northeast. I think "user-friendliness" is essential in Chicago, is a valuable selling point as a "smarter" 21st century way to offer an urban experience, and can successfully be balanced with other essential aspects of an aggressive city experience.

the urban politician Dec 3, 2008 3:09 AM

Quote:

Originally Posted by denizen467 (Post 3948721)
I appreciate the thought that Chicago should aim for Manhattanness and not sacrifice naturally-evolved hard edged urban experience for visitors' creature comforts. However, (1) tourists seeking that will often just opt to go to Manhattan, and (2) tourists coming here are likely Midwesterners and may have different preferences than people from the Northeast. I think "user-friendliness" is essential in Chicago, is a valuable selling point as a "smarter" 21st century way to offer an urban experience, and can successfully be balanced with other essential aspects of an aggressive city experience.

^ Frankly, I never thought of it this way, in that "midwestern" context. After what feels like countless years living out east I may have lost some touch with the midwestern mentality, but certainly this is an excellent point you've made.

In regards to the topic of the parking meters, I thought I'd post this rather breaking news to perhaps kickstart a discussion:


(Click link and scroll down to read all the angry commentary for a bit of fun):

Most city parking meters to cost $1 an hour

Posted by Dan Mihalopoulos at 10:30 a.m.; last updated at 3:50 p.m.

Rates for most city parking meters will increase to $1 an hour starting Jan. 1 as a result of Mayor Richard Daley's deal to lease the spots for $1.1 billion to a private firm.

Two-third of the city's meters now cost 25 cents an hour, but once the paperwork is finalized, any metered spot costing less than $1 per hour will increase to $1 next year, city officials said today. And by 2013, those same metered spots will cost $2 an hour, according to City Hall.

The most expensive meters, which are found in the Loop, cost $3 an hour now. They will increase to $3.50 an hour next year and $6.50 by 2013.

City Hall officials said that after the first five years of the 75-year parking meter lease, rate hikes will be subject to approval by alderman and are expected to be at the rate of inflation.

The $1.1 billion to city coffers will come from Chicago Parking Meter LLC, which is made up of two Morgan Stanley infrastructure funds.

The Daley administration said $400 million will go into a long-term reserve, $325 million will be spent in city budgets through 2012 and $100 million is earmarked for programs helping low-income people. An additional $324 million is headed toward a fund city officials said "may be used to help bridge the period until the nation's economy begins to grow again."

Daley said the meter money does not preclude further spending cuts, including layoffs, in the coming months and years. That depends on how bad the economy gets, he said.

Even with this new money, the city projects deficits of about $200 million a year for several years to come, Daley said.

"That could grow. That could get much bigger," he warned.

Paul Volpe, the city's chief financial officer, said revenues are down even worse than expected. Real estate tranfer tax revenue for November was $4.3 million --- the city's worst month in more than 10 years.

According to the city’s request for bidders to come forward, the lease would cover 36,161 parking spots.

The city has markedly expanded the parking meter system in recent years, and revenues from the meters have increased, too.

There were 30,559 metered spots in 2004, generating net income of $13.6 million. By 2007, net income had risen to $18.9 million, according to city documents.

the urban politician Dec 3, 2008 3:15 AM

Quote:

Originally Posted by Mr Downtown (Post 3947201)
Yes, making life difficult for prospective patrons has been a successful business strategy in so many industries . . .

^ Yeah, and taking business from one industry (CTA, taxicabs) to help another (restaurants, shops, Navy Pier) is an even better business strategy...

arenn Dec 3, 2008 3:51 AM

There are big differences between the parking meter lease and the Skyway/Midway leases. In the former cases, the city leased assets that were non-revenue producing for the city. That is, both of them either broken even (Midway has not been the contributor to city coffers that O'Hare has) or lost money (the Skyway until Daley shrewdly wiped out the bondholders). But parking meters are a revenue generator. The city has capitalized the entire future revenues stream for 75 years to get money now. That puts a hole in future budgets and takes away a revenue stream more or less permanently.

It looks to me like $400 million more for the Olympics (the "long term reserve") and 750 million to plug budget holes in the short term.

Ch.G, Ch.G Dec 3, 2008 4:18 AM

Quote:

Originally Posted by the urban politician (Post 3948837)
^ Yeah, and taking business from one industry (CTA, taxicabs) to help another (restaurants, shops, Navy Pier) is an even better business strategy...

Right? And the idea that Chicago's only selling point is free trolley service? Are you guys for real? Not only do I predict zero impact on Chicago's tourism industry, I also predict tourists will manage just fine.

About the privatization of the parking meter system: I find myself in favor of anything that punishes driving (or, rather, better assesses its costs) and pushes people towards mass transit. But that's just it: The revenue should go to modernizing the rail system and not frittered away on operating budgets. And a functioning CTA would probably do more for Chicago's low-income population than $100 million in program funding.

Also-- and maybe these are retarded questions the answers to which were provided earlier-- I wonder who will enforce the meters. The CPD? Or Chicago Parking Meter? And who gets the ticket revenue?

pip Dec 3, 2008 4:23 AM

the more services that are not run by the City the better. A city government is inherantly very expensive and inefficient to run. I look at it like a back to basics type thing for the city.

While I know the parking meters net 19.5 million last year it is still not another service run by the city. The less the better.

Also with the worldwide recession like no others what else was the city to do? Raise property taxes all the while personal income has stagnated and forclosures are rampant?

edit: good questio. Who gets the ticket revenue?

VivaLFuego Dec 3, 2008 4:30 AM

Quote:

Originally Posted by lawfin (Post 3948501)
Increased tax revenue from new high value property in the central area (residential and commercial)

That is not quite how property tax works. The tax rate is calculated each year by taking the total levy divided by the sum total assessed value of all properties subject to the tax. It varies by the taxing district, and each property is subject to perhaps 5-10 districts depending on location. Us downtown residents still see an "Urban Mass Transit" taxing district created to build the downtown subway system in the 1960s that never happened. The Public Schools tax has been inching up in recent years, for example, while the county has stayed constant and some others like Forest Preserve I think have declined. My property taxes have actually declined about 1% in nominal terms of the past few years - go figure.

Granted, of course, that lots of new development and booming property values give the taxing body much more political wiggle room to increase the levy - but generally speaking, the district sets its levy which implies the tax rate, not vice versa. This is why the property tax is such an amazing and reliable tax - and why it's so idiotic that all levels of government here in Chicago have sworn off of it as a revenue source, favoring instead stuff like sales taxes (somewhat unreliable) and real estate transfer taxes (incredibly unreliable).

The tax rate itself is incidental - in fact, Cook County's tax rate has fallen in half in less than 10 years...

Quote:

increased sales tax rate (perhpps offset by decrease in aggregate
sales???)
... hence the need for Cook County's sales tax hike, because it's property tax collection was actually decreasing in real (inflation-adjusted) terms, since the property tax levy has been held constant. The increase did not have to be an entire 1%, but something was necessary because the property tax levy is frozen and not growing - even with inflation.

Quote:

advertisement revenue on buses / trains etc....
This is a relatively negligible amount of money... somewhere on the order of $30 million a year. Blagojevich's free rides fiasco alone negates that. CTA alone has an operating budget of $1.1 billion and the city is what, around $5 billion I think.

Quote:

Where is all this extra cash going and how come it does not seem to be helping stem the tide of an increased deficit?

Seriously, where is the dough going?
Very generally speaking, I would say it is a combination of two things: (1) going to union wages and benefits (pension and retiree healthcare are very expensive propositions, the latter especially ballooning in recent years). There's more to it than that, but wages and benefits are a huge chunk of it. And of course, the city unions locked in their cushy contract a year ago to avoid any labor strife prior to 2016.... and it took exactly one budget year before things blew up requiring layoffs and the desperate rushed sell-off of the parking meters asset to use a portion to plug an operating budget hole. Meh.

also, (2) TIF districts, which now siphon off about $500 million annually in property tax collections. TIF districts are de facto tax increases or budget cuts, because they either (a) require new revenue (taxes) to account for the shortfall they cause in subsequent years, or (b) require reductions in real spending, because general fund tax revenue is decreasing at that much slower a rate as compared to operating expenses.

the urban politician Dec 3, 2008 4:36 AM

Quote:

Originally Posted by arenn (Post 3948922)
There are big differences between the parking meter lease and the Skyway/Midway leases. In the former cases, the city leased assets that were non-revenue producing for the city. That is, both of them either broken even (Midway has not been the contributor to city coffers that O'Hare has) or lost money (the Skyway until Daley shrewdly wiped out the bondholders). But parking meters are a revenue generator. The city has capitalized the entire future revenues stream for 75 years to get money now. That puts a hole in future budgets and takes away a revenue stream more or less permanently.

^ The city will put $400 million away for "future use" but the interest of $20 million per year that it collects from that will replace the lost parking meter revenue. So that issue is resolved. The beauty is, this gives Chicago the opportunity to jack up the cost of parking without as much of the political tug-of-war and fallout (ie we had to do it to save the budget, look we got 1.2 billion dollars out of it! and it's not us raising the revenues, it's that new company that runs the meters..etc)

Quote:

It looks to me like $400 million more for the Olympics (the "long term reserve") and 750 million to plug budget holes in the short term.
^ So if Chicago doesn't get the Olympics, perhaps some of that can be used to upgrade the transit system? Now that's always a possibility...

VivaLFuego Dec 3, 2008 4:47 AM

The parking meter discussion is very interesting. The concessionaire can not have any power to set rates - they can only be set by the city council. Meters only exist legally as an exercise of the police power, which government cannot delegate to a private authority. Meters are not, legally, a revenue-generating government power (the revenue generation is incidental in the effort to maintain peace by keeping parked cars circulating, or something to that effect). The contract for this deal will be an interesting read, since the city cannot contractually commit to the subservience of its police power to private interests. Furthermore, future changes in the number and location of meters impact how much money the concessionaire can make and ergo the value of the contract to them and the city, so there has to be some accommodation for that fact.

Even with these hikes in parking rates, in many locations at many times street parking will still be dramatically under-priced, but it's a step in the right direction from a transportation planning/economics standpoint. The next step should be at least quadrupling the annual fee for the residential zone permit stickers, and somehow figuring out a legal way to institute variable meter pricing to accommodate the peaking behavior of parking demand at neighborhood retail strips. On summer Saturday afternoons at Clark/Fullerton, Belmont/Broadway, North/Sheffield etc. the market rate is probably pushing $10/hr.

$100 million for "programs helping low-income people" sounds like money being flushed down a toilet of graft to me, but I guess that's the price of business in Chicago. Y'all should check out the millions of dollars in the city budget spent on services for the various neighborhood organizations/groups sometime by exploring the Contract Awards section of the city's procurement site.

Ch.G, Ch.G Dec 3, 2008 5:09 AM

Thanks for all the details, VivaLFuego. I think you're absolutely right that parking is dramatically underpriced; anything that helps to correct that is a good thing. Now that the city is replacing meters with kiosks and stickers, shouldn't "variable meter pricing" be easier to accomplish? I mean, were the city (or Chicago Parking Meter) to want to.

It all begs the question, to: Is the public entitled to parking-- that is, free parking or parking whose price is determined by the need for fair circulation and not the market? That idea seems like a relic of a bygone era when driving was considered a social good.

Anyway, I was especially interested by this point:

Quote:

Originally Posted by VivaLFuego (Post 3949043)
the city cannot contractually commit to the subservience of its police power to private interests.

I guess my questions weren't out there after all? The CPD is publicly funded. If it continued to patrol meters then that's a hidden cost which eats into the $1.1 billion. However, that would be moot if what you say is true, VivaLFuego, which case Chicago Parking Meter would have to incorporate some kind of a security staff or towing agency into its business, yeah?

VivaLFuego Dec 3, 2008 5:27 AM

I'm not sure exactly how it's going to work from a legal standpoint - I wish I did, and hopefully will eventually. But I'm just pointing that this one in particular (in contrast to say, the downtown parking garages) is an interesting legal case because of the connection to the police power. I know San Francisco is launching some sort of pilot program with variable meter pricing, but I'm not sure if they're in a different legal environment vis-a-vis state laws regarding parking meters than we are in Chicago and Illinois.

As I understand it now, parking violations can be written by contract employees, not only uniformed officers. Maybe someone else can confirm. The "police power" is more of a legal concept than a reference to actual cops on the beat. I have to imagine that, even if it's ultimately city employees or city contractors enforcing the meters, that enforcement cost would still be paid by the concessionaire. But again, the demand for enforcement is also proportionate to the number of meters, their hours of operation, etc. all of which can change in the future, and surely will at some point during the life of the concession.

I think a determination of whether the city got a good deal will be in the sum total of how all these little details were handled in the contract.

arenn Dec 3, 2008 2:30 PM

Quote:

Originally Posted by pip (Post 3949001)
the more services that are not run by the City the better. A city government is inherantly very expensive and inefficient to run. I look at it like a back to basics type thing for the city.

While I know the parking meters net 19.5 million last year it is still not another service run by the city. The less the better.

This is not about outsourcing for efficiency, it's about outsourcing to raise revenue. No matter how efficient the private operator is at running parking meters, the rates to consumers are going up 4x.

pip Dec 3, 2008 2:51 PM

to a whopping dollar

my point is the less the city has to do the better. The city is inefficient, beaurcratic, and expensive to run, no matter what it does. They should focus on their core stuff, like running the city.


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