Progress Illinois

The Windy City edition of the New York Times debuted today, featuring an article on the controversial parking meter lease from veteran City Hall reporter Dan Mihalopoulos, now with the Chicago News Cooperative.

In his report, Mihalopoulos digs into the books of Chicago Parking Meters LLC, the private company that now controls the city's meters under a 75-year, $1.15 billion deal with the city. He found -- not surprisingly -- that the company's profits are growing steadily, generating $1.1 million per week, thanks to the higher rates they instituted after taking over the system.  With more gradual increases on the way, the company is projected to collect $46.9 million this year and $79.5 million in 2010.

The most candid remark in Mihalopoulos' piece came from Ald. Rey Colon (35th Ward), who was one of five aldermen to vote against the 2008 ordinance approving the parking meter deal:

Another of the naysayers on the Council, Rey Colon, said this week that the parking meter company’s own numbers showed that aldermen should have raised parking charges and kept the money that the increases would have generated.

“At this rate, it was a great deal for the parking meter company,” he said. “I don’t know if it was a good deal for the city. We should have just bit the bullet and done it ourselves.”

Mayor Daley and some of the aldermen who supported the deal like to make the argument that the city could not have "bit the bullet and done it ourselves" for political reasons.  They further argue that their chosen path -- offloading the responsibility for the system to a private company (who then raises the rates) in return for an immediate windfall -- was a safer approach.  But was it? 

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Yesterday, we highlighted Ald. Berny Stone's (50th Ward) failed -- yet amusing-- effort to discredit the Independent Voters of Illinois-Independent Precinct Organization's (IVI-IPO) new lawsuit challenging the legality of 75-year lease of the city's parking meters. Now the city is taking a crack. The law department released a brief statement yesterday describing the suit as “wholly without merit.” But the Better Government Association's Andy Shaw disagrees.  Appearing on FOX's Good Day Chicago, the watchdog noted that "the legal argument is pretty good." But there's more at stake than just a courtroom victory, Shaw added. "Win or lose, we need some answers." Watch:

SHAW: I think winning the suit is less important that airing some of the issues. Remember that this was a backroom deal, in effect. It was rammed through the City Council in two days last December without public hearings on its impact or due diligence ... and as a result it has been rammed down the throats of Chicago residents and they've been seething ever since. So I think if nothing else, if we get to answer some questions here, the public will be well served.

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After the Independent Voters of Illinois-Independent Precinct Organization's (IVI-IPO) filed a lawsuit yesterday against the city of Chicago challenging the legality of the 75-year parking meter lease, WTTW's Chicago Tonight convened a panel to talk about this latest development.  In a curious selection, Ald. Berny Stone (50th Ward) was tapped to defend the $1.15 billion deal. He squared off against the Reader's Mick Dumke, whose ongoing investigative reporting on the meter lease (alongside Ben Joravsky) has made him an expert on the intricacies of agreement.

During the heated segment, Stone attempted to brush off a series of reports -- including an investigation by Inspector General David Hoffman's office -- exposing how taxpayers were shortchanged by the deal (while the private financial firms who proposed the plan made out like bandits). After Stone dismissed Hoffman's report as "worthless," Dumke asked the alderman, "What research did you do?" Stone's response: "It's none of your damn business." Watch the exchange below (full video available here):

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You don't have to dig too deep into our past coverage of Chicago's tax increment financing (TIF) system to see how the system has been gamed by influential businessmen, deep-pocketed campaign contributors, and the politically connected.  A report (PDF) released today by the Chicago Coalition for the Homeless (CCH) provides yet another reason for outrage. While downtown developers have pocketed millions in taxpayer dollars through TIF, CCH found that a mere 4 percent of property tax revenue diverted by  TIF has been reinvested in housing stock that could be considered "affordable."

Based on their analysis, at least half of all TIF-subsidized residential units across the city sold above the average price of a home in their respective communities. And a mere 27 percent of these units fell within the price range of full-time, low-wage workers. More from CCH:

The data shows that in a quarter of all wards where TIF-subsidized affordable housing was constructed, for-sale units were priced for households earning as much as 2.5 times the community’s median income.  In another quarter of those wards, TIF-funded rental housing cost as much $582 more per month than the average apartment in the neighborhood.

Alds. Walter Burnett Jr. (27th Ward), Manny Flores (1st Ward), and Toni Foulkes (15th Ward) unveiled an ordinance today that would force the city to up the ante by putting 20 percent of the property tax revenue collected through TIF ($555 million in 2007 alone) towards housing for Chicagoans with modest incomes. "These aren't people who are asking for a handout," Flores said at a City Hall conference today. "They're asking for a hand up." Watch:

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Yesterday, we highlighted a rare bit of good news for Illinois schools: Revenue from large-scale wind projects are providing relief to some downstate school districts who've been struggling to cope with unreliable state funding. For instance, by next year, the Colfax school district will net an additional $1.7 million in new revenue from Horizon Wind Energy's Twin Groves Wind Farm. For a rural district operating on an $8 million annual budget, that is money that will go a long way.

The economic power of the wind industry -- which is anticipated to invest $1.9 billion in Illinois over the next 25 years -- looks equally promising for the state as a whole, according to some new research out of Illinois State University.  Economist David Loomis of the school's Center for Renewable Energy examined the economic impact of Illinois' 17 major wind projects (and the 1,118.76 MW of energy they've generated).  He found that the farms have succeeded in generating sizable and sustainable revenues, including upwards of $11.4 million in new property taxes each year.

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On the heels of Inspector General David Hoffman's report criticizing the City of Chicago's low-ball valuation in leasing its parking meter system, it's important to remember what we gave up in the deal: not just a billion additional dollars, but also one of the city's "most powerful transportation planning tools," as David Hoyt wrote on Huffington Post Chicago back in January:

San Francisco is pioneering a high-tech pilot program that will let parking meters charge a true market rate, based on hourly variations in demand (from $0.25 to $6) at individual meters in a given neighborhood.

If a parking system actually did that -- letting the true market cost of public curbside parking vary with demand -- then, as parking researcher and guru Donald Shoup [PDF] argues, you would considerably reduce congestion, as well as the frustration of circling for a parking spot at ungodly hours in ungodly conditions. You could then channel the revenue, through neighborhood parking benefit districts, to projects in the district area, or to related public goods such as a modernized transportation system in Chicago.

The latter prospect, however, is entirely lost in the Morgan Stanley privatization deal. What could be a long-term revenue generator for a city in budgetary crisis and with an enormous backlog of deferred public transportation maintenance has been traded for a one-time fix in operating revenue.

And it leaves one of the most powerful of transportation planning tools -- parking policy -- in the hands of a privately held company that specializes in parking garages.

The San Franscisco experiment further undermines the city's argument that it was politically "impossible" for the government itself to raise parking meter rates.  Also, if you're interested in learning more about parking policy, be sure to check out the Shoup report linked to above. Fascinating stuff.   

As we noted earlier, Inspector General David Hoffman issued a scathing report this afternoon estimating that the Chicago was shorted upwards of $1 billion by Mayor Daley's 75-year lease of the city's parking meters.  Hoffman repeatedly criticizes the city for "fail[ing] to calculate how much the parking-meter system would be worth to the City over 75 years if it retained the system rather than leasing it."  It's clear that Daley's folks tried their darndest to dissuade the inspector general that such an analysis wasn't necessary:

The City has also argued that it would make no sense to calculate the value of the parking-meter system to the City under the terms of the lease, because the City could never operate the parking meters under the same terms as a private company. Specifically, the City has argued that (a) it would have been impossible for the City to have both kept the parking-meter system and raised the rates to the same extent as the lease, because there was not sufficient political will to do so (the “impossibility argument”); and (b) any private company would be able to operate the parking-meter system more effectively and efficiently than the City could (the “government inferiority argument”).

Not only was Hoffman not buying these excuses, he rebuts them directly.

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The AP has an article out on the increasing number of cities looking at leasing off public infrastructure, particularly parking meters and garages (this despite the ongoing Chicago debacle). Front and center is a quote from Mayer Brown attorney John Schmidt:

"Every city in this country is in real financial strain at the moment and every city in this country has parking in some form," said John Schmidt, a partner at the Mayer Brown law firm, which has represented Chicago in its failed airport deal and other leases.

While Schmidt doesn't appear to have been directly involved in the botched parking meter lease, he is at the center of the "public-private partnership" (P3) craze, as the National Law Journal noted last June:

"Cities and states have discovered that they have assets that are enormously valuable in what has become a world infrastructure market," said John Schmidt, a Mayer Brown partner who led the Chicago law firm's work on the Pennsylvania Turnpike project. "You have investors that are very interested in acquiring those assets."

Mayer Brown was at the genesis of the recent surge when it represented the city of Chicago in its lease of the Chicago Skyway for $1.83 billion in 2005 and in its work with Ice Miller on the lease of the Indiana Toll Road for $3.8 billion the following year.

"At the genesis," indeed.  And if Chicago is the Garden of Eden, you know who Schmidt represents.  He has sheparded the Chicago Skyway and Indiana Toll Road leases, was behind the unsuccessful Midway Airport project, and has advised Pennsylvania on an attempt to lease its 535-mile turnpike. (See update below.)

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Last Friday, State Sen. Martin Sandoval and State Rep. Julie Hamos -- chairs of the House and Senate transportation committees -- took a group of lawmakers, transit officials, and reporters for a tour of the Chicagoland region's mass transit system. From a Metra station in Cicero to a Pace bus lacking air condition, the group saw firsthand what commuters deal with daily -- a system in urgent need of repair. "It was an eye-opening day," Sandoval told reporters at a press conference in Springfield yesterday, "going around Metra, CTA, [and] Pace and witnessing the decay and the rust and the strain on our system.”

Sandoval stressed that now is the perfect time to enhance the system's capacity and create jobs through intense state investment. That's why he formally endorsed the Transportation for Illinois Coalition's (TFIC) proposed capital plan yesterday, which calls for $13.5 billion in infrastructure spending over five years to cover a “minimally adequate, maintenance- and safety-focused program.” While a 2006 study conducted by TFIC found that Illinois transportation projects needs exceeds $23 billion, the coalition -- consisting of 70 members such as the AFL-CIO, the RTA, and the Chamber of Commerce -- eased their request because of the state's budget deficit. Yet the pared-down figure is still almost $10 billion more than Gov. Pat Quinn allotted for roads and rails in his capital bill. TFIC consultant Linda Wheeler explained the differences between the two proposals in Springfield yesterday. Watch it (full video at Blue Room Stream):

Finding an adequate revenue source will be the big sticking point, as Illinois Issues' Bethan Jaeger explained:

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Yesterday, members of the organization Action Now gathered on Chicago's Garfield Boulevard to protest the "unfair and unequal distribution of resources in the City of Chicago," particularly with regards to pothole repair.  The group located the rally about four miles west of Washington Park, the proposed site of the 2016 Olympic stadium, where the city had recently repaved surrounding roads in anticipation of the International Olympic Committee's current visit. From a statement released yesterday prior to the action:

While Mayor Daley has been repaving roads around the Olympic sites and spending money beautifying downtown, Chicago residents on the South and West Side are damaging their cars because of massive potholes that have been growing more dangerous year after year. Once again city resources are being unequally distributed and working families are bearing the brunt of this neglect. [...]

Action Now members and community residents have tried calling 311, yet still nothing gets done. We’re tired of waiting.

Well, they didn't have to wait long. The Tribune reports today that just as the demonstration was set to begin "Chicago Department of Transportation crews showed up, filling holes along a stretch of Garfield, including the area where the demonstrators had gathered."  The article goes on to quote a city spokesman saying the timing of the repairs were "coincidental."  Right.

The group posted photos of the crews going to work on the stretch of road, which you can view here.