Parking meters and prisons: Top six privatization horror stories (Click on this heading to read more)Rss@dailykos.com (laura Clawson)
Sunday, December 29, 2013, 10:16 pm
Parking meter reading "time expired."
Selling public resources to private companies for them to profit off of is a hot trend in cities and states-not all of them controlled by Republicans, either. Privatization deals affecting everything from parking meters to child welfare to public water systems are often negotiated in secret, carried out with little oversight, and subject to massive cost overruns and corruption.
The sordid story of Chicago's parking meters has to be a top entry in any "worst privatization stories" competition. Rick Perlstein laid out the ugly details in The Nation a couple months back:
Mayor Richard M. Daley in 2008 struck a deal with the investment consortium Chicago Parking Meters LLC, or CPM, that included Morgan Stanley, Allianz Capital Partners and, yes, the Sovereign Wealth Fund of Abu Dhabi, to privatize our meters. The price of parking-and the intensity of enforcement-skyrocketed. The terms were negotiated in secret. City Council members got two days to study the billion-dollar, seventy-five-year contract before signing off on it. An early estimate from the Chicago inspector general was that the city had sold off its property for about half of what it was worth. Then an alderman said it was worth about four times what the city had been paid. Finally, in 2010, Forbes reported that in fact the city had been underpaid by a factor of ten.
Not only does CPM get the money its meters hoover up from the fine upstanding citizens of Chicago. It gets money even if the meters are not used. Each meter has been assigned a "fair market valuation." If the City takes what is called a "reserve power adverse action"-that can mean anything from removing a meter because it impedes traffic flow, shutting down a street for a block party or discouraging traffic from coming into the city during rush hour - "CPM has the right to trigger an immediate payment for the entire loss of the meter's fair market value over the entire life of the seventy-five-year agreement."
Shut down one meter that the market-valuation says makes twenty-two bucks a day, in other words, and the City of Chicago has to fork over a check for $351,000-six days a week ... fifty-two weeks in a year, times seventy-five-within thirty days. Very easily, Geoghegan points out, a single shut-down of parking in a chunk of the city-say, for something like a NATO summit Chicago hosted last year-"could be more than the original purchase price of the deal."