As aldermen toy with the possibility of blocking a sale of Chicago’s parking meter system, its deep-pocketed owners are puffing out their own chests in return.
The system’s ownership group, led by Morgan Stanley and in part owned by the Abu Dhabi Investment Authority, sent a letter to Mayor Brandon Johnson’s administration last week warning that the city could face “financial catastrophe” if aldermen move ahead on their threats to reject a sale to a new owner.
The aldermanic resistance threatens to tank the sale to New York investment firm Stonepeak Partners, attorney Dan Webb wrote on behalf of the owners in the letter he said was sent to the city last Wednesday. If that happens, Webb warned the city would have to pay up.
“If the City breaches (the contract), with the result that the sale to Stonepeak collapses, that will destroy value measures in the billions of dollars — for which the City will be held legally responsible,” Webb wrote.
Webb’s letter did not specify whether the owners would sue the city if the council turns down the deal. But by invoking the possibility, it appeared designed to spook aldermen planning to vote against it.
A majority of aldermen have said they will either vote no or are considering doing so. Some frame their position as a protest against Johnson, who they say has not transparently shared information during the process.
It appears Johnson’s team did not broadly share the letter from Webb with aldermen, potentially leaving them in the dark on the meter owners’ position.
City Law Department spokesperson Kristen Cabanban refused to confirm or deny the department had received the letter, citing Law Department policy. Johnson spokesperson Allison Novelo, meanwhile, said in a statement that “The Mayor’s Office has not received such correspondence.”
Webb said the letter was sent to Johnson’s office and attorneys, but declined further comment.
Some on the City Council argue the body has leverage to finally improve the infamous parking meter privatization deal, but must threaten a rejection to win concessions.
The letter officially marks an unsurprising position for the owners who have a keen interest in closing on the 10-figure transaction. Aldermen must now determine if the legal threat has credence or is a posturing effort aimed at getting them in line.
Contract components narrowly restricting how “the city” can review the deal also apply to aldermen, Webb argued in the letter.
The sale marks another chapter for the 2008 privatization scheme masterminded by former Mayor Richard M. Daley and maligned ever since. The $1.15 billion cash payout Daley’s administration got for selling a 75-year lease of the system, after only three days of City Council discussion, pales in comparison with what it has earned for its private owners: over $2 billion in revenue, including $189 million last year alone.
Aldermen were scheduled to finally discuss the parking meter sale in public Monday, but Finance Committee Chair Ald. Pat Dowell, 3rd, announced just as it was set to start that the meeting was canceled.
Dowell said Stonepeak finally shared more than 1,000 pages of information requested by aldermen late Friday night and added that her City Council colleagues asked her to delay the meeting so they could read the documents shared by the company.
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Aldermen previously believed they faced a June 30 deadline to vote on the sale, but Dowell said Monday that the companies involved had agreed to an extension until July 24.
Dowell declined to say Monday whether she believes, as some aldermen do, that the council has sweeping power to approve or reject the sale for any reason. She cited the part of the contract that allows aldermen to analyze the buyer, including by scrutinizing its reputation, as something aldermen could use to reach approval or rejection.
“I think we need to have more information on what that relationship is between Stonepeak and Omni International,” she said, citing the investment firm’s ownership of a company that conducts long-haul deportation flights for the federal government. “That’s probably one of the items that could be considered.”
Stonepeak Managing Director James Wyper called the delay “quite disappointing” in a Tuesday morning statement. The company has made “every effort” to engage with city parties about the sale, he wrote. Stonepeak representatives were at City Hall ready to present to aldermen Monday and “remain available to thoroughly and transparently answer any questions,” he added.
“The relationship with the City and its citizens is critical for Stonepeak and we do not want there to be any ambiguity as to our commitment to an open and honest dialogue,” Wyper wrote.
Downtown Alds. Brian Hopkins, 2nd, and Brendan Reilly, 42nd, said they did not object to Dowell’s decision to delay the meeting. They pinned the need for the rescheduling on the mayor.
“We have the mayor to thank for that,” Reilly said. “To expect us to process reams and volumes of information on a dime, turn around and have a productive hearing today, I think, is ridiculous. It was reasonable to put off this hearing. We should have gotten this information months ago.”
Both signed a letter sent by 22 aldermen to Johnson last week that pledged “no” votes on the deal not because of its merits, but because Johnson’s administration “has systematically withheld the information necessary for property evaluation.”
The letter argued that Johnson’s administration did not properly notify aldermen of the sale and has cited a confidentiality agreement while not sharing much-needed legal and financial experts to analyze the deal.
Hopkins and Reilly criticized Johnson’s team for stating in an ordinance that Stonepeak met the contracts requirement. The administration must share its reasoning for making that determination, they said.
Still, Hopkins said he believes aldermen do indeed have the ability to reject the sale, a stance that would enable them to use the threat of doing so to extract better terms on a much-derided privatization scheme long viewed as ironclad.
“Why would you tell a legislative body it has the authority to vote on something, but it doesn’t have the authority to actually make the decision? That is nonsense,” he said.
For his part, Johnson has rejected the claim that he has not been transparent amid the sale. Novelo said the administration shared information with aldermen “at the earliest practicable opportunity” and has not agreed to any timeline that dictates how long aldermen have to make a decision.
Johnson’s administration continues to claim it is bound by a confidentiality agreement reached when it briefly pursued buying the system back — at an estimated $3 billion — in January. Johnson quickly backed off the purchase attempt days after it was first reported, despite reports that Morgan Stanley lifted the confidentiality limits.
Johnson continued to place the burden of decision-making on alderman Tuesday, saying during an unrelated news conference that it was “something that the City Council is going to have to heavily consider.” Asked by reporters, Johnson did not elaborate on the Law Department’s views on the sale, including the question of whether there is a chance aldermen can push for changes to the contract.
“There might be,” he said. “Look, this is why I think it’s important they go through a thorough process.”
Ald. Bill Conway, 34th, one of the first City Council members to highlight the potential to hold up the sale and get a better deal, said he had not seen the letter when asked about it Monday. But the threats won’t make aldermen speed up, he said.
“The 2008 agreement was rushed through, and that’s part of the reason it was so disastrous, and that makes it all the more important that we make sure that we are making the proper decisions for the taxpayers,” he said.