Mayor Brandon Johnson’s budget chair took a stand against the planned sale of Chicago’s infamous parking meter lease to a private firm Monday, arguing the city should instead create a trust to purchase the system itself.
Ald. Jason Ervin, 28th, one of Johnson’s closest allies, became the latest council member to join the naysayers on the proposed deal that would land the system a new owner. His stance came as the mayor’s Finance Committee Chair Ald. Pat Dowell, 3rd, was expected to pull a vote Monday afternoon, sources told the Tribune.
The transfer from Chicago Parking Meters LLC to Stonepeak, a New York investment firm, has been broadly opposed by progressive mayoral allies and moderate opponents alike while Johnson has carefully avoided taking a public stance. The last-minute delay by Dowell keeps alive the proposal that appeared to have dubious chances of advancing on Monday.
The sale would mark the first transfer of a system privatized by then-Mayor Richard M. Daley in a 75-year lease that’s become known as a disastrous transaction for the city. But many aldermen have mused about their ability to improve the deal by threatening to reject the sale, which requires their approval, and using that leverage to win concessions.
In a statement shared with the Tribune, the alderman of the West Side 28th Ward joined the fray — and made the clearest call yet for the city to take the system back. Ervin said he was opposed to any sale of the parking meters until Chicago evaluates creating a taxpayer-backed trust that can acquire and manage such infrastructure assets.
“The parking meter deal has been one of the most damaging financial decisions in Chicago’s history,” Ervin said in the statement. “Now that the concession is changing hands, City Council has leverage we may never have again. We should not simply approve a new private owner and move on. This is more than trying to fix a bad deal. It is about forcing us to create a good investment policy for Chicago’s future.”
Dubbed the Chicago Public Infrastructure Trust, the arrangement could hold the meters for the remainder of the deal with an ownership structure similar to the city’s pension systems, based on respective capital contributions, Ervin’s statement said. The public financing options include pension investment capital, pension obligation bonds, tax-increment financing revenue bonds and TIF-funded expenditures.
The four-term alderman argued the city will always lack leverage when potential sales of the meters come up without a trust that can independently vet such transactions, arguing that if global pension funds can invest in infrastructure, then Chicago should be afforded the same approach.
“Chicago uses taxpayer-supported tools every day to invest in neighborhoods, infrastructure and economic development,” Ervin said. “We should be asking how those tools work together. … They should be part of a coherent strategy to build public wealth.”
Johnson said the city bid for the lease earlier this year before pulling the offer off the table because the payments on the debt would be too big a burden.
A large majority of Finance Committee aldermen appeared poised to vote against the $2.53 billion sale to Stonepeak. Many Johnson allies pinned pledged no votes on the ownership of a company that carries out long-haul deportation flights, while other aldermen argued Johnson’s team had not communicated transparently enough to secure their support.
But while the deal now survives, it still faces a daunting and growing challenge to pass.
Meanwhile, new details about Johnson’s own effort to buy the parking meter system using taxpayer money came to light in a memo sent by the mayor’s administration to aldermen.
Johnson made three nonbinding bids to buy the system, ranging from $2.8 billion in October to $2.85 billion in November and $3.2 billion in December, according to the letter sent by acting CFO Steven Mahr and obtained by the Tribune.
The city’s bid needed to be far higher than other bids because the company would have faced major tax liabilities if it had sold to the city, Mahr wrote.
The city’s last offer was deemed the winning bid, but Johnson’s team backed off the deal in part because it feared parking habits could change. If parking revenue wasn’t enough to finance the debt needed to complete the purchase, the deal could take up money from the city’s main operating fund, Mahr wrote.
Mahr said Johnson’s administration worked on the deal with consultants from Ernst & Young and JP Morgan. Aldermen did not learn of the proposed purchase till January, when Johnson announced he had backed off of the bid.
The parking meter company has repeatedly asserted that aldermen do not have the right to reject the deal if Stonepeak is determined to be capable of effectively running the system. CPM attorneys have raised the specter of legal action if the deal is shot down, warning a rejection could cause the city “catastrophic” financial damage.
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The company’s attorney, Dan Webb, said once again that the “politically contentious issues” are not legal grounds to reject a deal in a letter obtained by the Tribune.
“The concessionaire has done everything in its power to work with the city to keep the proposed transfer on track for approval, and avoid the needless collapse of a major commercial transaction, which would benefit no one,” Webb wrote.