Aldermen gave initial approval Thursday to the sale of Chicago’s infamously privatized parking meter system from one owner to another, but not before praise for new perks met concerns that the city is once again getting a subpar deal.
As the City Council’s Finance Committee voted nearly unanimously to advance the $2.53 billion deal for New York investment firm Stonepeak Partners to take over the five decades remaining on the 75-year lease, some aldermen praised the deal as a once-unthinkable score.
But others gritted their teeth and expressed frustration that, upon a closer look, the provisions aimed at enticing them to approve the deal weren’t as valuable as they’d expected.
Still, by the time the meeting ended, aldermen had agreed the new terms made the disastrous 2008 privatization of the city’s once-public system a little bit better.
“We got to put some more sugar in it,” Ald. Anthony Beale, 9th, said during deliberations. “But it’ll take a lot of sugar to get this deal to get sweet. It’s still a little bitter, but it is getting a little sweeter.”
The committee’s decision marks a major step toward the full City Council taking an up-or-down vote on the sale, expected Friday after months of confusion. Aldermen face an Oct. 1 deadline to approve the sale from current controlling owner Morgan Stanley to Stonepeak or risk costly arbitration.
As aldermen began to weigh the sale under the time pressure Thursday, it won subtle praise from Johnson’s top attorney, Corporation Counsel Mary Richardson-Lowry, who announced her retirement last week and is expected to leave her role next week.
In a curtain call before the committee, the typically tight-lipped legal expert told aldermen the widely panned original deal crafted by then-Mayor Richard M. Daley was one of a kind.
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“Yes, the agreement was unprecedented, but so are the terms we are going to put before you today,” she said.
Richardson-Lowry then walked the committee through the benefits she and a group of aldermen negotiated for the city with Stonepeak’s leaders. The city would get a $75 million transfer fee, 2% of any future sale and the opportunity to negotiate over new revenues from technologies like electric vehicle charging, she said.
And she said any future sales would involve the City Council and mayoral administrations in a clearer, simpler way — a key concession after aldermen accused Johnson of not clearly communicating with them as he responded to the proposed sale and even at one point tried to purchase the system back for the city.
But one of the most noteworthy sweeteners announced by a group of aldermen earlier this month suddenly appeared Thursday to be worth far less than previously expected, according to Ald. Bill Conway, 34th.
Conway estimated the deal to be over $100 million less valuable for the city after his questions revealed a pledge by Stonepeak to share 5% of revenues would be weakened by the new owner’s ability to write off interest costs and depreciation.
The revelation drew criticism from other aldermen, including Johnson ally Ald. Jason Ervin, 28th, who called in July for the city to buy the system itself. After Ervin pressed Richardson-Lowry on how the interest and depreciation accounting could impact the deal, she reminded him the city will continue to get nothing if the deal is rejected. The system has generated “significant” revenue in recent years, she added.
“Remember, these are dollars that the city never had before,” she told Ervin.
“And we may not get them,” he fired back.
After crunching the numbers throughout the meeting, Conway, an adjunct finance professor at DePaul University, said he believes the deal would create $139.2 million in present value for the city — a drop of around $80 million from his earlier calculations. The amount is smaller than what had been previously projected, but still “a good win for the taxpayers,” he said.
“The numbers check out. So this is something we should absolutely support,” he added.
Other aldermen raised their own concerns.
Several cited a pledge by Stonepeak officials to sell Omni Air, a cargo airline it owns that conducts long-haul deportation flights for federal immigration authorities. Richardson-Lowry told aldermen they would be able to view records outlining Stonepeak’s planned sale of the airline outside council chambers, and many left the meeting in apparent efforts to check the documents and negotiate over the sale.
Ald. Andre Vasquez, 40th, pressed the top attorney on what legal action the city could take if Stonepeak is slow to sell the airline
“I would not put a legal strategy like that on the record,” Richardson-Lowry said. “But there are rights and remedies that we’ve reserved in this agreement that we would exercise and pursue.”
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Ald. William Hall, 6th, criticized the system’s current and future operator, Chicago Parking Meters LLC, for not working with Black-owned firms.
“A line was drawn in the sand for concerns about dealings with ICE companies,” he said. “There should be a line drawn in the sand, or just some more clarity around why aren’t more Black-led companies involved in the current operation.”
By the end of the meeting, even with their reservations, the aldermen present at City Hall stood resolutely behind the deal.
Ald. Matt O’Shea, 19th, castigated Johnson’s administration for not more clearly and quickly communicating with aldermen about the sale, first sparked over a year ago. But when he listed off the perks aldermen negotiated with Stonepeak after months of pressuring the company. If anyone had told him that’s how it would shake out as the deal-making started, “I would have said you were nuts,” O’Shea said.
“This is a great deal. This is the deal of the century. This is a deal that will never make up for what we were all stuck with back in 2008,” he said. “But this is a deal.”
In a voice vote, only two aldermen — Hall and Ervin — opposed the sale. Tepid applause broke out as aldermen left the hall.