The infamous parking meter lease that Chicagoans love to hate is switching hands, with a New York investment firm taking over after aldermen got them to improve the deal.
The City Council on Tuesday approved the sale of the parking meter system to Stonepeak Partners by a 46-3 vote. The firm made key concessions during the final stretch of a monthslong, high-stakes negotiation in order to get the $2.53 billion package across the finish line.
While it does not buy back the roughly 36,000 meters across the city, supporters of the transfer framed it as a big improvement over Mayor Richard M. Daley’s 2008 sale that’s now widely mocked as a boondoggle and viewed as a black mark on the aldermen who voted for it.
More Top Picks Fl 41 Glasses For Migraine What The Research Shows
“This was the definition of high stakes. I think through gritty and nuanced negotiations, and by facing the hard-hitting truths, I think today we delivered to all of Chicago a better deal than we delivered in 2008,” Finance Committee Chair Ald. Pat Dowell, 3rd, said.
The decision allows the system’s remaining 57 years on the lease to be sold by the current ownership group controlled by Morgan Stanley to Stonepeak. It got over the finish line with under two days to go before the city faced a deadline to approve the deal or face potentially disastrous arbitration.
After publicly emerging as the prospective buyer this May, Stonepeak eventually yielded to aldermen who held out on the deal until a benefits package emerged: A $75 million transfer fee, 2% of any future sale and 5% of the system’s calculated net income — altogether around $140 million in present value, according to the Finance Committee vice chair, Ald. Bill Conway, 34th.
The official sign-off on the sale faced a false start last Friday, when lead negotiators Dowell and Ald. Scott Waguespack pulled a floor vote after hearing that Mayor Brandon Johnson’s floor leader Ald. Jason Ervin, 28th, was plotting a delay.
Aldermen largely reached the deal without Johnson, who remained carefully distant from the entire process.
In recent weeks, the city’s Corporation Counsel Mary Richardson-Lowry, helped aldermen negotiate with Stonepeak. But aldermen took credit Tuesday for landing the unprecedented agreement. Later in the day, Johnson called the agreement “stronger” than the old deal and praised the council’s work.
The original privatization deal was hammered out amidst the fallout of the 2008 recession, with the council rubber-stamping it after just three days of discussion. Of the five who dissented, only Waguespack still serves in council today. Another no vote came from Cook County Board President Toni Preckwinkle, then an alderman representing Hyde Park.
The 75-year lease was secured by Chicago Parking Meters LLC for a mere $1.15 billion payment — $150 million of which went to plugging a budget deficit, and another $400 million for long-term reserves.
That has proven a disaster, as the money quickly dried up, parking rates for drivers went up, the city lost the ability to alter roadways and bike lanes for decades to come and one of Chicago’s most valuable public assets — once providing about $20 million annually in net income — was lost for generations.
Meanwhile, the Morgan Stanley-led investment group already has recouped its original investment and then some: More than $2 billion in revenue, including $189 million last year alone. Tuesday’s compromise cannot undo all of the constraints that give the leaseholder control over the meters, but supporters argue it makes the city’s fateful decision back then a little easier to stomach.
Dowell canceled a planned vote on the deal in July as a majority of aldermen appeared poised to strike it down. Some said the Johnson administration had been too slow to share information with them about the proposed sale. Others pinned their resistance to Stonepeak’s ownership of Omni Air, a cargo airline that conducts long-haul deportation flights for federal immigration authorities.
Stonepeak representatives assured aldermen in recent weeks they planned to sell Omni Air. On Monday, the Stonepeak subsidiary that controls Omni announced it had reached a deal to sell the airline to another company for an undisclosed amount.
By Tuesday, that news had resolved concerns from many on the council, including Latino and progressive aldermen, that Stonepeak was too tied to President Donald Trump’s deportation efforts.
Still, even as most aldermen sung the deal’s praises, several blasted the deal as rushed and wrongheaded — a stance others in the City Council said belied other motives.
Ald. William Hall, 6th, criticized his colleagues Tuesday for not securing more assurances that Stonepeak will use Black contractors to help run the system. Last week, he singled out those who pressured aldermen to sell Omni Air, while not stalling the deal for his own concerns.
Hall did not make his criticism until last week, as the Oct. 1 deadline for aldermen to approve the deal grew inescapably close, a late stance he said Tuesday was the result of delays by the city and company in sharing data with him. The council’s Black Caucus, which Hall is a part of, did not meet to discuss the concerns, according to multiple aldermen.
Ervin, who called in July for the city to buy the system itself, joined Hall in resisting the deal.
“I still stand on the premise that we should take our streets back … Unfortunately we have been trained to believe that we are powerless,” he told his colleagues before the vote. “I think that history will judge us poorly, just as it is judged the ’08 council.”
The two invited Loop Capital founder Jim Reynolds last week to a Progressive Caucus meeting first reported by Crain’s Chicago Business. Reynolds told aldermen to strike a better deal while Hall and Ervin urged them to stall the decision.
More Top Picks Best Pour Over Coffee Sets
Reynolds had previously explored buying the parking meter system through one of his own companies, as well as creating a public-private partnership with the city, according to Crain’s.
Both Ervin and Hall are among Johnson’s most consistent allies. Close Johnson ally Ald. Byron Sigcho-Lopez, 25th, also spoke against the deal. The pushback drew a stiff rebuke from Waguespack.
“The people who want to disrupt it right now, outside agitators or outside businessmen who think they’re going to come in at the last minute and manipulate this vote, that’s unethical at best,” said Waguespack, who later said he believes Ervin and Hall were being influenced to oppose the deal. “This is far better than anything we are going to get.”
Waguespack later praised the council’s independence, a theme Progressive Caucus Co-Chair Ald. Maria Hadden, 49th, also nodded to in a floor speech.
“Times are changing, and this body is necessarily actually changing with it,” she said. “We’re seeing maturity in this City Council. That, I hope, is a trajectory that continues.”
But council members across the political spectrum have agreed they do not know where the mayor stood.
Why Johnson would cede his seat at the table is not clear. Following the mayor’s attempt to buy back the parking system for the city in January, he has remained tight-lipped every step of the way once the sale emerged.
Aldermen even threatened earlier in the summer to block the deal because Johnson had been too slow to share critical information provided to his administration by Stonepeak, citing confidentiality agreements that his critics challenged.
Though most aldermen now agree this compromise is better than the status quo, anything related to the parking meter deal could become a political landmine later on, so Johnson could just be playing it safe by staying out of it.
Ervin has repeatedly denied he is following the mayor’s will with his parking meter-related maneuvers and even expressed offense to questions asking if the mayor is sparking his moves.
Pressed in mid-July on whether Johnson had directed him when he first called for the city to buy back the parking system, Ervin raised his middle finger toward a reporter.
“(Expletive) you!” he said.
The late pushback from the duo attracted criticism from some in the council who argued Ervin and Hall wanted to push the city too close to the Oct. 1 deadline.
“It’s silly season, they’re trying to get attention from the media,” said Ald. Walter “Red” Burnett, 27th, who was one of the first aldermen to publicly argue the sale approval could give the City Council leverage and helped lead negotiations with Stonepeak. “Don’t blow up a deal at the last second because you want political attention.”
With the deal approved, aldermen turned their attention to what might come next for the parking meter system.
Stonepeak and the council agreed to negotiate over new revenues from technologies like electric vehicle charging, a so far undefined promise that could bring in new cash for the city and company alike.
Burnett said aldermen also have discussed a “city wallet” program with the company and City Clerk Anna Valencia that would facilitate easier payments for parking and other city services.
And aldermen are considering bifurcating parking meter prices by adding a surcharge for non-Chicagoans who park in the city, a move designed to raise revenue and promote public transit, Burnett said.
The surcharge would be 25 to 50 cents an hour, according to Burnett. He did not say how much money the fee would bring in, but said it would be “significant over time.” The system would use license plate data to determine who pays what rate, he said.
More Top Picks Best Gutter Heating Cables
“It’s easy to track, they already have the data now,” Burnett said. “We want our suburban counterparts to help when they’re clogging up the system.”