Remember the three-year-old parking meter privatization that will be former mayor Richard Daley's best-remembered legacy? In another example of how not to negotiate a deal, it turns out the city agreed to pay the parking meter company for lost revenues under what should have been eminently predictable circumstances:
Financial statements for the company show that CPM has billed the city an additional $2,191,326 in “True-up Revenue” through the end of 2010.
Under the contract, the city is given an 8% annual allowance for required meter closures in the Central Business District, and a 4% allowance everywhere else. After the annual allowance is exceeded, any metered space(s) closed for more than six hours in a day or for six total hours over three consecutive days, the city must pay the meter company for the lost revenue from that metered space(s) for that entire day.
In other words, if the metered space is closed for six hours, the city is on the hook for the estimated revenue for the total number of hours the meter is in operation. Most meters are in operation no less than 13 hours a day.
Remember that the city council voted on the 500-page contract only a few hours after receiving a copy. The city leased the meters for $1.16 bn, almost $3 bn less than a conservative cash-flow analysis suggested at the time and $7-8 bn less than high-end estimates.
In Chicago, we joke about how much we tolerate small-scale local corruption. The parking meter lease violated even that standard; the council should abrogate the deal, and investigate why it happened in the first place. Of course, I think we already know the answer to that: some people got really rich off it. And taxpayers in Chicago got screwed.