City looks to Chicago for privatized parking ideas
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CHICAGO -- Mike Dixon doesn't like the 500 percent increase in parking rates that's hit his neighborhood since the city leased on-street parking rights to a private consortium for 75 years.
He doesn't like trekking to and from a pay machine--often in the middle of a block--to get a time-stamped piece of paper to put on his dashboard. He said the small, rectangular slips are a waste of trees and source of litter.
In fact, he doesn't like anything about the city's $1.2 billion parking lease with Chicago Parking Meters LLC, a controversial deal struck in December 2008 to plug a hole in the city's operating budget.
"I wouldn't recommend it to anybody," said Mr. Dixon, owner of Hanger 18, a gift shop in Lincoln Square, a northern city neighborhood where the cost of an hour's on-street parking jumped from 25 cents to $1.25 over the past 13 months. Under the lease, rates in Lincoln Square and other neighborhoods will climb each year, at least through 2013.
Some Chicagoans have accepted the higher rates and adjusted to the 4,200 "pay-and-display" machines that are replacing about 36,000 parking meters along streets and in open-air lots.
But the deal still has plenty of critics, including some who say that Pittsburgh, which is considering the lease of parking garages and meters to boost the city pension fund, could learn a lot from Chicago's experience.
They said Pittsburgh should have a more open, thorough vetting of any proposed lease; make changes as convenient as possible for motorists; and consider the ramifications for other groups. For example, Melissa Flynn, executive director of Lincoln Square Chamber of Commerce, said community groups must pay Chicago Parking Meters for "lost revenue" whenever a street is closed for a fair or festival.
"That's a pretty significant hit to our already under-sponsored events," she said.
In January 2009, Pittsburgh Mayor Luke Ravenstahl proposed leasing the city's 11 parking garages, with the goal of netting at least $200 million to inject into a pension fund that's only about one-third funded. Officials said meters along streets and in lots also could be part of a deal.
In all, about 18,000 parking spaces could be up for grabs.
Morgan Stanley is Mr. Ravenstahl's financial adviser for the proposal. The firm's infrastructure investment group also is the primary partner in Chicago Parking Meters LLC; LAZ Parking, in turn, operates the parking system for Chicago Parking Meters.
Prospective bidders have until Friday to respond to Pittsburgh officials' "request for qualifications." The city will use the financial data and other information to assemble a list of qualified bidders.
Mr. Ravenstahl has proposed a lease that could extend for 50 years. It's too early to know how parking rates would be affected or whether a lease would lead to a wider use of pay-and-display machines, already used here on a limited basis, including at lots in Shadyside and street spaces in Oakland.
Council members are leery.
On March 2, Councilman Patrick Dowd and city Controller Michael Lamb proposed transferring ownership of certain garages to the pension fund, saying that would be a better arrangement than a long-term lease with a private party. On Wednesday, council gave preliminary approval for an outside valuation of parking authority assets.
In Chicago, the city council set the annual parking rates, which vary by neighborhood. In the Loop, the main business district and most expensive parking area, the cost of an hour's on-street parking has increased from $3 to $4.25 since 2008. By 2013, the rate will jump to $6.50 an hour.
Scott Kunka, Pittsburgh's finance director, pension fund executive director and parking authority chairman, said Pittsburgh officials likewise would continue to control parking rates under a lease. And he has said Pittsburgh will learn from Chicago's mistakes.
Chicago residents and the city's inspector general said the city, desperate to shore up short-term finances, essentially gave away the store. The inspector general estimated that the $1.2 billion contract is worth at least $974 million less than the city would have received had it "retained the parking meter system under the same terms" it agreed to in the lease. The length of the lease also has drawn heavy criticism.
"What justifies a 75-year contract? They sold a kidney. They're selling body parts," Jay Goltz, a businessman in Lincoln Park, another northern neighborhood, said of city officials.
Chicago Mayor Richard M. Daley's administration also has been criticized for pushing through the deal with little notice, no time for public comment and virtually no scrutiny from the city council.
The proposed agreement with Chicago Parking Meters was announced Dec. 2, 2008, and presented to council's finance committee the next day. On Dec. 4, 2008, aldermen voted 40-5 to approve the contract.
"This was effectively controlling 75 years in 72 hours," Padraic Swanton, director of marketing and communications for Lincoln Park Chamber of Commerce, said.
Pete Scales, spokesman for the city finance department, said then-Inspector General David Hoffman overestimated the parking system's value; actually, Mr. Scales said, $1.2 billion was "on the higher end of what we expected" for the system.
Mr. Scales said Chicago Parking Meters is responsible for installing, maintaining and emptying the pay boxes. And he said removal of meters -- and the defined parking spaces that accompanied them -- has created additional room for parking.
Business people said they've noticed increased availability of space, but fear that's because higher parking rates are keeping customers away.
At Pizza Capri in Hyde Park, a southern neighborhood where President Barack Obama and his family have a home, manager Rebecca Butcko said she's noticed an increase in delivery and carry-out business and a drop in dining-room business since hourly rates jumped from 25 cents to $1.25. Restaurant owner Max Taleb said dining-room sales are most lucrative.
Residents said it isn't pleasant in any season, let alone a Chicago winter, to drag children from the car to a pay machine and back again. Angela Aufegger, owner of Salamander of Chicago, a Lincoln Square shoe store, said some motorists have gotten $50 parking tickets before they could get to the pay machine and back.
"I've watched it," she said.
Ms. Aufegger and others said parking enforcement has increased significantly with privatization. Shoppers are less leisurely, she said, because they feel like they're "on the clock."
Mr. Scales said there's been no ramp-up in enforcement, which is still conducted by city employees.
Parking rate increases displeased Harold Lucas, president and CEO of the Black Metropolis Convention and Tourism Council. Mr. Lucas, who's trying to boost tourism in Bronzeville, a southern neighborhood and center of black history, said every additional dollar spent on parking is one fewer available for tourism.
However, some residents acknowledged that parking rates in some neighborhoods had been unreasonably low for years because city officials didn't want to take the unpopular step of increasing them. However, the inspector general said, the city council had to approve rate increases as part of the lease agreement.
Mr. Goltz said he's concerned less with the increases than with the decision to let Chicago Parking Meters charge for early-morning, evening and Sunday parking. He said that change is particularly hard on condominium owners who live in business districts.
Ms. Butcko said Pizza Capri makes $40 worth of change each day for patrons who need quarters for the parking boxes. Before the rate increase, she said, the store provided about $10 worth of quarters daily.
The switch to pay stations has eliminated what some residents considered a sacrosanct part of parking culture -- finding a meter with time left on it. If she has unused time on a parking slip, Hyde Park resident Jo Reizner gives it to another driver.
"It's like a matter of pride. You have to beat 'the man,' " she said.
Chicago has been a trailblazer in privatization initiatives.
In 2004, the city approved a 99-year lease of the Chicago Skyway, a 7.8-mile toll road, for $1.8 billion. In 2006, it approved a 99-year lease of four parking garages for $563 million, money used to pay down debt and make neighborhood improvements. A proposed lease of Midway Airport recently fell through, but the idea remains on the table.
John Schmidt, a lawyer involved in the Skyway, parking garage and Midway projects, said the completed leases have been popular. He said the Skyway leaseholder upgraded toll booth technology that made travel more convenient. He said rates at the parking garages, which had been artificially low under government ownership, increased to market levels with privatization.
He wasn't involved in the on-street parking lease but considers that a fair deal, too.
"I've told [former Inspector General] David Hoffman directly that I think his financial calculations were essentially gibberish," Mr. Schmidt said.
Mr. Scales and Mr. Schmidt agreed that the rollout could have been smoother. One initial problem: Rate increases took effect before the pay boxes were installed, and the old meters couldn't handle the extra quarters.
Reviews of the boxes are mixed.
Some are happy to be able to pay with a credit card.
The machines also accept quarters and dollar coins. They don't accept dollar bills, dimes or nickels or give change. In cold weather, the credit card readers sometimes froze, so the company put plastic covers over them, residents said.
"I don't think the machines are as user-friendly as they could be," Hyde Park resident Irene Sherr said.
Asked to comment on the complaints, Chicago Parking Meters cited a December statement in which it announced several steps to "improve the parking meter system and add convenience for motorists."
Now, to help customers get the most use of paid parking time, drivers are allowed to take parking slips with them from one street to another in a given neighborhood. Some boxes near theaters and other venues were reprogrammed so motorists could park for three hours, instead of the original two -- a move designed to keep drivers from rushing out to cars in the middle of a show.
The company also said it's donated thousands of meter poles for bicycle parking, and the city has agreed to void one overdue parking fine per vehicle per year; to qualify, the citation must have been written within five minutes of the violation.
First Published March 14, 2010 12:08 am