Parking in Chicago: Two Minutes for Two Bits
Posted by Larry Doyle on June 25, 2013 8:35 AM |
Do you ever get to the point when you think your life is one large windshield and every bird in the world has taken a liking to you?
Let’s take a break from trying to decipher the nuances and obfuscations in all too many statements emanating from the Federal Reserve system and focus on simple matters of everyday life.
To do just that, let’s navigate to the Windy City and the state of Illinois and revisit a chilling comment left here the other day by a regular reader:
I live in Illinois, and our unfunded pension debt is $100B, and grows by $17.1M per day. The school pensions are paid by the state, so there is no accountability by the local school boards to limit large wage increases to teachers that are retiring by the next contract, or within four or five years. Four, five, six and even seven percent increases have been given to teachers retiring in the next few years, padding their pensions that the citizens of the state of Illinois are on the hook for.
The Civic Club of Chicago actually estimates Illinois’ unfunded pension obligation is $240B to $248B if the accounting included accrual, not cash value. As soon as I can sell my home, I am moving six miles north to Wisconsin, where pension reform actually lowered property taxes by an average of $400.00 per homeowner in Wisconsin, while my tax rate increase in Illinois went up 22.7% after going up 20.1% the year before.
With both the city of Chicago and state of Illinois under enormous fiscal pressures, what is one vehicle — pun intended — the city specifically has taken to address its escalating fiscal nightmare? It sold its parking meters.
Who bought the meters and what does this mean for the life of everyday citizens? The Financial Times highlights that Chicago Car Owners Are Driven to Distraction:
Meg Babs and four friends are pumping quarters into an automated parking meter on Clark Street, two blocks from Chicago City Hall.
Thirty-four quarters later, they look at the time they’ve accrued: one hour and nineteen minutes. For $8.50.
“It’s crazy – you put in a quarter you get two minutes, you put in $5 you get 49 minutes,” Ms Babs, 21, says. “It makes you want to take public transportation to get into the city.”
Ms Babs and her friends are not alone in their frustration with the city’s parking rates. Fees have been rising since a 2008 deal saw Chicago lease its 36,000 parking meters to a consortium led by Morgan Stanley for $1.15bn for 75 years. The consortium is also backed by Allianz and Abu Dhabi’s sovereign wealth fund.
Chicago’s parking woes highlight the growing tension between America’s cities and the Wall Street banks, which have stepped in to offer to plug desperate municipalities’ widening deficits.
The bank invested in the city’s parking system through Morgan Stanley Infrastructure Partners (MSIP), its $4bn infrastructure fund. MSIP has been snapping up assets in recent years including Southern Star Central, a company that transports natural gas to municipalities including Kansas City and Oklahoma City.
The Chicago deal has been pilloried in the media, by residents and by Mayor Rahm Emanuel, whose predecessor rushed it through and used nearly all of the proceeds to plug budget holes.
A spokesman for the consortium, Chicago Parking Meters LLC, says that only the city has the authority to raise rates. He points out that the company has invested in infrastructure, including 4,700 modern pay boxes.
The city says the schedule of increases over the past five years – which took rates from as low as 25 cents an hour in some places to $2, $4 or $6.50 an hour – were written into the original contract, which many argue the city council and then-mayor’s office had not fully considered.
This parking nightmare, aka ‘windshield treatment’, is further evidence of the longstanding and massive municipal malfeasance in Chicago but now also the rent-seeking solutions pursued by political operatives.
For those reading this via a syndicated outlet please visit my blog and comment on this piece of ‘sense on cents‘.
I have no business interest with any entity referenced in this commentary. The opinions expressed are my own. I am a proponent of real transparency within our markets so that investor confidence and investor protection can be achieved.