Chicago Parking Meters: Privatization's Long-Term Cost

Key Quotes

"The city of Chicago has struck a deal with a private company to take over the city's parking meters this agreement the story was about how Chicago's mayor mayor Richard M. Daley had made a deal with some outside investors to sell off the proceeds to Chicago's parking meters for a big upfront payment of 1.16 billion."

Journalist Mick Dumkey recounts the initial news report about Chicago's parking meter deal. This quote highlights the core transaction: the city selling its parking meter revenue stream for a large, immediate payment. Dumkey's observation sets the stage for the subsequent analysis of this privatization.

"The math is daunting especially because this touches on one of the most important concepts in finance and economics and honestly daily life the time value of money are we talking about a certain rate are we talking about the yes discount rate perhaps the discount rate ah the discount rate basically the idea behind a discount rate is that money now is worth more than money later if someone offers you 100 today or 100 a couple years from now you should almost always take the 100 today because if you take it now and stick it in a savings account you can earn interest maybe it'll become 110 in a couple years but if you wait to take it you've lost out on that opportunity and also 100 will buy less because of inflation basically money in the future is worth less than money today."

This passage explains the fundamental concept of the time value of money and the role of the discount rate in financial calculations. The narrator clarifies that money available now is worth more than the same amount in the future due to potential interest earnings and inflation. This concept is crucial for understanding how the value of future parking meter profits was assessed in 2008.

"I was just walking around saying look don't vote for this thing you were literally walking around trying to pick people off tell them not to vote for this yeah and I was getting the brush off from quite a few people because they're like look Scott come on yeah the way Scott and others describe it the mayor had a lot of influence over the city council at the time."

Alderman Scott Waguespack describes his efforts to persuade fellow city council members to vote against the parking meter deal. Waguespack highlights the political pressure and influence Mayor Daley's administration exerted to push the deal through. This quote illustrates the challenges of opposition when faced with a powerful executive.

"We concluded that works out to a value of the city's parking meters in 2008 of two point one billion dollars or so so about a billion dollars more than the city ended up selling it for that's a huge difference yeah that's like that's like double just about just about."

Aaron Feinstein, an investigator for Chicago's Inspector General, presents his findings on the true value of the parking meters. Feinstein's analysis, using a more conservative discount rate, suggests the city significantly undervalued its parking meter system. This quote quantifies the potential financial loss for the city by comparing his calculated value to the actual sale price.

"It is the worst deal I think in municipal history in the United States wow oh yeah it's absolutely the worst deal in the history of uh municipalities if you're running a post mortem on what makes this the worst deal of all time it kind of boils down to three things one chicago discounted the future too much two they made the term of the lease too long and three they made the decision too quickly during a moment of crisis."

Alderman Scott Waguespack offers a strong condemnation of the parking meter deal, summarizing the key factors that made it a significant miscalculation. Waguespack identifies the excessive discounting of future revenue, the excessively long lease term, and the rushed decision-making process during a crisis as the primary flaws. This quote encapsulates the retrospective judgment on the deal's detrimental nature.

"now every time they pop in a quarter or many quarters to feed the meter instead of funding their own city they are essentially renting back the space that used to belong to all of them hour by hour at cutthroat rates until the meter contractually runs out on February 29th of 2084 yeah you read that right the contract this whole situation ends on a leap day."

The narrator explains the ongoing impact of the parking meter deal on Chicago residents. This quote emphasizes the personal and continuous nature of the financial burden on citizens, who are now paying private entities for parking that once funded their city. The specific end date, a leap day in 2084, underscores the long-term commitment of the deal.