Spreading the privatization gospel

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People in other cities may want to take note of the recent news about parking around here because the architects of Chicago’s parking meter privatization are taking their show on the road.

A few days ago Channel Two's Pam Zekman confirmed that it’s costing the city—i.e., the taxpayers—lots of money to make even temporary changes in parking policy.

The funny thing is that critics of the parking meter privatization agreement—people who’ve actually read it—have been saying this for the better part of the year.The Daley administration has brushed aside their criticism, insisting that the city retains full control of the meter system. Which is true—except that with every change it makes in meter placement, hours, or rates, it has to return some of the cash it initially received from the consortium that now operates the system. Zekman acquired records to show it.

Meanwhile, attorney Clint Krislov, whom she quotes in her story, is pushing ahead with a lawsuit that he hopes will force the city to amend or even kill the agreement.

But leaders in other cash-strapped cities are being tempted by Chicago's example of reaping a short-term windfall from privatization.

Late last month Pittsburgh officials hired Katten Muchin Rosenman to help them with the legal work needed to privatize city parking lots, meters, and garages. That’s the Chicago-based law firm (led by one of Mayor Daley’s best friends) that did the bulk of the legal work on our meter privatization, which netted it $662,759 in fees. The firm was also paid $60,000 to work on the privatization of Chicago’s downtown parking garages in 2006.

Two months earlier, Pittsburgh officials enlisted Morgan Stanley to provide financial advice on parking privatization. Various wings of the international firm are the primary investors in Chicago Parking Meters LLC, the consortium that leased Chicago’s system.

Los Angeles Mayor Antonio Villaraigosa has proposed a similar privatization of his city's parking meters. But the city council and skeptical journalists and citizens have resisted the effort, citing the way things went down in Chicago.

Last week, though, a council committee advanced a plan to privatize ten of LA’s public parking garages. “I'm sure there will be a lot of interest in this,” privatization expert Thomas Lanctot told the Los Angeles Times. “There's an enormous amount of private capital out there that is looking for public infrastructure investment.”

In case the name rings a bell, that’s the same Tom Lanctot who works for William Blair & Company, the firm that claims credit for the idea of leasing Chicago’s meters and downtown parking garages—and which the city hired as its financial adviser for both deals without conducting a search or bidding process. William Blair made a total of about $6.5 million on those deals. And Lanctot declined to talk to us about them.

Chicago city officials and privatization advocates are also engaged in a furious effort to put a better face on the parking meter deal here. A recent article on AmLaw Daily, a legal news site, hailed Pittsburgh’s march toward a parking lease agreement as good news that puts private-public partnerships (otherwise known as P3s) “back in play.”

“As bad as the P3 deal looked for Chicago last summer, sources say the uproar over the privatization has since abated,” the article states. “The rocky transition has given way to improved parking services for many Windy City residents, as technological advances have given rise to easy credit card access at meters, even though the rates themselves have increased.”

The author doesn't name his "sources," but their view sounds a lot like the Daley administration’s take on things here.

Similarly, a new essay in Governing magazine concludes that Chicago’s meter “‘fiasco’ actually represented a significant privatization success.” The problem, it argues, was that the transition from public to private control was botched—exactly the line Mayor Daley has stuck to. The piece was written by Stephen Goldsmith, the former mayor of Indianapolis, which is looking into privatizing its own parking systems.

The parking privatization message is obviously spreading. As the libertarian Reason Foundation notes, the city of Las Vegas just issued a request for “written proposals that analyze and suggest operational and/or investment Public Private Partnership (PPP) opportunities for current City and RDA parking systems and assets.”

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