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Asset Privatization in Chicago

Privatizing assets owned by the public is nothing new in Chicago. Since 2004, the city has privatized the Skyway, four downtown parking garages, and the city’s system of 36,000 parking meters. As a result – Chicago is Ground Zero over the national public debate on this issue. Other cities are looking to Chicago’s experience to see whether they should privatize public assets like these.

Perhaps the most egregious example of backroom dealing was the Chicago City Council’s approval to privatize the city’s parking-meter system.

The privatization deal – allowing a Morgan-Stanley backed set of investors to reap the profits for the next 75 years from the city’s parking meters – sparked public outrage as parking rates quadrupled overnight in some parts of the city, meters malfunctioned, and critics, including the city’s own Inspector General, argued that the city received hundreds of millions of dollars less for the meter system than it was worth.

All of these factors have led some streetwise Chicagoans to wonder what was really behind the privatization deal. The fact that the city spent millions of dollars on consultants hired via no-bid contracts to arrange the deal, rushed consideration of the plan through City Council in only three days, and offered the public no way to scrutinize the deal or voice its opinion add to the sense of suspicion. In fact, City Hall was working on this deal months before the public – or even the City’s aldermen – knew about it. This isn’t how public policy decisions should be made.

It’s too late to undo parking meter privatization. But it is not too late to reform City government by demanding greater government transparency and more citizen input in important budget decisions like privatization deals.

Illinois PIRG is working to pass the Asset Lease Ordinance that would do just that. The public protections in the ordinance are outlined below:

1.      There must be an independent evaluation of deals to ensure taxpayers receive fair value. It’s important to make sure future revenues aren’t sold off at a discount just because the city is facing tough budget decisions.

2.      There must be complete transparency to ensure proper public vetting. The proposed ordinance requires a 30 day public review period before the city council votes on any privatization ordinance.

3.      The Mayor’s office must report to the public whenever an asset lease deal is being considered.

4.      No lease should last more than 30 years to minimize the risks of a bad deal haunting us for generations.

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Discussion

Trackbacks/Pingbacks

  1. Pingback: Lessons from the parking meter deal « Tax Dollars and Sense - September 8, 2011

  2. Pingback: Midway Airport Lease Resurgence « Tax Dollars and Sense - September 29, 2011

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