As longtime readers may know, one of my favorite parts of Matt Taibbi's book "Griftopia" is the part where he describes how it came to pass that Chicago's parking meters ended up in the hands of foreign investors and ruined everyone's lives just a little bit more.
The short version of the story goes like this: Chicago had a budget hole to fill, Mayor Richard Daley, a Democrat, decided the best course of action was to lease a public asset (municipal parking meters) to Morgan Stanley for $1,156,500,000 for 75 years, Morgan Stanley turned to a gaggle of foreign investors to pony up the money, those investors contracted the on-the-ground work to a parking enforcement company, and the whole kit and caboodle was jammed it through the legislative process as quickly as Daley could, lest anyone pause and consider whether it was a good idea.
As it turns out, it was a terrible idea.
To start with something simple, it changed some basic traditions of local Chicago politics. Aldermen who used to have the power to close streets for fairs and festivals or change meter schedules now cannot -- or if they do, they have to compensate Chicago Parking Meters LLC for its loss of revenue.
So, for example, when the new ownership told Alderman Scott Waguespack that it wanted to change the meter schedule from 9 a.m. to 6 p.m. Monday through Saturday to 8 a.m. to 9 p.m. seven days a week, the alderman balked and said he'd rather keep the old schedule, at least for 270 of his meters. Chicago Parking Meters then informed him that if he wanted to do that, he would have to pay the company $608,000 over three years.
The bigger problem was that Chicago sold out way too cheap. Daley and Co. got roughly $1.2 billion for seventy-five years' worth of revenue from 36,000 parking meters. But by hook or crook various aldermen began to find out that Daley had vastly undervalued the meter revenue.
And what about filling the budget shortfall with that quick injection of foreign capital? As Taibbi notes: "It was the grand plan of [Chicago CFO Paul] Volpe to patch the budget hole with the interest earned on that big pile of cash. But interest rates stayed in the tank, and so the city was forced to raid the actual principal."
Tough break for Chicago. But, you know, it's a cautionary tale and an important lesson learned. Now, your mayor would have to be either a complete moron or a grifter heel to repeat Daley's mistake -- oh, hey, what's this I see over at Taibbi's blog today?
Hizzoner Michael Bloomberg in New York has decided to do his own version of the Chicago infrastructure bake sale; the city announced that it is putting up nearly 90,000 parking meters for lease. They're expecting to get over $11 billion in upfront money from the deal, which is great news if you're Mike Bloomberg, who gets to use that money to patch current budget holes instead of making tough cuts or raising taxes. The news is less awesome for the next half-dozen New York City mayors, or for the citizens of New York, who now will get to spend most of the 21st century grappling with its increasingly monstrous deficits with a major tributary from the city's revenue stream shut off.
A Bloomberg spokeswoman tells Bloomberg News that Bloomberg's plan is to "avoid mistakes others have made." But Chicago's mistake is quantifiable. In Chicago, meter users are projected to pay the Morgan Stanley investment group "at least $11.6 billion to park at city meters over the next 75 years, 10 times what former Mayor Richard Daley got when he leased the system in 2008."
We are also given this further assurance:
New York would retain "full control" of rates and violations enforcement, she said.
This really doesn't mean anything, though! Nobody seriously expects the heads of big sovereign wealth funds to hump around Midtown handing out tickets. The key question is whether "rates" will fund New York City or private investors, and whether New York City will be "enforcing" the rules for the betterment of the city or in defense of someone else's profit margin.
Per Bloomberg spokeswoman Julie Wood: "We're seeking private-sector expertise on innovative ways to enhance the efficiency and quality of parking services." Here are the words I challenge her to account for: "expertise," "innovative," "enhance," "efficiency," and "quality."
READ THE WHOLE THING:
New York to Repeat Chicago's Parking Meter Catastrophe [Taibblog]
NYC Seeks Private Companies To Run 90,000 Parking Spaces [Bloomberg]
PREVIOUSLY, on the HUFFINGTON POST:
Celeste Meiffren, In The Public Interest : Learn From Chicago's Mistakes
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