Jun 2, 2009 10:47 pm US/Central
Report: City Lost $1 Billion On Parking Meter Deal
CHICAGO (CBS) ―
A private company took over Chicago parking meters and pay boxes earlier this year. Ever since, there's been nothing but trouble. Now a scathing report accuses the city of poor planning and bad math. CBS 2's Mike Parker explains.
The city's governmental watchdog, the inspector general, has just wrapped up a five-month long investigation into the parking meter lease deal. And like most of the folks who park their cars in Chicago, he doesn't like what he found. Not at all.
The big money lease of the city's parking meters to private operators has not only been a source of anger and more anger for city drivers, it's also turned out to be a very bad financial deal for the Daley administration.
That's the gist of a 43-page report by Chicago's inspector general.
"The city failed to make a calculation of what the value of the parking meter system was to the city," Inspector General David Hoffman said.
Charts and graphs in Hoffman's report say the city, eager to balance the budget, unloaded its meter revenues for $974 million less than they were actually worth over the life of the 75-year deal. That's just shy of $1 billion.
And there's criticism of the City Council's 40-5 vote for the deal after just two days.
"There was a process that was hurried, rushed, highly pressurized, that did not allow for full deliberation," Hoffman said. "There was a lack of any meaningful debate or meaningful deliberation in City Council."
Minutes later, the administration fired back, calling the report "misguided."
"And when he calls the parking meter transaction, a 'dubious' financial deal, I would suggest to you today that many of the report's central claims, are in fact, dubious," said Mayor Daley's Chief of Staff Paul Volpe.
Volpe said the claim that the City Council did not have time to study the proposal was "insulting."
The mayor's top assistant called the bidding process for the deal "robust and open."
CBS 2 Chief Correspondent reports that Alderman Leslie Hairston, one of five aldermen who refused to go along, remembers it differently.
"Is it made clear that the pressure is on that something needs to be done within a certain period of time for a particular reason, absolutely, and Volpe should know that better than anybody because he used to do it," Ald. Hairston said.
At the time, more than a few aldermen objected, claiming they didn't have enough information. Volpe, today, said they were briefed from the start.
"He is not telling the truth," Ald. Hairston said.
Volpe called Hoffman's facts dubious, and allegations insulting. But in an interview tonight, the city's inspector general refused to take the bait.
"We stand behind our report and people can call names if they want, but I think I'm confident that if people look at our report, they'll see it's a good, solid, well-researched piece of work," Hoffman said.
And in fact, he agreed with Mayor Daley's curious pre-emptive strike this morning. The mayor knew the report was coming, we didn't.
"If we didn't have this money, you better believe we'd be in the tank," Mayor Daley said.
But Hoffman says the way the meter deal was done may have cost the city more than money.
"Are we just snapping our fingers and raising the rates, and all of a sudden like magic everything is going to work?" Hoffman said. "What assurances do we have? There was no discussion about that. It is the vetting of that contractor in the future, it is what are the terms and conditions. Let's think about Midway airport, this is going to come up in the future."
That's the message here. Because if they resurrect the Midway lease deal, and perhaps others, Hoffman's report lays out steps to prevent the mess we now have with the meters.
Still to come: a consumer fraud investigation into the new privatized meter system. Illinois Attorney General Lisa Madigan has kicked that off with a blizzard of subpoenas to the companies running the system.
CBS 2 Chief Correspondent Jay Levine and CBS 2's Mike Parker contributed to this report.
(© MMIX, CBS Broadcasting Inc. All Rights Reserved.)
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