A lot has been going on in Chi Town since the auditor’s report last month on the parking meter leasing deal. Newspapers are writing story after story with complaint after complaint, the aldermen are getting beat up by their constituents, and council meetings are being held. You can read about some of it here, in the Sun Times.
The Sun Times article notes that rates appear to be set too high, since no one is using the meters. I got the referral from Don Shoup who must be mulling the city’s decision to increase the rates abruptly without seeming recourse to lower them if necessary.
The deal with the vendor, Chicago Parking Meters, LLC, which is wholly owned subsidiary of Morgan Stanley and being run by Laz Parking, says that the city can change the rates that were agreed to in the lease agreement, but if they do, they must compensate Morgan Stanley for lost revenue. This puts the city in the position of having made a decision a year ago as to what to charge for parking over the upcoming what, 75 years. I’m not privy to the agreement but I do know that parking rates have been set through 2013 if not further out.
The city is now in the position of having set the rates too high (utilization is way WAY down) and not being able to lower them, except at a great cost.
One wonders at the study that was done on setting the rates and how it was determined what the rates should be. I guess the old idea of market based pricing, setting rates so that there is one space available per block face keeping in mind the rates in area off street garages was thrown out the window.
But it just gets better and better. Here is an article in the Chicago Reader. It’s long and very well documented. I know that business with the city of Chicago is done differently that most places, but this is an extremely damning piece.
In the middle of it is William Blair and Co, the consulting firm that put together not only this deal but also the original deal with the four off street garages Morgan Stanley leased for 500 million plus year before last. Read the article. The Byzantine inner workings of the City’s purchasing and contracting departments are a wonder to behold. They even compare a similar project done by the City of Pittsburgh. Wow, what a difference. Note that William Blair seems to have a relationship not only with the city but also with Morgan Stanley. It must be great, being a consultant for both parties in a deal.
It’s a long piece but well worth the read.