Provides $1.15 Billion to Bolster City Reserves, Balance the Budget, and Help People Most in Need

The City of Chicago closed the concession lease sale of the parking meter today with Chicago Parking Meters, LLC. For the right to operate Chicago’s metered parking system of approximately 36,000 parking spaces for 75 years, the firm today provided City of Chicago taxpayers a single $1.15 billion payment.

The transaction would make Chicago’s the first major publicly-owned meter system in the United States to be subject to a long-term concession.

“Under this agreement, we will use funds from the parking meter lease to substantially add to the city’s long-term reserves, help balance this year’s budget, support people in need, and create a rainy day fund to help Chicago work through these difficult economic times,” said Mayoral Chief of Staff Paul A. Volpe. “While other cities and states are struggling to find ways to help balance their budgets, we’re creatively working to protect our property taxpayers for years to come.”

The nearly $1.2 billion in net meter proceeds will be allocated into four distinct funds:

• $400 million in a long-term reserve/revenue replacement fund, similar to the $500 million long-term Chicago Skyway reserve, which will bring the city’s total long-term reserves to $900 million;
• $325 million in a mid-term budget relief fund to help balance city budgets through 2012, consistent with the 2009 budget plan;
• $100 million human infrastructure fund to support for programs helping those most in need; and
• The balance – nearly $320 million – in a budget stabilization fund that may be used to help bridge the period until the nation’s economy begins to grow again.

Chicago Parking Meters, LLC consists of Morgan Stanley Infrastructure Partners A Sub LP (76% ownership), Morgan Stanley Infrastructure Partners LP (23%) and several other entities sharing 1% ownership. LAZ Parking will serve as the operator for Chicago Parking Meters, LLC.

As part of this agreement, graduated meter rate increases will be implemented over a period of five years that will bring rates closer to market level.

And as the city announced earlier in the week, LAZ will begin changing meter rates, and days and times of required operation starting with the Loop area. The changes are expected to be complete within a month. Motorists are encouraged to take note of posted meter rates, and required hours of operation. Motorists are only required to pay meters based on posted signage.

Although the approximately 36,000 meters are located throughout the city, about 25% of are located in two downtown wards. Nineteen wards each hold less than 1% of the parking meters and two wards contain no parking meters at all.

These increases will be the first in more than 20 years for more than 25,000 of the 36,000 meters.

This agreement also mandates the private operator to make system upgrades in the near future that will provide cashless payment options far sooner than the city would be able to complete. And by the middle of 2011, all meters must have both cash and cashless payment options.

The new downtown parking meter rate of $3.50 per hour compares favorably to hourly rates in downtown or commercial areas in other cities like Denver, Houston, San Francisco, Seattle, Dallas, Las Vegas, and West Palm Beach, FL, where hourly rates range from $4.00 to $8.00 an hour.

And at $3.50 an hour, downtown meters also still compare extremely favorably to off-street options.

Under the agreement, the City Council retains the right to revise the rates, change the number of meters or the hours of operation. But to the extent the City takes action that negatively impacts meter revenue, it will be obligated to replace that value to the private operator.

“During the toughest economy our nation has faced in over fifty years, it is more important than ever that we manage our budget in ways that are both responsible and creative,” Volpe said. “The funds from this parking meter agreement will strengthen our city’s finances for the long term, give us the ability to continue investing in people’s needs and most importantly, protect our city and taxpayers from a worsening economy.”

Chicago has been a national leader in innovative financial management.

The $1.83 billion lease of the Chicago Skyway, completed in January 2005, has been a model for state and local governments, and it allowed the city reduce city debt, create reserve funds, and invest in people and neighborhoods.

The February 2006 lease of the public parking system comprised of the four parking garages beneath Grant and Millennium parks provided the City and Chicago Park District with $563 million to pay for capital improvements in parks in neighborhoods throughout the city, pay Park District operating expenses, retire debt and rebuild Daley Bicentennial Plaza.