The Botched Privatization of Chicago's Parking Meters

The year is 2008. The United States is in a huge financial crisis and recession. Chicago, IL is badly hurting for cash and needs a miracle cashflow to fill a gap in their budget. Enter: CPM, Chicago Parking Meter LLC; a private company with investors from all over the globe. They graciously offer the city a one-time payment: $1.156 Billion for a 75 year lease on 36,000 parking meters. Chicago, now desperate, accepts the offer. 

After this deal was signed, it was concluded by official inspectors that CPM had profited significantly as the meters were valued at an additional $1 Billion than what was paid. The investors were happy but still wanted a large return on their investment, and Chicago grew to have some of the highest parking rates in the Country. 

Fad Analytics' article on the ordeal summarizes this financial upset perfectly:

“At face value, considering that Chicago’s parking meters generated $136M in gross revenue in 2021, it is easy to draw the conclusion that selling 75 years worth of revenue for $1.156B, or roughly 8.5 years of revenue at a $136M run rate, was incredibly short sighted (KPMG 2022). 

The Washington Post included a snippet lambasting the Chicago parking meter deal in a recent article, stating “With 61 years left on the 75-year lease, Chicago Parking Meters LLC now has recouped its entire $1.16 billion investment and $502.5 million more” (Knox and Anders 2023).”

In addition to all of this, the contract of this deal makes transportation planning and alternatives (bus lanes, bike paths, etc,) exponentially more expensive and complicated to introduce as CPM literally owns the locations the meters are on. In order to implement these plans, Chicago essentially needs to “Buy-back” the parking spaces, which has amounted to an additional $78 Million in CPM’s pockets in the 12 years since signing the contract. This re-transfer of ownership also serves as Chicago’s feeble attempt to recover the revenue that could have been generated by the year 2083. 

So what did we learn from this? DO THE MATH! While there is no way of knowing exactly how different Chicago streets would look if this deal was never to happen, it is still interesting to speculate. Overall, the accountants and planners of the City of Chicago are still in for a long and difficult journey into getting their streets back, of which I do not envy. But I can laugh, and be grateful that the only thing I had to worry about in 2008 was my Nintendo Wii.

-Written by Beth Bennett (Photo Credits via inthepublicinterest.org)