Chicago City Council to hold meeting on how to use $75 million from parking meter lease transfer

The Chicago City Council on Monday will hold a special meeting to decide how $75 million will be spent.

This comes after alders approved a deal allowing Chicago's private parking meters to be sold to a new company. Alders voted 46-3 in late September to deal the remaining 57 years of the lease on the city's meters to New York City-based Stonepeak Partners LLC for $2.63 billion. The $75 million the city receives is a transfer fee.

The deal was negotiated by Finance Committee Chair and Ald. Pat Dowell (3rd), Ald. Nicole Lee (11th), Ald. Walter Redmond Burnett (27th), Ald. Scott Waguespack (32nd), and Ald. Gilbert Villegas (36th).

Then-Mayor Richard M. Daley's 2008 deal to lease the city's parking meters to Chicago Parking Meters LLC in exchange for a $1.15 billion lump payment is widely considered to be one of the worst financial moves in the history of municipal politics. Mayors since have worked, and largely failed, to find a way for the city to recoup any of the revenue coming from parking fees since.

Dowell, who led the negotiations on the agreement to sell the parking meters to Stonepeak, argued that the deal originally presented to the City Council in June had no benefit to the city, but alders were able to negotiate a number of benefits to make it palatable.

The question now is what to do with the $75 million. A group of alders wants to use it to chip away at the city's $36 billion pension debt, but that could blow a $75 million hole into Mayor Brandon Johnson's budget plan last year, which he would have to fill.

Mayor Johnson wants to use the money to offset the cost of pensions in 2027, and close the city's budget gap.

But City Council members like Ald. Timmy Knudsen (43rd) say the money was negotiated to make an additional payment toward the pension debt, not to replace funding already budgeted.

Knudsen sent a statement that reads in part, "I will be advocating to ensure these funds are used as intended: to pay down our pension debt, not plug another budget hole."

In addition to the immediate upfront payment of $75 million immediately upon the transfer of the meters to Stonepeak, the city would receive an additional 5% profit share from the annual net income of the meters for the duration of the lease. City officials have estimated that profit share amounts to about $367 million over the 57 years.

However, Ald. Bill Conway (34th), a former investment banker with JP Morgan and an adjunct finance professor at DePaul University, argued that after Stonepeak is able to factor in the costs of its interest expenses and depreciation of the parking meters, the city will likely end up netting around $140 million in profit sharing over the course of the deal.

The Johnson administration explored the possibility of buying back the parking meters after Chicago Parking Meters first sought potential buyers last year, and even made a $3.2 billion bid, but later backed out after determinining that purchasing the meters would be too expensive, requiring the city to take on a massive amount of debt. As a result, any revenue from the meters would have had to pay off that debt for the next 40 years, effectively forcing the city to raise parking rates annually to cover costs.  

The Council will meet on Monday starting at 10 a.m.