The agreement would bring the rates closer to market level, according to Mayor Daley. After that, any increase would be subject to the approval of city council- and are expected to be at the rate of inflation.
It's not clear when the rates would take effect, but here's the expected breakdown:
The cost to park in the Central Business District could reach as much as $6.50 an hour by 2013. As part of the deal, the private firm has to replace traditional meters with pay boxes capable of handling credit cards.
The hike in parking isn't exactly receiving rave reviews from the public.
"When you keep trying to extract more and more money it ultimately hurts the businesses downtown," said one Chicagoan.
"This is a very difficult economy," said Mayor Daley.
The Mayor says tough times call for creative solutions and privatizing parking meters is one of them. He will ask the City Council to approve the deal at a special meeting on Thursday. The $1.1 billion influx of cash will not be used to restore any of the city's planned cuts in services and jobs in next years' budget. Instead it will help shore up long-term finances of the city. And, $100 million will go toward programs helping those in need.
Despite the money, Mayor Daley warns the economic outlook could get worse.
"I can't say this this morning, that we still won't be forced to cut spending, make additional layoffs, or look for new revenue in the months or years ahead. I cannot make a statement on that. That's how serious the economy is. It all depends just how much the economy will worsen," said Mayor Daley.
Parking meters make up the fourth asset the city's signed over to private firms. The others are the Chicago Skyway, Midway Airport, and Millennium Park.
Daley will ask the City Council to approve the deal at a special meeting on Thursday. If it gets approved, the private firm will also be able to write tickets.