Inspector General: Chicago got a raw deal

June 2, 2009 8:31:57 PM PDT
An analysis of the city's $1 billion parking meter lease is less than favorable.The report was compiled by the City of Chicago Office of the Inspector General.

Download the Report (PDF)

The report accuses the Daley administration of mismanagement in the controversial sale of the city's parking meters to a private company. It concluded the city got shortchanged in a deal that happened way too fast.

"The decision that was made was based on not a lot of information in way too short a period of time," said Chicago Inspector General David Hoffman.

Inspector General David Hoffman says the analysis of the parking meter deal concluded most prominently that the city's 36,000 spaces -- which have been leased for 75 years to private company that paid $1.5 billion -- was sold for only about half of what is worth.

"Value of the parking meter system to the city had the city kept it to the terms of the lease, was $2.1 billion dollars.

The IG's investigation began in January. The 43-page report has four major findings:

  • the meter transaction was a dubious financial deal because of the price and actual value
  • the city failed to calculate the value and
  • did not consider alternatives including a deal less than 75 years and profit-sharing.
  • there was a lack of deliberation by the city council, which approved the deal only two days after getting it from the Daley administration.
  • The mayor's chief of staff --who was chief financial officer during the transaction--called the IG's report "dubious" and defended the city's due diligence.

    "It is insulting to suggest the city council made that decision irresponsibly and without information," said Paul Volpe, Mayor's Chief of Staff.

    Since privatization, the system has been beset with operational problems. Speaking before the IG's report was released, the mayor said money derived from the lease of public assets--the skyway, parking garages and meters-- has saved the city from financial ruin.

    "This transaction both the skyway and garages, parking meters, this is all about vision," said Mayor Daley.

    Hoffman recommended the city have independent reviews of asset sales before putting them out to bid.

    "There was a process that was hurried, rushed, highly pressurized, that did not allow for full deliberation, for true consideration of alternatives, or for the right amount of transparency," said Hoffman.

    On Wednesday the city council will consider an ordinance that would require the city council to wait at least 15 days before it approves future lease deals.


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