Chicago Taxpayers Take Another $57.8 Million Hit From Parking Privatization As Daley Family Profits

The follies of former Chicago Mayor Richard Daley's privatization efforts just keep coming and at a steep cost for Chicago taxpayers. I've previously discussed ongoing feuding between Mayor Rahm Emanuel's administration and the private operator of the city's parking meter assets over tens of millions of dollars the city is being billed by the private operator for parking meters that have been taken out of use for construction or public events and for metered spaces used by handicapped drivers. Under a separate privatization agreement for the city's parking garages, the Chicago Sun-Times is reporting that the city has been hit with a $57.8 million penalty for violating the terms of that agreement by approving a permit to another parking garage company to operate a parking garage too close to one of the city-owned garages.

Mayor Daley's administration issued a permit to Standard Parking to open a 1,288-space parking garage at the Aqua tower in downtown Chicago, which is one block from another city-owned garage operated by Chicago Loop Parking, LLC, and which is controlled by Morgan Stanley, where former Mayor Daley's nephew William Daley, Jr. is employed, a job he began just months before the city entered into the privatization deal with Chicago Loop. Politics may have also played a role in the issuance of the parking permit to Standard Parking, which was represented by John Daley, former Mayor Daley's brother. By allowing another parking garage to open that close to a city-owned garage, the Daley administration violated the terms of a 99-year deal it entered into with Chicago Loop Parking for $563 million to operate the city's parking garages. That privatization deal allows the private operator to charge whatever rates it wants and keep all the revenues it generates from 9,178 spaces in four parking garages.

Executives with Chicago Loop Parking say the company would have never paid near the $563 million it paid to the city in 2006 if it allowed for competition near the four garages it agreed to operate. Naturally, it began complaining to the city that the new garage that Standard Parking opened in 2009 was cutting into its business and demanded compensation of at least $2 million from the city. The Daley administration responded by telling Standard Parking that its parking permit had been issued in error and was being revoked. In its place, the Daley administration issued Standard Parking an accessory permit, which limited use of the parking garage to people attached to the Aqua tower and a 43-acre area surrounding the tower. According to usual city practice, an accessory license would have been limited to people who lived, worked or stayed in a hotel in the Aqua tower to use the garage.

Initially, Chicago Loop Parking believed the problem had been resolved when it was told by city officials the public parking permit had been canceled. When the private operator learned that it had converted the license to  an accessory parking permit only that eliminated any claim for compensation from future losses, it cried foul and sought arbitration over the dispute with the city. A $57.8 million judgment in favor of the private operator and against the city is less than the $200 million originally sought by Chicago Loop Parking, but it's still a major hit to an already cash-strapped municipal government. According to the Sun-Times, the daily parking rates at the Standard Parking garage are about $1 a day cheaper than the nearest city-owned garage.

The City of Indianapolis paid Morgan Stanley $1.9 million for its role in providing financial services related to the city's parking meter privatization deal with a partnership headed by ACS/Xerox. The company has played the role of a switch hitter in these deals. It unsuccessfully sought a privatization deal for Pittsburgh's and New York's parking meter assets.

The headaches the Daley era privatization deals are causing Mayor Emanuel's administration seem never to end. The mess with the Chicago public school system Emanuel inherited culminated with a controversial decision by Emanuel announced late last week to close 54 schools. Emanuel insisted the schools were failing in their job of educating the city's children and that closing the schools represented an investment in quality education. Parents of children affected by the school closings have expressed concern that their children will have to cross gang lines to attend new schools.

On a side note, it is truly remarkable that Gov. Rod Blagojevich is sitting in a federal prison jail cell and not former Mayor Daley. Blagojevich only thought out loud about the financial rewards he could attain from self-dealing; Daley lived them daily, no pun intended. He's now a partner, by the way, at the law firm which handled the $1 billion parking privatization deal.

UPDATE: Perhaps the feds were trying to nab at least one of the Daleys. Chicago Tribune political columnist John Kass' recent column discusses the conviction of Cook Co. Commissioner Bill Beavers on income tax charges this past week. It seems Beavers had a gambling problem and helped himself out to a bunch of his campaign dough to feed his habit at Indiana's Horseshoe Casino in Hammond. Kass mentions Beavers' refusal to cooperate with federal investigators in its investigation of one of his fellow colleagues, John Daley:

He'd decided long ago, he said, that he'd do time rather than talk to federal authorities about political corruption. Since his indictment last year, he's told the story about the FBI asking him to wear a wire on fellow Cook County Commissioner John Daley, brother of former Mayor Richard M. Daley.

"There's no question about it," Beavers said Thursday. "Have you ever seen the IRS come looking for you for $30,000 and they come with the FBI? ... Even Ray Charles could see that. They thought I was a punk."

But Beavers isn't a Daley. He doesn't have that kind of political infrastructure, no hive of workers to protect him the way the queen bee is always protected at City Hall.

You've seen even powerful mayors crack at the smallest of things, chatty one minute, seething the next. One City Hall queen bee of years ago, suffering as his drones were picked off by the FBI and the U.S. attorney's office, was reduced to frequent emotional outbursts and public tears . . . " 

Listen, I ain't got no regrets at all, you understand? I'll take my lumps, OK? Like I told them when they came and asked me about John Daley. I'm not a stool pigeon or will be. I'll take my lumps." . . .