Chicago parking concession big win for investors, hard on curb management

By Michael Brenneis
As reported by the Chicago Sun Times, the 2018 audit of the Chicago Parking Meters LLC (CPM) financial statement shows parking meter revenue of $132.7 million, down slightly from $134.2 million in 2017. In 2008, before the on-street parking lease to CPM began, and prior to a system-wide price increase, the City of Chicago collected $23.8 million in parking meter revenue from this system of 36,000 metered spaces, the third largest system in the country. With an investment of $1.16 billion for the lease and $38 million to pay for 4,700 credit or debit card pay-stations and other improvements, CPM has collected about $1.2 billion in parking revenue during the first ten years of the concession.
The concession has been widely denounced as a bad deal for taxpayers. Critics of the deal often point to the missed opportunity of parking revenue. Others note that the concession makes the city less nimble when implementing innovative curbside solutions for transit, cycling, and placemaking. The cost of compensating CPM for lost (potential) parking revenue drives up the cost of eliminating parking for curbside, bike- or bus-only lanes, among other uses. In an attempt to lower city costs, the 2013 renegotiation swapped free parking on Sundays, outside of the central business district and the loop, for extended metered hours during the week in some areas. The renegotiation initially reduced the compensation payments for meters out-of-service, or true-up payments, from nearly $27 million in 2012, to a low of $6.5 million in 2014, but they have been creeping back up to $17.3 million in 2017 and $20 million in 2018. Incoming Mayor Lori Lightfoot has indicated an openness to reevaluating the contract, if possible.
The true-up payments are designed to compensate CPM for any revenue shortfall caused by closing streets for events, construction, moving or eliminating meters, or changing time limits and metered hours. Because CPM must be compensated for reductions in revenue, there is little cost-savings incentive to reduce the need for parking by shifting travelers to other modes, or otherwise reducing vehicle miles traveled.
In an article for NextCity, a professor from Roosevelt University in Chicago points to several obstacles to infrastructure improvements set up by the concession. The cost of implementing BRT lines may go up as it gets more difficult to find new locations to relocate parking meters, perhaps leading to the implementation of fewer BRT lines. Removing metered spaces at intersections to improve the visibility of pedestrians and cyclists incurs the additional cost of CPM compensation. Opening up parking lanes to rush hour travel also requires CPM compensation.
For those seeking more walkable, lower traffic stress urban neighborhoods, the constraints of the parking concession could, over time, put Chicago at a competitive disadvantage if comparable cities outpace Chicago with cycling and walking infrastructure improvements. People for Bikes gives Chicago two of five possible points as an overall bikeability score, and a low 0.7 score measuring its commitment to growing cycling infrastructure and events. However, still ranks Chicago in the top ten among U.S. cities in the walk-score, transit-score, and bike-score categories. So far, Chicago seems to be demonstrating that it is robust enough to withstand the on-street parking concession that some continue to call a “big lemon.”
Michael Brenneis is an Associate Researcher at SSTI.