CHICAGO Dec 2 Chicago on Tuesday said it
agreed to lease its parking meter system to a fund managed by
Morgan Stanley in a 75-year, $1.16 billion deal, the latest
privatization deal by the city as it struggles to close a
yawning budget deficit.
The deal with Chicago Parking Meter LLC, an infrastructure
investment fund managed by Morgan Stanley, marks the first time
a U.S. city has privatized its parking meter system. It adds to
the list of infrastructure assets Chicago has cashed in on with
leases of an airport, a toll road, and some downtown parking
The deal covers more than 36,000 parking spaces, with rates
on many meters expected to quadruple to $1 an hour. It requires
City Council approval, and a special council meeting was set
Chicago Parking Meter LLC had previously paid $563 million
to lease city-owned underground downtown parking lots.
Chicago Mayor Richard Daley's $6 billion 2009 budget
counted on $150 million from the sale of the parking meter
system to help close a budget deficit for the fiscal year
beginning Jan. 1.
The city said $400 million from the parking meter lease
deal will go into a long-term reserve, $325 million will go
toward the city budget through 2012, $324 million will go
toward budget stabilization until the economy recovers, and
$100 million will fund programs for low-income residents.
Daley said the deal will not solve the city's budget
problems, which will depend on the depth of the economic
recession that has led him to lay off of hundreds of workers
and a planned shutdown of city government for six days around
holidays next year.
The city recently leased Midway Airport for $2.5 billion to
private operators, pending federal government approval, and in
2004 leased its Chicago Skyway toll road for $1.8 billion.
"Because of our innovative Midway Airport and parking meter
transactions, we're taking steps that no other city or state is
taking to cushion our taxpayers from the bad economy and keep
our city moving forward," Daley said.
Proceeds from parking tickets will still go into city
"I think it's a fair price" for the parking meter system,
said Dana Levenson, head of North American infrastructure
banking for Royal Bank of Scotland, who helped negotiate the
parking lot lease in his former position with the city.
The idea of leasing infrastructure to private companies,
which take on the risks of operating and maintaining the
assets, should appeal to cash-strapped local and state
governments, Levenson said.
"If you look at the magnitude of the country's needs in
terms of infrastructure, which the American Society of Civil
Engineers has pegged at $1.6 trillion, it's not just going to
be government. It has to be all different sources that need to
be available to improve infrastructure in this country,"
(Editing by Michael Conlon and Leslie Adler)