August 20, 2009 / 5:24 PM / 10 years ago

Lawsuit challenges Chicago parking meter deal

CHICAGO (Reuters) - Chicago’s controversial 75-year deal to lease its parking meters to a private operator for an upfront payment of $1.157 billion is now the target of a lawsuit.

Clint Krislov, a Chicago attorney for a group of taxpayers, said on Thursday that a Cook County Circuit Court judge on August 28 will hear their petition to allow the lawsuit challenging the deal to proceed.

“The contract is illegal so we’re asking (the court) to block spending tax dollars on it,” Krislov said.

Chicago entered into the deal to lease 36,000 parking meters with Chicago Parking Meters LLC, comprised of Morgan Stanley Infrastructure Partners and others, earlier this year.

The lawsuit claims the deal violates the Illinois Constitution by requiring the city to spend public funds to “police, enforce and maintain” what is now a “privately controlled parking meter system.”

“After the transaction closed, the city continued to expend public funds to maintain and repair CPM’s privately controlled meters based on complaints that a number of CPM’s parking meters were disabled, would not take coins, did not properly recognize the coins placed in the meters, and displayed inaccurate parking rates and times of enforcement,” the lawsuit stated.

Chicago also overstepped its legal authority granted by the Illinois General Assembly by leasing on-street meters, according to the lawsuit.

The complaint challenges the Illinois secretary of state’s legal ability to suspend the licenses of drivers who fail to pay parking fines in Chicago because the meters are now privately controlled.

The suit seeks to stop Chicago’s comptroller and state officials from spending any public funds related to the parking meter system or related driver license suspensions.

A spokeswoman for Chicago’s law department said the suit is “wholly without merit, both factually and legally.”

In June, Chicago’s inspector general issued a report that slammed the deal for shortchanging the city and for being pushed through the city council without sufficient time for review. The Illinois attorney general also launched a consumer fraud investigation that does not involve the City of Chicago.

The city has used some of the upfront lease payment to plug budget holes.

Chicago has also leased its Skyway toll bridge and parking garages, while a long-term lease for its Midway Airport fell apart in April after the winning bidder failed to obtain financing.

Krislov said he is also looking into the other lease deals consummated by Chicago.

Reporting by Karen Pierog; Editing by Leslie Adler

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