It turns out that, despite Chicago's disastrous parking meter deal, the city government can still use meters to benefit neighborhoods. During a recent discussion of Chicago's parking challenges and their accompanying report, Metropolitan Planning Council vice president Peter Skosey and research director Chrissy Mancini Nichols told me how the city can make lemonade out of this lemon of a deal. There are a few issues that need to be resolved first, and this turnaround would require installing more meters, but that would only be a good thing for neighborhoods.
In 2008, then-mayor Richard M. Daley pushed the meter contract through City Council, where the vast majority of aldermen voted for it. The deal turned over the next 75 years of meter revenue to private investors in exchange for a lump sum payment of $1 billion, most of which Daley quickly spent on balancing the budget.
That was likely billions less than the concession was actually worth. To add insult to injury, the city is now required to repay the Chicago Parking Meters, LLC, a company representing the investors, anytime meter revenue is lost due to festivals and other street closures. (The city has started charging contractors for lost revenue when they close roads for construction.) It also means that any time the city strips metered parking for other street uses like bike or bus lanes, they must compensate CPM by installing meters of equal or better potential revenue nearby.
However, Mancini Nichols explained, the contract does allow the city to collect 85 percent of the revenue from new "reserve" meters it chooses to install. Rather than lining the pockets of the investors, Mayor Rahm Emanuel and the City Council could opt to use that money to pay off Chicago's pension debt, or for investments in the neighborhoods.
Unfortunately, we can't start collecting that additional revenue until CPM gets the full annual revenue promised in the contract, based on the number of functioning meters that were available in 2009. Until CPM reaches that level of compensation, the city must use revenue from new meters to "true up" its payment to CPM at the end of every year. The meter availability is called "system in service," and the 2009 level is considered 100 percent system in service. Currently, Chicago's meters are at 96 percent system in service, Mancini Nichols said.
Parking meters are good for businesses
If Chicago reaches 100 percent system in service, then the lion's share of additional revenue from new meters will go to the city. That money could be reinvested in the neighborhoods it came from, in the form of transit improvements, storefront façade renovations, landscaping, and sidewalk repair, Mancini Nichols said.
In 1993, Pasadena, California, created a "parking benefit district," as a strategy to revitalize its old downtown. To make new parking meters palatable to people accustomed to free parking, the revenue was earmarked for street furniture, trees, and events in the district. Metered parking also helped out businesses by promoting turnover of parking spaces. Since employees and shoppers could no longer hog parking spaces all day for free, more spots became available for short-term visits from customers.
"The rationale [for more meters] goes back to creating healthy retail corridors," Skosey said. While good pedestrian, bike, and transit access to business districts should be prioritized, it has to be acknowledge that many shoppers arrive by car, he said. "If they can’t park their car, they're going to turn around and go somewhere else."
As part of Emanuel’s renegotiation of the parking contract in 2013, he exchanged longer paid parking hours on weekdays and Saturdays (with River North metering even longer because of its active night life) for free parking on Sundays. This approach backfired on several bustling North Side business strips in the 32nd and 44th wards. In these areas, residents would park in metered spots from Saturday night to Monday morning for free, which meant there were fewer spaces available for Sunday shoppers, Mancini Nichols said.
MPC conducted a parking study of Wicker Park and Bucktown and found many unmetered areas, right outside retail establishments, where it's common for people to park for seven or eight hours. This is the case on parts of the the restaurant row on Division Street, west of Ashland. The Belmont business district in Roscoe Village also has plenty of unmetered spaces. Even in some parts of the Loop, the most valuable real estate in the city, you can park as long as you like for free.
Renegotiation improved the parking deal
Another change in the contract that benefitted Chicagoans was correcting a mistake that cost all taxpayers – not just people who paid to park – $25 million a year, Mancini Nichols said. Soon after the original contract was signed, the city extended the maximum parking time near movie theaters to three hours, changing 10,000 meters. CPM argued that the change reduced meter revenue that year, and would in future years, and the city paid dearly for it.
It turned out that the drop in revenue was because extending the hours happened as the parking price increased dramatically, at the deal's start. The renegotiation dropped that policy, saving taxpayers – including those who never put money in a meter – $1 billion (in today’s dollars) over the contract's remaining 72 years.
Parking fraud is paid for by taxpayers
There’s another problem, Mancini Nichols explained. Disabled parking fraud is another issue that prevents the meters from reaching 100 percent system in service. The meter deal allows six percent of people to park for free, an arbitrary figure designed to accommodate the state law. Over the first four years of the contract, people fraudulently using disabled placards cost Chicago taxpayers an estimated $73 million in compensation to CPM.
In 2013, Emanuel convinced legislators in Springfield to revise the definition of who could park for free, limiting it to people with physical limitations that make it very difficult to access the meters. "Prior to the new law, 90 percent of people parking in the Loop had disabled placards, and after the new law that number fell to 17 percent," Mancini Nichols said. That's still too high. The city is now conducting stings to enforce the law, and educating doctors about the law so they won't issue placards liberally.
Getting to the positive benefits of parking meters
Once Chicago reaches 100 percent system in service, the city would have the financial leeway to experiment with variable meter pricing. MPC recommends changing prices according to demand, raising prices during peak times to increase turnover, and decreasing prices at low-demand times to encourage people to spread out their errands over the course of the day. This can actually be done using the current meter technology, but the city would be on the hook for any revenue decrease.
Chicago's parking meter deal is notorious as one of the worst-ever examples of privatization. However, meters are a useful tool for promoting thriving retail strips when the revenue is reinvested in local infrastructure.
If our city is to take advantage of that phenomenon, we need to reach the mandatory 2009 service levels by adding more meters. After that, City Council can start earmarking the surplus revenue for business district improvements. "We’d be happy to work with any alderman who wants to do something about this," Mancini Nichols said.
