Remember the name William Blair and the firm name Morgan Stanley when you’re plugging 28 quarters into a meter in the Chicago Loop for 2 hours of parking, because those are the culprits who have put the people of Chicago in the position of staging a rebellion against the sale of the city of Chicago’s parking lots (in 2006) and meters (36,000 of them, in February) to private contractors.
Let me explain.
Like all cities, Chicago is cash-strapped, and it seems, according to Ben Joravsky and Mick Dumke’s article (“The Insiders”) in the June 18, 2009 Chicago Reader that we may have William Blair to thank—or blame—for the fact that in the city of Chicago, since Mayor Daley inked a deal leasing the city’s parking meters to a private company for 75 years on February 13, 2009 for the sum of $1.2 billion upfront, “parking rates have doubled, mislabeled and malfunctioning meters have let to citations, and response from LAZ Parking, the firm contracted to run the system, has been less than acceptable.” (LAZ Parking is a firm formed by Morgan Stanley, the purchasers, to handle the meters for the next quarter century).
And was this sale of the city’s parking meters a good deal for the cash-strapped city of Chicago?
According to Joravsky and Dumke’s “The Insiders” June 18, 2009 article, “Inspector General David Hoffman’s office ran a study, announced on June 1st, and concluded that the city may have leased the meters for $974 million less than they were worth.” (Joravsky and Dumke, “The Insiders” in The Chicago Reader, June 18, 2009 p. 22).
So, whose big bright idea was it to sell the city’s parking meters to the Morgan Stanley group in the first place? The answer that Joravsky and Dumke provide on page 20 of their expose goes like this: “And there’s one more thing: William Blair & Company originated the idea for the transaction.”
That’s right: the very same William Blair who received 0.375% of the payout ($4.3 million). The very same William Blair who was the “outside expert” that Mayor Daley commissioned to analyze whether it would be a good idea to sell the parking meters (36,000 of them, which were sold on February 13, 2009, according to Jon Helkevitch in the Friday, March 20th, 2009 Chicago Tribune.) (Archives.Chicagotribune.com ch-parking-meters-20-March20).
So, who is William Blair, exactly, other than the scion of William Blair & Company? Well, for one thing, he’s a member of Mayor Daley’s inner circle of good buddies who form a sort of “kitchen cabinet” that regularly goes out 3 times a week. He’s the very same William Blair who was hired in June of 2007 (according to Joravsky and Dumke), a good 4 months before Michael Sneed of the Chicago Sun Times first made public the plan to privatize the city’s parking meters. He’s the very same William Blair whose company was also instrumental in leasing the city’s downtown parking garages in 2006 for 99 years to a partnership led by Morgan Stanley, in return for $2.2 million for work on that deal. He’s the very same William Blair who donated $104,500 (according, again, to Joravsky and Dumke’s article) to Mayor Daley’s wife Maggie’s favorite charity, After School Matters, a charity she founded and runs. He’s the very same William Blair whose chairman, Edgar D. Jannotta, now serves on the board of directors of AON, which Patrick Ryan retired from last year so that he might serve as chairman and CEO of Chicago’s Olympic bid committee.
Why did the city sell the parking meters so cheap?
The reason, says this City Inspector General June 1st report, was that “William Blair’s calculations of the system’s value were all done from the perspective of an investor,” not from the perspective of the seller. The Blair figures were based on what an investor might be willing and able to pay for the meters, not their actual value to the city. Attorney General Lisa Madigan announced at the end of May that she was launching an investigation into the “transaction and implementation of the parking meter deal” (Joravsky & Dumke, p. 17)— and the Inspector General’s office (David Hoffman) reported “The City should have conducted this analysis so that its decision about whether to lease the parking meter system now—and if so, under what terms—could be made in the most informed fashion possible. The failure to conduct this analysis strongly suggests that the decision had already been made that the City was going to lease the meters for the best available price on the market.” (Joravsky and Dumke article “The Insiders,” Chicago Reader, June 18, 2009, p.22).
So, what has this parking fiasco meant to the residents of the city of Chicago?
For openers, according to a Friday, March 20, 2009 article by Jon Helkevitch in the Chicago Tribune (archives.Chicagotribune.com ch-parking-meters-20-mar20):
1) There was a fourfold increase in parking rates at meters in Chicago this year.
2) Those attempting to park are being deluged with tickets, as the meters don’t work or are not emptied faithfully enough. After all, you now have to drag along 28 quarters for just 2 hours in the Loop! The meters were not built to handle all that change, and they are frequently not emptied often enough, so that they are either broken or jammed.
3) If you want to park in the Wells Street area, meters have escalated from $1 for 2 hours to $2 for 2 hours.
4) If you want to park in the central business district, be prepared to shell out 16 quarters for 2 hours of parking. Business is down in that area, as a result, and one of those businessmen who spoke to the Tribune and said so is Dan O’Donnell, owner of Armitage Hardware and Building Supply at 925 West Armitage.
5) Parking in city neighborhoods is now 8 quarters for 2 hours. However, sometimes the meters aren’t accurately marked. According to the Tribune article, meter #279089 in the 1800 block of Clybourne Avenue, which was supposed to give a person parking their car 15 minutes for a quarter gave only 7 minutes for that quarter. And that, of course, would lead to a ticket for the person parking the car who mistakenly believed the labels on the meters, according to the Helkevitch Tribune article (March 20, 2009).
The parking meter situation, coupled with the 10.25% highest-in-the-land city sales tax, has Chicago residents boiling mad. As Carol Marin, political blogger for the Chicago Sun Times said in her article “Chicago Parking Meter Rebellion” (blogs.suntimes.com/marin) on June 20, 2009, in referring to “the city’s long and dubious history of rewarding the politically connected with lucrative opportunities,” raising the parking fees, blanketing cars with tickets and eliminating free weekend parking (fees are now payable 24/7, whereas, previously, there was free Sunday parking, at least), “In 1979, lousy snow removal sparked a voter rebellion and booted a Mayor. Could parking meters by the new snow?”
Long-time Chicago Mayor Daley said, during a press conference held on June 2nd, the day after being slammed by City Inspector General David Hoffman regarding the “dubious” (Hoffman’s term) deal, “My chief of staff detailed—detailed!—why we think this is a very, very responsible agreement. As Mayor, it is my job to be responsible.”
[Hear! Hear! Your Honor! So, let’s see some responsibility coming the way of Chicago residents, for a change, and not just payback for your political cronies.]