Thursday, March 26, 2009

First it was Facebook. Now its the parking meters.

Im setting myself up for no end of ridicule on this but I guess Im one of the few in Chicago who thinks that the parking meter lease is a good idea and that the gnashing of teeth about the switch over is mostly a non story.

First of all I think the whole concept of selling off an underperforming asset for loads more cash than the city could generate in the short term is breathtakingly brilliant and Im going to try and entice you to at least entertain the same notion.   A particularly  cogent explanation of the details is found here and serves as a good basis for moving the discussion forward.

Here's why its such a good idea in my head:

a.)  As a user fee parking meter rates have been woefully underpriced.  Why the hell do I say that?  Most, though admittedly not all meter fees hadn't seen a significant increase is almost twenty years.  Can you name another transportation fee  that has had that kind of flat price rate for that long?  No you cannot.  Privately owned parking garages downtown have raised rates through the roof in that same time period without a drop off  in usage and even heavily subsidized CTA fares have increased more than %100 in roughly the  same time frame and the same is true of Illinois toll fares.   There is no way around the fact that the city has been losing money on meters relative to other transportation user fees for a good long while now.

Okay... well... why do it this way and privatize the system?  Why not just let the city retain control of the meters and raise the prices over time??

b.)  According the the linked article above the city earned a profit of roughly $16 mil per annum on meters at the previous rates.  Nice, but not nice enough when you're  several hundred million in the red annually.   But still, lets just say the city was able to double its income on the deal to a cool $32 mil per.  At that rate it would take the city over 40 years to earn roughly the same $1.16 billion it got in a lump sum from Morgan Stanley et al, and in 40 years a billion dollars wont be what it used to be.  Even in good economies  the purchasing power of money is severely eroded over time.  You'd much rather have that money with today's purchasing power than doled out over several decades.  Couple that with the fact that the city has banked more than $300 million of the pay day so the overall take at the end of the contract will  be well beyond the $1.16 billion.   That's just damned smart.

Now for some of the bitching:

Don't our taxes cover this kind of stuff?

Uh..... no.  And honestly its unfair to increase the burden on taxpayers simply to support an undervalued price structure that people can choose to use or not.  When possible user fees are ALWAYS more equitable than across the board taxes and should reflect actual value in pricing.

Rates are too high and businesses will suffer

This one makes at least some sense on its face but even so Im skeptical that there will be long term impact on neighborhood business.   I'll go back to the example of downtown parking garages.  They're packed even on weekends, so the likelihood of any long term chill due to meter rates isn't supported anecdotally.   But, hell lets say Im wrong and prices are too high and businesses get hurt because  nobody will park at meters.   This is the beauty of the free market boys and girls.  These investors are obviously HIGHLY leveraged on the deal and if we start denying them our quarters in numbers large enough to have any impact they will have to adjust their pricing downward or default.  

Daley  could have gotten more money  than he did

Maybe, but to be fair this is relatively new territory and pricing precedent is hard to come by.  Even so had Daley sold the meters for $4 billion as some have suggested they're worth the rates would have to be much much higher as would the relative level of bitching about them.

Well the whole thing is a giant fucked up mess and nobody  knows what the hell is going on.

This is true.  For now.  As I've said the contractor here, LMZ, and Morgan Stanley have over a billion reasons to get this thing up and running quickly which obviously means mistakes will be made.  But they've got the same number of reasons to see to it that those mistakes are fixed in time.  Money is one hell of a motivator.

But that said I guess I never had any contact with this benevolent and efficient Dept. of Revenue everyone seems so nostalgic for lately.    No, this seems just like it has always been to me, too many cars chasing too few spaces and the desk jockeys running the system don't give two squirts of piss about it one way or the other.  At least with this system there is a top down motivation to improve it.

But.  All that verbiage notwithstanding lets say you still disagree.   Fair enough.  Lets hear your better idea.

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