It’s doubtful that Bob Dylan, though prescient in so many ways, had in mind the Great Chicago Parking Meter Swindle of 2008 when he sang “Don’t follow leaders, watch the parking meters” in 1965’s “Subterranean Homesick Blues.” But then, again, it doesn’t take much prescience to see a 75-year commitment for a quick fix for a budget crisis might not be the best deal a city could make.
We’ve written about this before, including in my book The Privatization of Everything and in our factsheet “The perils of privatizing parking assets.” According to our web analytics, the parking meter stories are among our most popular. And it keeps popping up in the media–most recently in an episode of NPR’s Planet Money that revisits the story with recent interviews of people who watched it happen in real time.
Here’s how it starts:
In 2008, Chicago’s budget was in a bad place. The city needed money. One way to raise money was to increase property taxes, but what politician wants to do that? So instead, Mayor Richard M. Daley’s administration looked around at the resources the city had, and thought, ‘Any of this worth anything?’ They opted to lease out the city’s metered parking system — to privatize all 36,000 of its parking meters.
As In the Public Interest followers know, here’s how it ends:
“This deal that Chicago made would go down as one of the most notorious miscalculations in the history of city government. It would call into question what the government is even supposed to do, and become a textbook case on the potential pitfalls of privatization.” [Host and reporter Alexi Horowitz-Ghazi]
In the deal, Chicago got $1.16 billion while a group of buyers led by Morgan Stanley got all those meters for the next 75 years (investors included the Abu Dhabi Investment Authority, the sovereign wealth fund of the United Arab Emirates). Planet Money’s story details how members of Chicago’s city council hadn’t even read the contract they voted to approve as it was rushed through the process. As we reported in 2022, investors made their money back by 2019.
The reason this story resonates with us so much is that it illustrates so much of what In the Public Interest has made its concern.
First, it shows that if there’s a business out there who wants to take a public good or service off of public hands, there’s one reason for it: they think they can make money from it somehow. In fact, in 2024 alone the meters generated $160.9 million in income, adding up to $1.97 billion in income since the outset of the contract–with 58 years still to go.
Second, it shows how short-term gain can lead to long-term pain. We’ve often written about municipal governments strapped for cash selling off vital assets like water and sewer systems, only to find they are now at the mercy of a corporation whose first goal is profit, not public service.
Third, it shows how so many privatization deals are about the loss of democratic, public control over public goods. Every time Chicago hosts a street fair or creates a bike lane, they have to compensate the lease-holders. That means a lot of decisions about what’s good for Chicago and Chicagoans must weigh the additional costs it will incur.
And, finally, for leaders who are still considering a deal to privatize a public good or enter into a public-private partnership, the Chicago story reveals the importance of due diligence and oversight. We’ve outlined what officials should look for in our publication, “Ask the right questions before privatizing,” and created a guide for understanding and evaluating infrastructure public-private partnerships. Had all of Chicago’s aldermen read the proposal fully and carefully–or even skimmed its 500+ pages–it’s hard to believe they would have voted for it.
But it’s always important to remember that the bottom line for business is the bottom line: profit, not the public good.
Donald Cohen
Executive Director