TW: More on my favorite pet peeve, the Daley parking meter deal that is a metaphor for poor American fiscal management. Now Chicago's own inspector general (Daley created the IG position in response to past criticism of city governance) is stating the obvious- the deal was stupid. Note how the Daley rep in countering the IG avoids the fundamental point, i.e. the deal traded millions in the future for short-term cash, and credits the deal with shoring up Chicago's current budget shortfall. But that is the point Chicago traded a huge asset in order to avoid a couple of year's budget shortfalls.
The only good thing coming out of this is that perhaps the City Council is going to alter its approval process for such deals in the future.
From Chicago Tribune:
"City Hall's inspector general blasted Mayor Richard Daley's parking meter lease Tuesday, alleging the administration gave up the potential for hundreds of millions in additional cash when aldermen rapidly rubber-stamped the deal...The report takes the City Council to task for ratifying the deal by a 40-5 vote in December, just a day after Daley aides briefed aldermen on it."There was no meaningful public review of the decision," Hoffman wrote.
The city got about $1.15 billion upfront for jacking rates and turning over control of its paid street parking system to a private company that gets to keep all the meter money for 75 years. Hoffman's report calls the lease a "dubious financial deal," arguing the city could have raked in at least $2.13 billion if only it had kept the meters after raising rates -- minus the cost of collecting the money and maintaining the meters.Top Daley aide Paul Volpe immediately fired back...Volpe said the parking meter money has helped the city avoid service cuts and steep tax hikes. The money from the parking meter deal in this year's budget is equal to the cost of retaining 2,000 police officers, or half the budget of the Streets and Sanitation Department, Volpe said...Now some council members say they made a mistake in voting for the deal and want the city to back out.
...Rates immediately quadrupled at most meters around the city, with the cost to park at some downtown spots to rise to $6.50 an hour within four years.Aldermen weary of public criticism are expected to approve a measure Wednesday that would give them at least 15 days to review future privatization deals.
...Daley appointed Hoffman in 2005 to head an office that is supposed to root out wrongdoing in city government. Hoffman has expanded the role to include issuing public reports on city government's performance. In one report last year, investigators spied on city garbage crews, alleging that truck drivers and laborers loafed for about two hours of every eight-hour shift."
Showing posts with label parking meters. Show all posts
Showing posts with label parking meters. Show all posts
Wednesday, June 3, 2009
Monday, February 9, 2009
No Surprise: Chicago Pissed Away $300 MM On the Parking Deal
TW: We posted on this when it happened.
http://treylaura.blogspot.com/2008/12/these-privatization-programs-are-insane.html
http://treylaura.blogspot.com/2008/12/chicago-under-benevolent-dictatorship.html
http://treylaura.blogspot.com/2009/01/well-that-did-not-take-long.html
But it is always good to see the obvious stated in print by an actual economist. The net net Daley traded $300 million of future revenue over the next 75 years in order to fix the next two or three years budget shortfalls. Disgraceful governance.
From the Chi Tribune:
"Mayor Richard Daley reaped a windfall and avoided further budget cuts when he secured fast-track City Council approval of a 75-year lease of the parking-meter system, but an economist's analysis concludes he also gave up hundreds of millions down the line.The complex agreement, the first of its kind in the United States, nets the city a one-time cash payment of nearly $1.2 billion when the deal is closed this month.But the city could have earned $1.5 billion—in today's dollars—if it kept the meters and simply raised rates to the same levels it granted the winning bidder, according to H. Woods Bowman, a professor of public service at DePaul University.
..."There's nothing that would prevent the city from doing what the private sector is doing," Bowman said, noting aldermen already took heat for approving the rate increases in the deal...The reason they are doing it is because they can get the money now and close their budget gap."
...Pete Scales, spokesman for the city's Budget and Management Office, said Bowman's calculations don't take into account the risk of such a lengthy lease."[TW: this is happy horse dung from the City, what risks or at least what risks that could not have been mitigated in the future by the City]
http://tinyurl.com/d5qq77
http://treylaura.blogspot.com/2008/12/these-privatization-programs-are-insane.html
http://treylaura.blogspot.com/2008/12/chicago-under-benevolent-dictatorship.html
http://treylaura.blogspot.com/2009/01/well-that-did-not-take-long.html
But it is always good to see the obvious stated in print by an actual economist. The net net Daley traded $300 million of future revenue over the next 75 years in order to fix the next two or three years budget shortfalls. Disgraceful governance.
From the Chi Tribune:
"Mayor Richard Daley reaped a windfall and avoided further budget cuts when he secured fast-track City Council approval of a 75-year lease of the parking-meter system, but an economist's analysis concludes he also gave up hundreds of millions down the line.The complex agreement, the first of its kind in the United States, nets the city a one-time cash payment of nearly $1.2 billion when the deal is closed this month.But the city could have earned $1.5 billion—in today's dollars—if it kept the meters and simply raised rates to the same levels it granted the winning bidder, according to H. Woods Bowman, a professor of public service at DePaul University.
..."There's nothing that would prevent the city from doing what the private sector is doing," Bowman said, noting aldermen already took heat for approving the rate increases in the deal...The reason they are doing it is because they can get the money now and close their budget gap."
...Pete Scales, spokesman for the city's Budget and Management Office, said Bowman's calculations don't take into account the risk of such a lengthy lease."[TW: this is happy horse dung from the City, what risks or at least what risks that could not have been mitigated in the future by the City]
http://tinyurl.com/d5qq77
Saturday, January 3, 2009
Well That Did Not Take Long
TW: Was perusing the Chi Trib this morning (a process that takes about 3 minutes usually due to the shrinking content of that paper), but ran across an article on the Chicago City budget. SHOCKINGLY, a rainy day has arrived already and that parking meter fund set aside for posterity is already in line to be tapped. Yep it took all of one month for the City to start in on the fund. We posted on the topic last month when the plan to capitalize 75 years of revenue was announced.
http://treylaura.blogspot.com/2008/12/these-privatization-programs-are-insane.html
From the Chi Trib:
"Just weeks after Mayor Richard Daley said the city's new budget wasn't overly optimistic, his chief financial officer announced Friday that revenue fell short by $31 million in recent months amid a worsening economy.If the downward trend continues, City Hall will have to find more ways to cut costs or boost revenue, said Paul Volpe, whom Daley has tapped to be his new chief of staff...Volpe also said the city could tap a $324 million rainy-day fund to be created when Chicago closes on the 75-year lease of its parking meters for nearly $1.2 billion"
http://www.chicagotribune.com/news/local/chi-daley-city-budget-03jan03,0,4749873.story
http://treylaura.blogspot.com/2008/12/these-privatization-programs-are-insane.html
From the Chi Trib:
"Just weeks after Mayor Richard Daley said the city's new budget wasn't overly optimistic, his chief financial officer announced Friday that revenue fell short by $31 million in recent months amid a worsening economy.If the downward trend continues, City Hall will have to find more ways to cut costs or boost revenue, said Paul Volpe, whom Daley has tapped to be his new chief of staff...Volpe also said the city could tap a $324 million rainy-day fund to be created when Chicago closes on the 75-year lease of its parking meters for nearly $1.2 billion"
http://www.chicagotribune.com/news/local/chi-daley-city-budget-03jan03,0,4749873.story
Thursday, December 4, 2008
Chicago Under Benevolent Dictatorship
TW: This Chicago parking meter deal has me chafed. I have mentioned before that more than most understand we are governed by the equivalent of benevolent dictators (POTUS relative to national security, the Fed relative to monetary policy etc.). Certainly Chicago is governed by a benevolent dictator as epitomized by this deal. I have also mentioned benevolent dictators while anti-democratic are neither new to the US nor necessarily bad.
But if you have a dictator you better be damn sure to get one that knows what they are doing (hence W. Bush has been a real problem) and they should be truly benevolent and far-sighted. Unfortunately Mayor Daley and his ilk are mortgaging the future of our great city in pursuit of short-term budgetary and hence political gain. This deal not only uses future cash flows to pay for current spending it imposes a completely regressive tax on the citizens of Chicago while cynically providing limited funding for "low-income Chicagoans".
And thanks to the ineptitude and toadiness of the alderman and media, while they shriek and moan about the increases, not one word is uttered about using your children's and grandchildren's cash flows to pay for next year's budget.
From the Chicago Tribune:
"...Anticipating big shortfalls, Daley plans to set aside as much as $675 million of the one-time parking meter windfall to help balance the city's budget [TW: plus another $100 million for "low-income people" whatever that means and I would bet you $100 the rest gets pulled into the current budgets much sooner than later]. Last year, Daley had said the meter money would be kept in reserve instead...
Several aldermen also raised concerns about being given only 72 hours to review, evaluate and approve the deal [TW: that is what dictators do, ram things through]...Volpe [budget director] said interest rates are currently very low and the city wants to act now in case those rates increase in this "volatile market." [TW: this is complete BS, almost no one expects interest rates to go up in the short-term and I assure the folks making a 75 year deal are not focused on short term anyway]. He also said the city needs the money as soon as possible [TW: which says it all, this is about addressing one year's budget by selling out the next 75]..."
http://newsblogs.chicagotribune.com/clout_st/2008/12/aldermen-debate.html
But if you have a dictator you better be damn sure to get one that knows what they are doing (hence W. Bush has been a real problem) and they should be truly benevolent and far-sighted. Unfortunately Mayor Daley and his ilk are mortgaging the future of our great city in pursuit of short-term budgetary and hence political gain. This deal not only uses future cash flows to pay for current spending it imposes a completely regressive tax on the citizens of Chicago while cynically providing limited funding for "low-income Chicagoans".
And thanks to the ineptitude and toadiness of the alderman and media, while they shriek and moan about the increases, not one word is uttered about using your children's and grandchildren's cash flows to pay for next year's budget.
From the Chicago Tribune:
"...Anticipating big shortfalls, Daley plans to set aside as much as $675 million of the one-time parking meter windfall to help balance the city's budget [TW: plus another $100 million for "low-income people" whatever that means and I would bet you $100 the rest gets pulled into the current budgets much sooner than later]. Last year, Daley had said the meter money would be kept in reserve instead...
Several aldermen also raised concerns about being given only 72 hours to review, evaluate and approve the deal [TW: that is what dictators do, ram things through]...Volpe [budget director] said interest rates are currently very low and the city wants to act now in case those rates increase in this "volatile market." [TW: this is complete BS, almost no one expects interest rates to go up in the short-term and I assure the folks making a 75 year deal are not focused on short term anyway]. He also said the city needs the money as soon as possible [TW: which says it all, this is about addressing one year's budget by selling out the next 75]..."
http://newsblogs.chicagotribune.com/clout_st/2008/12/aldermen-debate.html
Wednesday, December 3, 2008
These Privatization Programs Are INSANE!
TW: Chicago is leading the way in privatizing public revenue streams. We have done so with the Chicago Skyway and Mayor Daley is proposing to do the same with our parking meters. These deals would more accurately be described as capitalization schemes. The City of Chicago is trading 75 years of revenue in return for $1.2 billion. The deal is getting huge press mainly as in order to get the $1.2 billion upfront the city is proposing to let the private firm raise meter rates by up to four X over the next four years. No doubt by weaving the increases into a "capitalization" scheme the city believes the increases will be more palatable but my far greater concern is what the deal means for the future finances of Chicago.
Perhaps if the $1.2 billion was put away into some form of annuity or investment vehicle (preferably not invested in CDOs or Icelandic currency), then such a deal would not be destructive to the long-term financial health of the City. However, the actual plans for the money are much different. The vast majority of the money will be used for standard operating budgets over the next three years
"The Daley administration said $400 million will go into a long-term reserve, $325 million will be spent in city budgets through 2012 and $100 million is earmarked for programs helping low-income people. An additional $324 million is headed toward a fund city officials said "may be used to help bridge the period until the nation's economy begins to grow again."
So about one-third of the money will be set aside (with no guarantees it will not be grabbed say next year) and the balance will be deployed over the next three years including that "$100 million of low-income" which is mere vig to insure the votes of the city alderman to approve the plan.
Chicago is trading 75 years of revenue to shore up the next 3 year's budgets!!
These capitalization schemes are toxic waste being planted in a bi-partisan manner throughout the country, they are fiscal insanity. They are literally equivalent to a 20 year old capitalizing her life time earnings and then going on a three spending binge.
http://newsblogs.chicagotribune.com/clout_st/2008/12/city-parking-me.html
Perhaps if the $1.2 billion was put away into some form of annuity or investment vehicle (preferably not invested in CDOs or Icelandic currency), then such a deal would not be destructive to the long-term financial health of the City. However, the actual plans for the money are much different. The vast majority of the money will be used for standard operating budgets over the next three years
"The Daley administration said $400 million will go into a long-term reserve, $325 million will be spent in city budgets through 2012 and $100 million is earmarked for programs helping low-income people. An additional $324 million is headed toward a fund city officials said "may be used to help bridge the period until the nation's economy begins to grow again."
So about one-third of the money will be set aside (with no guarantees it will not be grabbed say next year) and the balance will be deployed over the next three years including that "$100 million of low-income" which is mere vig to insure the votes of the city alderman to approve the plan.
Chicago is trading 75 years of revenue to shore up the next 3 year's budgets!!
These capitalization schemes are toxic waste being planted in a bi-partisan manner throughout the country, they are fiscal insanity. They are literally equivalent to a 20 year old capitalizing her life time earnings and then going on a three spending binge.
http://newsblogs.chicagotribune.com/clout_st/2008/12/city-parking-me.html
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