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Oct 24, 2024

Chicago Parking Meters LLC accused of violating city's minority participation requirements - Chicago Sun-Times

The Office of the Inspector General concluded in its 2009 report that the city made a “dubious financial deal when it entered into the parking meter lease.” Tyler Pasciak LaRiviere/Sun-Times Share The

The Office of the Inspector General concluded in its 2009 report that the city made a “dubious financial deal when it entered into the parking meter lease.”

Tyler Pasciak LaRiviere/Sun-Times

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The 75-year, $1.15 billion deal that privatized Chicago parking meters is the deal taxpayers love to hate for how lopsided it has been, and how quickly private investors have recouped their money.

Now, Inspector General Deborah Witzburg is giving beleaguered taxpayers yet another reason to despise the deal.

In an advisory released Tuesday, Witzburg accused Chicago Parking Meters LLC of essentially thumbing its nose at Chicago’s “monetary participation” requirements for minority businesses.

The 75-year lease requires CPM to utilize certified minority- and women-owned businesses for “at least 25% of annual expenses tied to operating the parking meter system, excluding construction contracts.”

But that’s not what has happened.

From 2011 to 2018, CPM “claimed MBE credit for a vendor that was not MBE-certified,” Witzburg said.

“The city’s contract with CPM is hugely significant on its scale and impact on city operations and finances. This serves only to magnify the importance of its requirements being met,” Witzburg wrote.

CPM “contended that it still satisfied” the set-aside requirements “notwithstanding the fact that it appeared to improperly count” the uncertified vendor, according to Witzburg.

The inspector general didn’t buy it.

“For at least the year of 2018, CPM fell short of the M/WBE requirement due to its claiming a vendor who was not actually MBE-certified,” Witzburg wrote.

“Whether or not CPM satisfied its M/WBE requirement under the concessionaire agreement during the other years in which it improperly counted a non-MBE-certified vendor, it is troubling that the city did not identify that CPM, for approximately seven years, had improperly counted the vendor as MBE-certified.”

Witzburg stressed that her office has “not identified misconduct at the root of this shortfall,” nor was there evidence of “intentionally false statements” submitted to the city.

Instead, the culprit appears to be “inefficient or wasteful management” with no “policies or procedures for monitoring and ensuring compliance,” the inspector general said.

“OIG concluded in its 2009 report that the city made a ‘dubious financial deal’ when it entered into the parking meter lease. The failure to implement policies or procedures to ensure that the city realizes every benefit for which it bargained compounds the harm from the initial agreement and is inefficient and wasteful, lessening the value that the city realizes from the agreement,” Witzburg wrote in a letter to Mayor Brandon Johnson.

Chicago Inspector General Deborah Witzburg

Jim Vondruska/For the Sun-Times

Witzburg said the city should implement oversight procedures to ensure concessionaire agreements comply with the city’s M/WBE requirements. “Had a policy or procedure been in place ... such as cross-referencing vendors counted, it may have been revealed earlier and addressed,” Witzburg said

CPM’s spokesperson refused to comment.

In an Aug. 20 letter to Witzburg, John Roberson, the city’s chief operating officer, agreed that it is “critical that concessionaires” such as CPM comply with all of the requirements of their agreements — “including and especially” M/WBE participation.

Roberson called the mandate a “vital tool in the effort to ensure that all of Chicago’s residents have the opportunity to participate fully in the business of the city.”

Going forward, the Department of Finance will work with Procurement Services to “cross-check annual M/WBE compliance reports from concessionaires against the city’s list of certified vendors,” Roberson wrote.

With 59 years left on the 75-year lease, CPM now has recouped its $1.16 billion investment and well over half a billion dollars more. The latest audit shows $150.9 million in parking meter revenue last year, up from $140.4 million in 2022.

The parking meters, downtown garages and the Skyway were all unloaded by former Mayor Richard M. Daley, who used the proceeds to avoid raising property taxes while city employee pension funds sank deeper in the hole.

Of those three deals, the parking meter lease has been the biggest political nightmare for succeeding mayors who inherited it, and for City Council members who gave it lightning-fast approval. There were steep rate hikes initially. The metered rate for parking downtown, for example, went from $3 an hour in 2008 to $6.50 an hour in 2013.

Drivers were so incensed, they vandalized and boycotted meters, leading to a dramatic drop in on-street parking. Revenues eventually recovered — until the pandemic.

The widely criticized 2008 agreement could get $120.7 million worse, thanks to a risky, pandemic-era scheme authorized by former Mayor Lori Lightfoot that an independent arbitrator has ruled out of bounds.

It called for the city to reclaim 4,007 parking spaces as the stay-at-home shutdown dramatically reduced the value of those spaces, then return 2,646 of those spaces to CPM two months later, but keep 1,361 spaces for the city.

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