Feb. 13 (Bloomberg) -- Chicago’s 99-year agreement to lease four downtown parking garages to an entity controlled by two Morgan Stanley investment vehicles faces a legal challenge from an Illinois taxpayers’ group.
The Independent Voters of Illinois and Chicago resident Aviva Patt filed papers today asking a state court in Chicago for permission to proceed with a lawsuit.
They contend that terms of the lease ceding parking garage rights in the east side of the third-largest U.S. city’s business district to a private entity and agreeing to pay indemnity if a competing garage is allowed to be built in that zone constitutes an illegal delegation of Chicago’s legislative and police powers.
“This is an illegal and offensive sale or lease of its sovereignty and exacerbated by the 99-year term,” lead plaintiffs’ lawyer Clint Krislov wrote the proposed complaint.
Chicago Loop Parking LLC paid the city $563 million for the lease in 2006 and, in 2011, submitted a demand for $200 million for lost revenue after the city allowed a new garage to be built within the restricted zone, according to the filing.
That entity is controlled in equal parts by Morgan Stanley Infrastructure Partners LP and Morgan Stanley Infrastructure Investors LP, according to the complaint.
Matt Burkhard, a spokesman for New York-based Morgan Stanley, didn’t immediately respond to a telephone message seeking comment.
Chicago comptroller Amer Ahmad is also a named defendant in the lawsuit. Roderick Drew, a spokesman for the city’s Department of Law, said the municipality hadn’t yet been served with the court papers and that he couldn’t comment on the allegations.
Patt and the citizen’s group seek a court order declaring the challenged provisions are void and barring Ahmad from paying out public money under the agreement. No argument date for the request to go forward with the suit was immediately available.
The case is Independent Voters of Illinois v. Ahmad, 2013CH04219, Cook County, Illinois, Circuit Court, Chancery Division (Chicago).
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