April 29 (Bloomberg) -- Chicago and a group holding a 75-year lease on parking meters reached a settlement that Mayor Rahm Emanuel said will save the city more than $1 billion over the term of the contract.
The agreement ends arbitration between the third-biggest U.S. city and Chicago Parking Meters LLC, a consortium owned in part by Morgan Stanley, over the terms of a lease agreed to by former Mayor Richard M. Daley’s administration in December 2008.
“When I was elected mayor, I said this was a bad deal, but promised to do everything I could to make improvements on behalf of the taxpayers of this city,” Emanuel said. “So, my administration fought to ensure not one tax dollar was paid that we didn’t need to pay.”
The Chicago Parking Meters group paid $1.15 billion for the lease to monetize about 36,000 street parking spaces. It is the third-biggest street meter system in the U.S. and the largest to be privately administered, according to Chicago Parking Meters.
That sum was about $974 million less than the concession was worth, the city’s inspector general said in a June 2009 report. A lawsuit accusing the city’s outside financial adviser, William Blair & Co., of negligence in its valuation was dismissed in 2011.
Chicago Parking Meters had sought $49 million from the city over the two-year period ending March 31, 2013, as payment for the city’s decision to remove some street spaces, including those reserved for the disabled, from metering.
While the city agreed to pay the consortium $8.9 million now, it obtained from CPM control over the processing of data to determine whether the city owes or is owed money from future adjustments to available street parking.
The city also agreed to extend metered parking by one hour in most areas of the city and until midnight in the area immediately north of the Chicago River. Chicago Parking Meters agreed to free Sunday parking in neighborhoods outside the city’s core.
By mid-2014, it will also be possible to pay for parking using a mobile phone application, Emanuel said.
Terms of the revised agreement and legal settlement will be put before Chicago’s city council on May 8, which will have 30 days to review it, the mayor said.
“CPM is hopeful that the city council will ratify both agreements,” the company said in a statement. The entity’s other co-owners are Allianz Capital Partners and the Abu Dhabi Investment Authority.
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