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Learning Lessons from Chicago's Parking Meter Privatization

Leonard Gilroy
May 21, 2009, 4:52pm

Given the recent political theater in Chicago over the rollout of their parking meter privatization initiative, it's important for policymakers in Los Angeles and other cities considering the privatization of their parking assets to be able to separate the policy lessons learned there from the politics.

The primary lesson learned thus far from Chicago is really an essential element of any type of privatization initiative—the critical importance of a sound transition plan. Earlier this week, Chicago Mayor Richard Daley acknowledged as such in taking responsibility for the rollout glitches involving a number of broken and mismarked meters:

Mayor Daley acknowledged Tuesday what Chicago alderman and motorists have known for months: City Hall botched the privatization of Chicago’s 36,000 parking meters by not transferring meters to a contractor more gradually.

"I'll take the responsibility. I'll take it. . . . There should have been a transition -- a much better transition -- and there wasn't. That's one thing we learned. There should have been a three-month transition," the mayor told reporters at an unrelated event.

Referring to other major assets turned over to private contractors without incident, he said, "The Skyway, parking garages -- everything else worked out. There should have been a three-month transition into it because the parking meters were not in the best of shape."

[...] Daley defended the deal, even as he fell on his sword. "If we didn't have that [cash infusion], you're talking about a serious economic crisis for Chicago [...] In the long run, this is the best thing. . . . If you had the foresight in your [media] companies to do things we're doing -- to shore up our budget, to shore up our infrastructure and to shore up our long-term debt -- your companies would be better off. But you don't have the foresight in your companies."

The Mayor is right that that Skyway and parking garage transitions were indeed smooth, and while that doesn't excuse dropping the ball on a better parking meter transition plan, it does help to explain why the city's eyes may not have been focused squarely on it. Similarly, the concessionaire also recently acknowledged their own contribution to the troubled rollout (see here).

Both parties certainly share the responsibility here—it's a partnership, after all—but let's keep this in perspective. No one's privatized 36,000 parking meters before; it's going to be tricky, and you can practically guarantee some hiccups along the way even with the most well-constructed transition plan.

The last thing you want to do is throw the baby out with the bathwater, which leads to the next lesson learned: even if they vote almost unanimously for it, opportunistic politicians will throw a controversial initiative under the bus in a heartbeat if they sense political advantage, and they'll start to threaten to try and undo it.

This is actually an old lesson as well. In fact, we recently saw it next door during Indiana's last gubernatorial election, where opponents of Gov. Daniels' privatization initiatives tried to build an anti-privatization bandwagon to carry them to electoral victory—threatening to undo the Indiana Toll Road lease, for example—but failed.

Such opponents offer clever soundbites, but once you ask the question, "even if you could cancel the contract how would you pay for it, especially after you've already spent some of the upfront payment?," they tend to avoid responding to the reality check. Another question fitting that same bill would be, "where would the city find the money to pay for the rest of the system modernization that the concessionaire already has underway?"

Another lesson learned centers on an issue I raised here: the condition of the existing system matters. As Mayor Daley said in the quote above, "the parking meters were not in the best of shape" at the turnover. This is a common occurence in privatization, and there has to be a political recognition that the private sector cannot just come in on Day 1 and wave a magic wand to undo years of system deterioration, obsolesence, etc.

It certainly seems that the concessionaire became overwhelmed facing the twin challenges of addressing the condition of the system they took over while also having to reprogram and relabel large blocks of meters to reflect the new meter rates approved by the City Council. But let's keep it in perspective: this is not a permanent condition, as the concessionaire is busy fixing broken meters while simultaneously starting to roll out the new multi-pay/multi-space meters that will eventually replace the current stock.

Ironically, one of the main privatization antis, Alderman Leslie Hairston (one of the handful that voted against the deal in the first place), took a break from leading the parking meter witch hunt and actually suggested something that I believe should be the proper focus of both the city and concessionaire right now:

[Hairston] welcomed the mayor's mea culpa. But Hairston said it's not enough for motorists who lost money and time after parking at improperly calibrated downtown meters. "I'm glad that he's stepping up. Then it becomes what do we do make people whole," Hairston said. [...] "There has to be some type of restitution. Everybody is not gonna be able to get their quarters back. But we need to set up a fund and make a good-faith effort."

So the last lesson learned from Chicago thus far to my mind would again be something fundamental to any privatization: if you make mistakes along the way (which will happen), acknowledge them (check), fix them (underway), and move fast to make any aggrieved citizens whole.

The current political circus is both unhelpful and a distraction from what the city and concessionaire need to be doing right now to achieve the latter. Rather than spinning wheels demonizing the initiative, alderman should be joining with the Daley administration and the concessionaire to figure out the best way to make whole those drivers who've been unfairly ticketed. That's no small task to be sure, but a far more productive one in the end.

There are certain advantages of being a prime mover like Chicago on privatization deals like this, but the advantage of being second is that you can learn valuable lessons like these from watching the first and then incorporate those into your own "version 2.0." Los Angeles policymakers shouldn't be spooked by Chicago's experience; instead, they should be focused on how they can learn from it to improve the model.

For more on Chicago's parking meter privatization, see here, here, here and here.


Leonard Gilroy is Director of Government Reform


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