Chicago Parking Meters Hit with an Antitrust Lawsuit
The proposed bipartisan compromise on the infrastructure bill has focused some spotlight on the public-private partnerships (PPP) that are a major part of the bill. Critics have argued that these harm the average person, who must pay increased tolls and fees to private companies that make out like bandits. One example of this cited by these critics is the situation with the parking meters in Chicago, where the city privatized the meters. Now, the company that operates Chicago's parking meters is facing a class action lawsuit for "an unreasonable monopoly," testing the concept of the PPP.
Chicago Parking Meters Is Making Money Hand Over Fist on a Lopsided Deal
Some Chicago drivers have been hit with sticker shock when trying to find parking on city streets. They have been forced to pay rates that they would usually associate with a parking garage, sometimes forking over as much as $6 per hour for a spot on the street. The problem is that the parking rates are set by a company called Chicago Parking Meters (CPM). In 2009, a desperate for cash city sold the right to operate these meters to CPM for an astonishing 75 years. According to the plaintiffs, this is another instance of Wall Street fattening its own wallet at the expense of Main Street. CPM counts Morgan Stanley, the Abu Dhabi Investment Authority and Allianz Capital Partners as its investors.
At the time, Chicago probably thought that it was getting a much-needed infusion into its coffers. CPM paid $1.16 billion for the 75-year lease. Time has proven that CPM by far got the better end of the deal. CPM has already collected over $1.6 billion of revenues just a dozen years into the deal. Parking meters do not even require a large investment like roads or mass transit that are the subject of some PPPs. It turns out that CPM is laughing all the way to the bank. What is fueling these profits is CPMs latitude to set parking rates. Apparently, it is taking full advantage of the monopoly power that it has to control over 36,000 parking meters. In addition, CPM has added even more meters to city streets, forcing residents to pay for parking that was previously free.
Paying Almost $7 Per Hour to Park in the Loop
Parking rates inside the Chicago Loop have risen to nearly $7 per hour, and drivers are forced to pay them. Even in less crowded parts of the city, drivers must pay an average of $2.25 per hour for parking. Chicagoans have railed against the agreement for years, as these meters and the prices have caused considerable ire. Now, they are bringing it to the court system to try to punish the company that operates the meters.
Now, a dozen years after the parking meters were privatized, the plaintiffs are taking aim at it as violating antitrust laws. Their issue is the monopoly power that CPM has. The plaintiffs argue that consumers could be better served by bidding for the meters. Parking rates would be lower, and consumers' needs and preferences would be better met. In addition, the plaintiffs also claim that the agreement illegally restricts alternative forms of transit, such as bicycles and ridesharing.
One of the main points of the lawsuit is that the city should still have the ability to regulate the rates that CPM charges. However, the consortium appears to have very wide latitude to set its own rates, and it is hitting Chicagoans in the wallet. The problem will persist for the rest of the lives of most Chicagoans, since the agreement lasts until close to the end of the century.
The lawsuit does not target the City of Chicago. Instead, it focuses only on CPM, in part because of its practices. The plaintiffs will initially seek class action status. They are seeking monetary penalties and legal fees for the alleged violation of antitrust laws and unspecified other relief.
This is not the first alleged parking abuse alleged in connection with the Chicago Business District. Previously, there was an investigation about higher parking ticket rates charged in this area than the rest of the city and Chicago police ticketing at higher rates outside the district. In addition, the city has raised parking tickets for expires meters from $30 to $65 since 2007, more than doubling the fine. Apparently, everyone is getting rich off Chicago drivers while the motorists get soaked.