This month the City of Chicago voted by a wide margin to privatize their parking meters – the biggest contract of its kind in the United States. Morgan Stanley will hand over a cool $1.15 Billion in exchange for a 75-year contract allowing the corporation to handle Chicago’s 36,000 parking meters. As the city sees it, the funds currently generated from the meters could be made up for with just the interest from $400 million of the lump sum, and the rest can be used to help the city weather the tough financial times. What they are giving up however is the control and future potential of these important urban spaces.
From Morgan Stanley’s perspective, it’s a good business deal because they can actually charge market rate for the space motorists would like to use to store their cars (at least for a few years, then city council will have regulatory oversight over the pricing). In fact, most of the meters in the city will be quadrupled in price – and doubled again in four years. There’s obviously a fair amount of untapped potential here.
The rates will be the highest in the United States, and may even be comparable to some European cities. These higher rates are expected to make finding a parking space much easier, and thus reduce the number of cars circulating in search of spots. In the short-term these changes could lead to some financial hardship for middle-class drivers, but in the longer term behavioral changes will likely balance things out – that is assuming these rate hikes are accompanied with other viable transportation options.
The shift of a major parking supplier from the public to the private realm raises some interesting questions about the storage of our cars. Is parking a basic human right (like freedom of speech) that ought to be publically provided for free, or is it a commodity (like gasoline) that should be paid for by the individual user? Americans remain very divided over the answer to this question, but at least one major city has come down firmly on the latter side.
(tip from Streetsblog)
Tuesday, December 16
What parking would really cost
Posted by Daniel Nairn at 9:42 AM
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3 comments:
Perhaps another question is to what extent government should charge the public to use public resources.
Government frequently charges for use of scarce publicly-owned resources. But, how far should government go, in the name of revenue generation?
Unfortunately, the trend is toward greater privatization, double taxation, and public subsidy of private profit-making. Toll roads are a clear example of where the public pays to build the road, but then does not necessarily have the automatic right to use the road. Auctioning off the radio spectrum is another example where private companies are allowed to buy a public resource for private entrepreneurship.
Unfortunately, those who can't afford to pay but still need to use the public resource suffer the most. Talk about disincentive to pay taxes and support government!
Hello Dan,
This comment is unrelated to this post, but I wanted to comment on your blog in general. I frequently read your blog (at least once a week) for the past year and appreciate you for keeping up with it. As an interdisciplinary studies student at a university where most students do not know what urban planning is, your blog has been like that fellow student with similar interests that I have not found at my college.
thank you so much, and keep bloggin'
Kelly
Thanks for the encouragement, Kelly.
Zed. These privatization plans also make me nervous. Chicago claims the deal was made with their own financial interests in mind, but with a 75-year contract, it's just so hard to foresee what would happen. It's also forgoing some ability to control the situation.
At least, this may sends a message to similar governments how much potential revenue the do have in their parking.
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