The ongoing case against privatization | Bleader

Monday, February 15, 2010

The ongoing case against privatization

Posted By on 02.15.10 at 09:00 AM

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Clint Krislov has heard the arguments—from advocates of privatization and from defenders of Chicago’s parking meter lease deal—and he thinks they’re nonsense.

Or worse. “I think this is just the latest way for people to make money off state and local governments,” Krislov, a public interest attorney, said in an interview in his office the other day. “This is the new way the investment banks, their lawyers, and consultants squeeze the taxpayers.”

In August Krislov, acting on behalf of the IVI-IPO, sued the city and state over Chicago’s parking meter lease deal. The suit charged that the agreement was illegal because it results in the use of state and city tax money to benefit Chicago Parking Meters LLC, the private company that controls the meters for the next 75 years, transfers police power to the company by giving it the right to issue parking tickets, and limits the ability of future city councils to set parking and traffic policy.

In the months since he filed suit, the parties have battled each other in a series of court filings. Krislov contends that if the state suspends anyone’s driving privileges because of parking violations, then taxpayer money is illegally being used to help Chicago Parking Meters bring in revenue. But attorney general Lisa Madigan argues that the state shouldn’t be part of the suit because the city reimburses it for any costs associated with parking policy in Chicago.

City attorneys, meanwhile, say the suit should be tossed because courts have ruled that the city has the right to govern itself and to enter into long-term contracts. They argue that taxpayers are benefiting from the deal in the form of the $1.1 billion cash payment the city received last year. And they say that it’s not illegal to let a private company write parking tickets. “The traffic control aide does not make the law—he or she enforces it,” they say in one filing. “This is true whether the traffic control aide is an employee of an administrative agency or an employee of a private entity.”

“The purpose of the concession agreement is not to enforce the safety and regulation of the public streets,” Krislov counters in a subsequent filing. “If that were the true purpose of the Agreement, then the Agreement would not even be necessary because the city’s police were already obligated to enforce the safety of the streets.”

Krislov hammers away at the fact that the city is obligated to compensate Chicago Parking Meters any time it wishes to change the number, location, hours, or rates of meters. “By granting the concessionaire ownership over the parking meter system, the concession agreement effectively gives a private corporation ownership rights over the meter system; and, hence, over part of the public streets,” he says. “The Illinois Supreme Court has expressly ruled that a ‘city has no power of authority to grant the exclusive use of its streets to any private person or for any private purpose.’”

A hearing on the suit is scheduled for March 31 in Cook County circuit court. But in our interview Krislov said that the fight goes well beyond this case or the debate over Chicago’s parking meter deal. He believes it’s critical to slow the wave of privatization that’s sweeping the country. Currently Pittsburgh, Los Angeles, Indianapolis, and Las Vegas are looking into privatizing their parking systems, and some of the same attorneys and consultants who put Chicago's deal together are working with them.

“They’re going around making these deals, and it’s very lucrative,” he says. “It’s a traveling road show. It’s like a circus coming to town.”

In an interview published a few weeks ago in the Reader, Chicago attorney John Schmidt, who helped the city lease out the Skyway and its downtown parking garages, argued to me that these deals make sense because private operators are more efficient, which helps government wring more money out of them for the benefit of taxpayers.

Krislov says that isn’t the case with the meters. He notes that a clause in the agreement allows Chicago Parking Meters to raise hourly rates if its operation and management costs exceed 15 percent of meter revenues. “That’s an incentive to be inefficient,” Krislov says.

He points to a chart the firm generated showing anticipated revenues from each block of meters over the next couple years—with rate increases, the income is expected to climb three, four, or five times. For example, in 2007 the 1400 to 1600 blocks of West 47th Street generated about $29,000. That figure was expected to climb to $133,000 for 2009.

“The bankers, lawyers, and advisers make huge money and the city transforms ownership of the meters, and who pays for it?” Krislov says. “People in the neighborhoods.”

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