rollingstone.com / by Matt Taibbi / June 13, 9:05 AM ET
Readers of my last book, Griftopia, might recall a chapter about the city of Chicago leasing 75 years of its parking meter revenue to a coterie of private investors, some of them from the Middle East. The end result was and is a political obscenity: Native Chicagoans are now completely at the mercy of private interests when it comes to parking rates, collections, even holidays. When elected officials in Illinois can’t shut off the parking meters on Abe Lincoln’s birthday because a bunch of sheiks in Dubai don’t want the revenue stream turned off even for a day, you know something has gone seriously sideways in the national body politic.
Well, Chicago isn’t alone anymore. Hizzoner Michael Bloomberg in New York has decided to do his own version of the Chicago infrastructure bake sale; the city announced that it is putting up nearly 90,000 parking meters for lease. They’re expecting to get over $11 billion in upfront money from the deal, which is great news if you’re Mike Bloomberg, who gets to use that money to patch current budget holes instead of making tough cuts or raising taxes. The news is less awesome for the next half-dozen New York City mayors, or for the citizens of New York, who now will get to spend most of the 21st century grappling with its increasingly monstrous deficits with a major tributary from the city’s revenue stream shut off.
A New York parking meter deal, like the Chicago deal, would be a perfect example of the deeply cynical short-term thinking of many American politicians these days. These deals involve a sitting executive selling off a valuable piece of city property at a steep discount to private financial interests (often, to friends or campaign contributors), in order to solve a current cash flow problem that, surprise, surprise, will still be there the year after you finish spending the proceeds of your sale.
In Chicago’s case, Mayor Richard Daley sold 75 years of meter revenue – worth an estimated $5 billion – for $1.2 billion. So he gets 20 cents on the dollar for the city’s parking meters in 2008, and then in 2009 the city still has a budget problem that’s now worse, because there’s no parking meter revenue anymore, ever. Meanwhile, a bunch of private investors rounded up by Morgan Stanley – these bankers go on road shows here at home and abroad to places like Geneva and the UAE to hawk discount American infrastructure to foreign billionaires and sovereign wealth funds – get to enjoy the fruits of raised rates. In some Chicago neighborhoods, the meter rates went from .25 cents an hour to $1 an hour in the first year of the deal, and then to $1.20 after that.
Thanks to BrotherJohnF