Inspector General Office Body Slams Meter Lease Deal
In a nearly 50 page report, Chicago’s Inspector General Office takes the Daley Administration and Chicago City Council to the woodshed for a brutal whipping, over the way the parking meter lease deal was completed.
The IGO began their investigation in January of 2009, shortly after the lease deal was signed in December of 2008.
Aaron Feinstein, Special Assistant for the IGO, was the author of the report and explains the IGO, began looking into the lease deal, “pretty soon after the deal was done we started taking an initial look at it.”
The report, was introduced this afternoon at a press conference by Inspector General David Hoffman, and has four major findings.
First, in what’s called “A dubious financial deal,” the report claims, based on the IGO’s independent calculations, the city essentially walked away of at least $1 billion dollars, by grossly undervaluing the potential dollar value of the deal.
Secondly, the city failed to calculate whether the deal was in the city’s best interest financially. The report contends, by being more concerned with filling a looming budget deficit, the city rushed to take the Morgan Stanley bid, without really considering whether they got the proper value for this city asset.
Third, the report concluded the city didn’t even entertain any other alternative solutions to the budget deficit problem. The report looked at public-private partnerships (PPP’s) overseas and saw that most of these types of leases have much shorter lease terms than the 75 year lease Chicago signed.
Fourth, the IGO is highly critical of the City Council and their lack of deliberation and independent analysis of the lease deal.
“There was no public comment; no testimony from critics or experts; no presentation of recent studies…” states the report.
The IGO is recommending a 60 day to “assess and deliberate” deals like this in the future BEFORE the bids have been placed.
“This will allow for more substantial analysis before bids are accepted”, explained Feinstein.
Tomorrow, the full City Council will deliberate a 15 day review period, once a winning bidder for a large asset sale, has been chosen.
Just minutes after the Inspector General’s news conference, Paul Volpe, Mayor Daley’s Chief of Staff, gave his own press conference re-defending the parking meter lease deal.
“With all due respect to the Inspector General, we take great issue with his report, and in fact, find it to be misguided and inaccurate,” said Volpe. “And while he calls the parking meter transaction a ‘dubious financial deal,’ I would suggest that many of the report’s central claims are dubious.
Volpe not only questioned the IGO’s math on the $2.13 billion they came up with, a conservative estimate according to the IGO, but stood by the administration’s claim that the $1.15 billion dollar lease deal was highly beneficial to the city and it’s populace.
“This transaction provided great benefit to Chicago taxpayers and residents, allowing us to continue providing vital services and avoid steep tax increases during this difficult economy,” Volpe said with defiance.