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The great sell-off: Chicago auctions city assets

The city is auctioning private assets to the highest bidder. But private ownership of parking meters stirs a backlash.

By Correspondent / June 24, 2009

Outsourced: In the face of a staggering deficit, Chicago's government has sold or leased a number of public institutions, including the Chicago Skyway.

Stephen J. Carrera/Special to the Christian Science Monitor

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Chicago

No city in America beats Chicago when it comes to selling public assets - garages, bridges, even parking meters - and contracting with private companies to supply traditional public services.Over the past five years, the Windy City under Mayor Richard M. Daley has sold or leased out public institutions such as the Chicago Skyway ($1.83 billion), underground garages beneath Grant and Millennium Parks ($563 million), and, more recently, city parking meters ($1.15 billion).

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That's not exactly chump change, especially for a city still grappling with a $469 million budget shortfall from last year, not to mention an estimated $300 million deficit this year.

But the privatization onslaught is under fire - and the barrage is intensifying amid complaints about a parking-meter deal between the city and Chicago Parking Meters LLC, a Morgan Stanley company.

Earlier this month, the Chicago Inspector General's Office called the parking meter sale "a dubious financial deal." In late May, 250 new pay-and-display boxes malfunctioned in the Loop. Residents are now waging informal protests against the sale, saying that since Chicago relinquished the meters three months ago too many meters are broken, inaccurate rates are being posted, and fines have been unfairly leveraged.

"It's fraud; it's extortion," says Sam Wolfson, owner of String-A-Strand, a crafts-supply store in the Lincoln Square neighborhood, where meter rates have jumped from one quarter to four quarters for one hour. Signs in his shop window register his protest, and "100 percent" of neighbors who have read them agree, he says.

Debate over privatization of public services is as old as the trend itself. The practice caught on in US cities during the early 1980s. Supporters argue that private firms are more efficient than government and can deliver better service and value to residents. Revenue from privatization contracts also boosts city coffers, they argue, preventing the need for tax hikes or service cuts. Critics counter that selling off public assets represents short-term thinking, is prone to cronyism and graft, and introduces a profit motive that leads firms to cut corners and underpay workers.

"Most public policymakers don't think long-term because there's a rule in the long term: We all die," says Ralph Marteri of the Center for Tax and Budget Accountability, a Chicago-based bipartisan think tank. "They are willing to lose future benefits because it doesn't hurt them [in the present]. It's a real problem."

Chicago's privatization trend has had its stumbling blocks: A $2.52 billion sale of Midway Airport fell through in April when the buyers couldn't get financing. The Daley administration, however, says the ongoing meter flap won't deter it from courting private buyers for certain city assets, or from contracting out for management of services including parking at O'Hare Airport, vehicle towing, janitorial maintenance, and street resurfacing.