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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.

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In the case of the parking meters, "we should have had a longer transition period from public to private," concedes Peter Scales, spokesman for the city's budget office. Still, he adds, "we're always looking for other ways to generate additional funds, but not done in a way that's for emergency reasons. These are long-term visions of leasing an asset that will help and protect taxpayers well into the future." The alternatives, Mr. Scales says, are to cut workers or, as a last resort, to raise taxes. Of Chicago's $3.1 billion budget this year, 80 percent goes to cover salaries of city employees.

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City officials, though, are feeling the heat over the parking-meter deal.

Mr. Wolfson, the shop owner, complains that the sale was pushed through with zero public input. "City Council members couldn't care less for the people of Chicago," he says.

The Chicago City Council approved the sale in two days without seeing a copy of the full contract. Five of the 50 aldermen voted against the sale.

The inspector general's report said Chicago may have undervalued its meters - to the tune of $974 million. It called for a law that mandates a "far more transparent, public and deliberate process" and for "a far more robust role for the City Council" in future privatization deals.

Alderman Leslie Hairston, who opposed the meter sale, says council members are stymied by limited resources, staff, and time.

"We only have ourselves and our staff of three, ... which is why [we] rely on the mayoral support staff," says Ms. Hairston, who says she has yet to see the full contract despite repeated requests.

Hairston says she is asking the state attorney general to examine potential "deceptive business practices" concerning broken meters and subsequent parking-violation fees. She asks: "If you buy a dozen eggs, you check to see that none are cracked, so why don't you do the same when you [buy] thousands of parking meters?"

The Attorney General's Office issued subpoenas May 19 "to determine whether there has been consumer fraud," says spokeswoman Robyn Ziegler. The attorney general is "not investigating the City of Chicago," she stresses. "We're looking for information on the ... implementation of the contract as it relates to the potential of consumer fraud."

To privatization critics, the problems are par for the course. The top motive for firms seeking municipal assets "is to make a profit," says Mr. Marteri. "For them, for example, higher tolls are a good thing, lower labor costs are a good thing, more congestion is a good thing. They don't want alternative transportation - it diverts traffic from moneymaking tolls. Everything that benefits a private-sector interest hurts the public-sector interest."

Shoring up city funds through privatization can work as long as it is transparent, says Scott Bernstein of the Center for Neighborhood Technology, a Chicago-based think tank on urban policy. It also requires residents to grasp that the likely alternative to these lucrative contracts is higher taxes. "In some sense, it should work," he says. "You just have to have a very different culture to support it."