Apparently, Abu Dhabi owns a majority of the City of Chicago’s parking meters. This is an odd twist to the highly publicized Morgan Stanley deal reported by Parking Today in January 2010, in which the company paid over a billion dollars for the City's future parking meter revenues.
On October 18, Rolling Stone released an exclusive excerpt from the new book Griftopia by Matt Taibbi which outlines how the deal went down.
Taibbi states that on December 1, 2008 the Chicago City Council was formally notified that Mayor Richard Daley made a deal with Morgan Stanley to lease all of Chicago’s parking meters for 75 years, for a lump sum of over $1.15 billion.
The reason was that the City was in a budget crunch and needed to pay for social services.
Taibbi adds that Morgan Stanley put together a consortium of investors - Chicago Parking Meters LLC - to handle the city's meters.
“There was no mention of who the investors were or who the other bidders might have been,” he says, when the agreement was rushed through City Council approval.
Taibbi calls it a "bait and switch" because even when the investors were finally revealed, "an Abu Dhabi entity" only owned 6% of the contract. Two months after the deal, the ownership structure changed a few times, and Abu Dhabi Investment Authority ended up owning at least 30% of Chicago Parking Meters LLC, according to Taibbi.
Taibbi claims that the City of Chicago undervalued the contract, which was really worth more like $5 billion. In my opinion, that is what this is all about, but Taibbi loses me when he says, "The most obnoxious part of the deal is that the city is now forced to cede control of their streets to a virtually unaccountable private and at least partially foreign-owned company."
This mysterious partially-Abu-Dhabi-based company has upset Taibbi and Chicago residents for several reasons, mostly notably because of a cultural clash that has resulted in no free parking on Christmas. Ostensibly this is because the foreigners do not celebrate our treasured American holidays and want to destroy our way of life? They hate us for our freedom? I don't quite buy it. I don't buy that the sale is akin to placing America's soul in hock. It's just business. But if Taibbi's calculations are correct, it remains a bad business decision for Chicago.
For JVH's perspective, click here to go to the Parking Today blog.
Pete Goldin
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