Chicago’s parking meter disaster | Hacker News Reader

Chicago’s parking meter disaster

chicagotribune.com

280 pointsscarface_74401 comments

"A report by Bloomberg Business said CPM stood to earn about 10 times what it paid over the life of the contract."

Umm, is that really that much over a 75 yr contract? $1 invested in the stock market 75 years ago would be worth $172 today and that's adjusted for inflation, which I don't think the 10x figure is. To get to where we end up with 11x after 75 years in nominal dollars we're looking at just north of 3.2% interest.

So basically Chicago got a 75 yr loan at just over 3.2%. Currently 30 yr muni bonds average almost 4%. They'd have been lower back then, and I'm not even aware of 75 yr bonds existing, but what works out to a 3.2% interest rate on a 75 year loan is far from a disaster.

This article was not written by someone who understands finance, so I may be taking too much from that one quote. But if all they're getting over 75 yrs is a 10x return, it's hardly abusive! The investors would have been much better off just buying ETFs.

The thing that sticks people’s craw is that it has more or less solidified the current allocation of street space to parking, and any attempt to change it (bus lanes, bike lanes, a COVID outdoor eating area, etc.) now cost the city substantial amounts of money.

At least with a normal loan if your priorities change you can shuffle your budget accordingly.

Also, normally when you pay for street parking the blow is softened by the belief that - at least in theory - the money might go to infrastructure maintenance or some other publicly beneficial cause.

Not so in Chicago, it's just going to line the pockets of rent seekers.

Street parking in the US is almost universally, and massively, subsidized. The money doesn't "go toward" anything except an infinitesimal reduction in that subsidization.

To see this in action, stroll into a popular part of town, check the rate for parking on the street for a few hours, then check the rate for doing the same in a private lot on the same block.

Metering is purely in the interests of the business owners on the block, who don't want people parking for more than a few hours - ie anyone except their customers.

That's fine though. If building roads and paying for them with meters, even if not fully, helps cities generate significant economic activity, that could easily be worth it from the taxes and other benefits generated. There's a reason every city does it.

There's so much propaganda on all sides when it comes to automobiles in the US that it's hard to tease out reality, but I'd wager anything states and cities have hard numbers behind what they do.

When it comes to things like that, where solid data isn't public I just assume the world is not run by idiots who don't know more about their area of expertise than me. I feel reasonably certain that urban parking subsidization is done at least to a large extent because it makes money.

Cities are soft locked into car dependence in many areas so businesses need cheap street parking to remain viable meaning cities are massively incentivized to continue providing it even if it is a bad local maxima.

The problem is, obviously, the expertise of one field ("maximise car parking to deliver revenue") clashes with the expertise of another ("if we don't work to minimise car parking and dependence thereon, we'll all be breathing sulfur-infused atmosphere and praying we don't break through the wet bulb temperature").

As a biker on the central west coast I just had the 'opportunity' to revisit the midwest and can tell you we are screwed.

> There's so much propaganda on all sides when it comes to automobiles in the US that it's hard to tease out reality, but I'd wager anything states and cities have hard numbers behind what they do.

I would take the opposite side of that bet for most cities in the US. The smaller ones I have been involved in are shockingly captured by a minority of random business owners and retirees that bother to show up to meetings and demand their lifestyles be protected. I think parking subsidization is done largely because it's a visible cost to car owners who will oppose it strongly.

I know in my small city, the pandemic laid bare just how much paid parking meant to the budget. With almost nothing coming in from the city-owned garages and street meters, there was much handwringing about the shortfall.

Subsidy means govt spends more money on parking spaces than it takes out of parking spaces. In the city of Seattle rates for parking spaces are more than $3 / hour from 8:am until 8:pm, including Saturday (Sunday is still free). Most of the parking spaces are used at full capacity. This means that one parking space in Seattle would collect some fraction of $3 x 12 hr x 6 days / week x 52 week / year = $11,232 / year. Believe me - in Seattle these parking space have not been updated in decades. Govt spent no money and instead it got some fraction of $11,232 / year.

Parking spaces, in Seattle at least, are not subsidized. They are a massive source of revenue for the local govt.

> Street parking in the US is almost universally, and massively, subsidized

So are sidewalks and bike lanes. I'm not aware of a single toll sidewalk or bike lane.

Well, "the money" already went to the city, and has been spent. Whether it has been on "publicly beneficial cause" or not is for Chicago voters to decide, but the investors already put the money in, and Chicago already spent it. What the parking meters doing now is returning what Chicago has borrowed to the investors. While I'd argue that the model of borrowing massive amounts of money for long terms and hoping the next guy will deal with it is not exactly the healthy financial strategy, it is pretty common for various governments (including the US Federal Government as the most prolific offender) and it's not the investors' fault that Chicago city government chose to do so.

Right? People are "forgetting" that Chicago got $1.16 billion dollars up-front and worked out a scheme where they don't have to pay any interest on it unless they choose to do so. Now they're boo-hooing that they can't cut CPM's income opportunity without making them whole. The fact Chicago already blew that $1.16 billion dollars and apparently has nothing to show for it is neither here nor there.

I think the genius in this scheme is that it doesn't show up as debt anywhere in the papers, and they can whine that evil capitalists are gouging the poor citizens while enjoying the money that seemingly came out of nowhere. And simultaneously look for ways to maybe get out of it by some trick and then re-sell the same thing again. If they just borrowed it the usual way, the headlines would be "Chicago city is getting deeper and deeper in debt", but now it's "Chicago city has to deal with unmitigated greed of capitalists, aided by heartless courts".

Liability, including contractual liability, really ethically SHOULD show up among 'debts' (which are just monetary liability). Maybe accounting laws are too focused on money and not enough on value.

Well, if somebody ever reads properly made audited balance sheet of the city, it probably would be mentioned somewhere is there. But since it's not a classical debt, most casual observers wouldn't even realize it exists.

Even at 1.16 billion the city of Chicago got fleeced. What they sold was worth a lot more than that!

Nevermind the policy nightmare of not being able to freely reallocate street usage, and being obligated to maintain the spaces as sold for 75 years.

Even at 1.16 billion the city of Chicago got fleeced. What they sold was worth a lot more than that!

Upthread logic seems to indicate, no fleecing occurred.

> What they sold was worth a lot more than that!

Would you mind to walk us through your calculations, and share how did you discover that NPV of that income stream is a lot more than $1.6bn and what figure did you arrive at?

> being obligated to maintain the spaces as sold for 75 years

Technically - and as the court correctly pointed out - this is not the obligation. The obligation is to preserve the income stream. It is true that if the city gets rid of the spaces, it would be hard for it to preserve the income, but there could be options - like create more parking in different places, etc. Of course, when undertaking such an obligation, as with any loan, you sacrifice certain flexibility - if you take a mortgage, you have to pay $X per month no matter what, even if this month you'd rather spent it on a nice vacation. It's just that the city assumed that since the income stream comes from the citizens and not the city budget, they essentially got a billion dollars for free. But turns out it's not exactly so. It's not the fault of the investors though - it's the fault of those who made wrong assumptions on the deal. And those aren't some naive gullible simpletons, or at least those are not supposed to be in charge of billion-sized contracts in a megapolis like Chicago. One has to assume they were aware of the implications, and chose to get the cool $1.6 billion anyway.

Unfortunately, the implications were that the mayor involved joined the legal firm that negotiated this privatization shortly after his term ended.

It is worth noting that at no point was privatization of parking in his platform previously, and his approval rating dropped to record lows in large part to deals like this, but Chicago lacks a recall mechanism and he chose not to run.

We are also talking about a mayoral administration that operated with impunity. Despite contracts with the state and the FAA, the city used bulldozers to destroy the runways at a general aviation airport, stranding planes and its own fire department helicopters there. https://en.wikipedia.org/wiki/Meigs_Field

> Unfortunately, the implications were that the mayor involved joined the legal firm that negotiated this privatization shortly after his term ended.

This certainly looks very shady, but by itself doesn't change the financials on the deal. The claim above that this deal costs "a lot more" than a billion - I'd love to know how much and how did they know it.

Chicago is free to do whatever they want. Their only obligation is to make CPM whole, i.e. pay the interest on their $1.16 billion loan. That's the deal - either allow CPM to earn the interest on the loan, or pay them the interest outright. That's completely reasonable.

Blaming CPM for Chicago's inability to manage their finances is unreasonable, and no, I'm not a CPM investor.

Well, one can certainly blame the Daley administration, which shoved this deal through during its last term, and then coincidentally Daley became employed at the legal firm that wrote the deal.

Chicago unfortunately lacks a recall mechanism, and voters were unable to punish Daley for this plan that had not been part of his campaign, because he declined to run after his approval rating sank to record lows.

Instead of tidily blaming a specific politician and then moving on as if nothing can be done, this type of principle agent problem should be eliminated. Simply put, mayors and city councils should not have an unrestricted authority to legally bind cities.

I'd say that any contract longer than around 3 years (and/or larger than a certain dollar amount) should require direct approval by voters, or it shouldn't be considered as having been duly executed. Furthermore any terms of a contract that restrict/require a municipality to enact certain laws/ordinances (including through financial incentives) should be straight up illegal and thus unenforceable.

The problem is systemic. How would you enact such a change? Neither Chicago nor Illinois have mechanisms for citizen initiatives amending laws or the relevant charters and constitutions, so you'd need a three-fifths supermajority of politicians to agree to hobble themselves.

There are many comments in this thread assuming it's a legitimate agreement made by the "city". My main point is that in the abstract, we should not take this as an open and shut moral certainty. Rather we should view the "contract" in the same light as a real estate deed signed by someone under undue influence or otherwise incompetent.

As for practical reform, especially with this failure in court? It might still be possible to get a majority of state politicians to constrain the city politicians. More centralized government is unfortunately one of the few remaining checks in this day and age.

Unfortunately, the legal system does not work in the abstract, and particularly for anti-capitalist policies the courts don’t look kindly to making up legal theories out of thin air.

Illinois is even more corrupt than Chicago.

A prerequisite to any sort of reform is being able to criticize what is wrong in general principles. As I said, there are many comments in this thread just plainly assuming that it's legitimate to consider the city as being bound by this deal due to unilateral actions of the mayor. Pointing out that this is an opinionated assumption and that we could instead use other standards to mitigate the principle agent problem is my attempt at articulating what is wrong with the situation. I'd say it has much better explanatory power for what people intuitively feel is wrong here.

I wonder if the CPM can be bought out of the deal if bus/bikes lanes are so precious. And today's environment may be more conducive to such deals. Maybe CPM has some payments due in other parts of it business and City of Chicago could take advantage of this. Just speculating.

That's not a very good financial analysis.

This investment pays dividends. The original investment has already been paid back in cash, plus $500 million.

There is an opportunity cost to money.

I'm not sure if you mean mine or theirs. Theirs is definitely bad. Mine was not an analysis, just pointing out how bad theirs is. The original investment was in 2008. $1 billion invested in an S&P500 ETF would have returned the original investment plus a couple billion more. Even still where they are at in 15 year does not work out to a really high interest rate. It's still sub 4%.

As I posted upthread, the 2022 nominal return was more like 12%, 6-7% when inflation adjusted. Assuming parking demand doesn't collapse, which seems unlikely given ongoing gentrification and decreasing transit usage, that sub-4% rate is about to go up by quite a bit.

Slightly off topic, but

Math.

Data.

They need to be explained. Even then, people have to understand their fundamentals to understand the explanation. You can't make a soundbite out of math.

"Chicago got suckered!!!"

There, you see. No explanations necessary. You can fit it into a 20 second political commercial. You can plaster it on Social Media. Doesn't matter whether or not it's factually correct.

You math and data guys are just doomed to lose every argument if you insist on employing only well reasoned and data backed introspection in public discourse. That's just not how the average US citizen works. (Nor even the average HN User to be honest. Look at the comments on this thread.)

Best to try to find someway to put the analysis into a soundbite. I don't claim to know what that would look like, but it would work better in public discourse. Summarize all of what you just said, and then add in the cost of the city running the program fully on its own. (Seventy five years worth of utilities, maintenance, salaries, pensions, sick leave etc.) That way people compare cost to opportunity cost right away, and see the point you're making.

Right. "They're making 10x!" is a great soundbite for anyone who never took a finance class in college, which is probably most people. This is one of the few places where I'd post something mathematical publically and assume that the vast majority of the people who read it would understand it. The people on this site might not all undertand finance very well (hell I'm intermediate level at best) but they could at least understand time value of money and opportunity cost and probably have intuited those concepts even if they'd never heard of them. Unfortunately the same cannot be said of whoever wrote the article.

Note it is in line with other similar schemes such as toll road leases...Indiana did the same scheme with their toll road leases..75 years and the firm that won got the same 10 times returns.

Toll roads are also panned in the United States for much the same reasons.

Selling of leases is a traditional way to pad budgets short-term, and then whoever did it retired and it becomes somebody else's problem. If you budget is leaking and you urgently need $BIG_BUCKS to plug it, just sell a 75-year lease and move on. Of course, if you eventually run out of leases to sell, it may be a bit of a problem, but it will be then, and now is now.

Here's more detailed breakdown of the original concession deal

https://reason.org/commentary/setting-the-record-straight-on...

The deal is lot more complex than just a lump sum in exchange for 75yr lease.

By the stated face-value, the $1.16b for 75 years splits to some $16m/yr. Previously, the city was reported to be making some $19m/yr from the parking fees. However, it seems that in present value terms such revenue stream should have been compounded to a larger present amount.

Reasonably, Chicago could choose to just raise the parking fees at any future point (with some political repercussions). This also would have changed the deal calculations. The fact that CPM raised the prices and the residents have no choice but pay them only proves this.

The deal is quite involved with some limit terms, infra expenditures, and other provisions. Each piece was likely evaluated in dollars to present it to both sides as fair value.

Is it really a fair deal to city residents? It seems that the popular sentiment is that it is not, even after so many years since it was signed.

I guess, no one has reasonably presented to the public an alternative to not having the deal. Or perhaps, other municipal fees like more speed cameras, zoning, and good old property tax increases have further muddied the fairness outlook.

Here’s the question: how much would you pay for an annuity that gave you whatever CPM is going to get out of this? If it’s more than $1.16b then you could say the city got a bad deal, but I just don’t think it is. I think it’s likely less, though that’s basing it on this article which is not well-written.

75 years is a long enough time horizon that you could consider the stock market “risk free”. It has never not performed way better than this annuity in that time period, and if it did, it would probably mean something so terrible happened that the money doesn’t matter (or maybe doesn’t exist) anymore.

Add to that the fact that Chicago very wall may go bankrupt and default on this. The city already got their billion. There’s a lot less risk the stock market (or take your pick of many alternative places to park a billion) goes to 0 and again if it does, we’re probably talking America having collapsed so the money doesn’t matter anymore anyway.

I just don’t see any reasonable set of mathematics where this wasn’t a good deal for the city.

And yeah, people don’t like it because it’s costing them more at the meter and 95% of people don’t understand finance or math and they’re really mad that their city is going a poor job of fiscal management. If it weren’t this problem, the city would have had to do something else to raise or save a billion and they’d be mad about that instead.

The cited 3% annual return should be seen as a floor, not a ceiling. Both nominal and real returns have crept upward significantly over the life of the contract.

The 2022 nominal rate of return was 12%, probably a 6-7% real rate of return, I'm not doing a precise calculation right now.

Numbers are here, 2022 revenue was $140.4 million: https://chicago.suntimes.com/city-hall/2023/6/11/23755615/ch...

How do you consider this a loan by the city? They sold the management concessions for a (potentially) fixed fee and in 75 years they'll get the rights back but nothing more. Or you're saying, this concession is equivalent to $1.16 billion lent over 75 years not adjusted for inflation at a rate of 3.2% rate today?

Also, a rough calculation, but I came out with a 13% nominal return per year for the management company assuming they hit that 10x:

1,160,000,000.00 * 10 = 11,600,000,000.00 -> total earned

11,600,000,000.00 / 75 = 154,666,666.00 -> earnings per year

154,666,666.00 / 1,160,000,000.00 = 13% -> annual return

Which does seem like a very, very nice deal for the concessionaire.

Compound interest:

    >>> 11**(1/75)
    1.0324885301426248

Right, it's basically an annuity.

If you're more of a numbers guy or gal, it's probably worth pointing out that the audited financial statements are available here [1]. I see that they have five lease deals going on and the reporting is only about the one (the worst deal???). A counterpoint is the deal in which Chicago leased the underground parking garages two years prior. Looking at those financial statements show that the deal was absolutely terrible for the bank(s) that financed the investment company - the original "owner" went bankrupt and the new "owner" has lost tens of millions over the last few years.

I have to wonder whether the aggregate of all the deals is a "disaster", "a little bit bad", or maybe "a little bit good" (lowest probability?)

[1] https://www.chicago.gov/city/en/depts/fin/supp_info/public_p...

For some reason this reply below the parent comment was marked as dead. Am I missing something? Why was it killed?

> Part of the deal is that if their yearly returns are not high or met, the city has to make up the shortfall. Which is absolutely disgusting and insane for tax payers.

I'm not sure why it's insane. It makes it more like a loan than a risky investment, and with 3.2% return one must be crazy to take the deal without some kind of guarantees. I mean if you are promised a 3.2% APY investment and then told "but we can actually decide at any time to mess with your income or do anything that breaks it completely, and you'd have to trust us not to do that for 75 years" would you take that? Would you buy an annuity which pays less than a savings account, but the holder can at any time restructure it in ways that makes it return even less? No sane investor would do that. At least not with 3.2% APY - that'd require much higher income, commensurate with the risk.

Sometimes it's the account rather than the specific comment. (Idk in this case.)

You're making a strawman in aggregating the deals. Whether or not in aggregate Chicago has good financials, at the end of the day, the parking meter deal is taking huge amounts of tax payer dollars for decades to, in essence, prevent modernize streets and reduce dependence on cars.

I have a new phrase du jour: "Let governments be governments". This is pretty much the exact situation. A mistake (corrupt or incompetent) was made. Admit it. Then end the contract.

Now governments should honour contracts negotiated earlier in good faith, but there has to be a level of "oh come on" about that honouring.

Here everyone's reputations would be enhanced if a meeting occurred where the CEO of Goldman? / Abu Dabi and the Mayor plus maybe a federal rep (pretty high up maybe White House Chief staff) sit down and basically threaten the investors with no more deals in USA unless they hand back the meters.

Everyone gets to look like winners - the government looks like real government and the investors get a profit and look like the kind of big shots only white house can deal with.

And then we learn to actually scrutinise these deals that happen every day across towns across the west and ask - why? Don't sell the family silver, build strong towns, tax sensible levels, and trust in your city.

Agreed. And next in Chicago we need to cancel or renegotiate pensions with all government employees in the county over the age of 60 for having been personally responsible for putting the county in a deficit to begin with.

Pensions are a tricky subject. In cases where a pension job paid less than prevailing wages, that pension is in reality deferred payment for time already worked. So taking away the pension is wage theft. It would be similar to if an organization decided to take back a large portion of your 401K because they retroactively deleted the company matching benefit.

In reality, that deferred pay should have been properly invested / managed from the beginning, but that would mean higher taxes or lower spending on other programs at the time the wages were earned.

Defined benefit pensions have a simple fix. They should be illegal (along with all other deferred compensation schemes) for taxpayer funded entities.

The moral hazard of letting today’s voters and today’s politicians and today’s senior government employees (the union leaders) steal from taxpayers 30 years in the future is obvious.

Not to mention it is all going into the same SP500 anyway, so just cut out the middleman and moral hazard, and give everyone a Fidelity/Vanguard/Schwab 401k and let them buy the SP500/target date retirement fund they want.

Having a lien on future taxpayers is literally the only difference between taxpayer funded defined benefit pension funds and 401K/IRA.

Defined benefit pensions are also largely a product of a more paternalistic time when there was an implicit deal of spend your career (or at least a big chunk of it) working for us and we'll help take care of you in retirement. It doesn't really work for private company employees these days given you often don't get much of anything if you leave in less than 5 years. And the public sector has even more moral hazard as you say; there is at least regulatory oversight of private pensions.

> Defined benefit pensions are also largely a product of a more paternalistic time when there was an implicit deal of spend your career (or at least a big chunk of it) working for us and we'll help take care of you in retirement.

There's no reason you can't have portable DB pensions (you'd need standards for employers set by the plan, and a common DB plan, but in a way that's how many non-federal public DB plans already work—they serve multiple different public sector employers.)

Its a policy choice not to do that in a way which provides universally portable plans covering private as well as public sector employers.

At that point, why not just increase the level of social security? It sounds like you're mostly creating an additional universal system to layer on top. And, if it's not universal (including small businesses that now have an additional administrative cost) you have now created a retirement plan that basically favors public sector and big companies (which admittedly 401k already does to an extent).

> At that point, why not just increase the level of social security?

I was mostly thinking in the context of state governments in creating their existing multi-employer DB plans making that policy choice, but, yes, the Feds could also expand SS contribution and benefits to make it a universal first-line pension instead of a near-universal safety net pension.

Multiemployer DB pension plans are a specific thing unrelated to taxpayer funded DB pension plans.

An examples would be multi employer Teamsters truck driver pension plans, and they are notable because in a multi employer DB pension plan, when an employer goes bankrupt, the unfunded liabilities get distributed amongst the remaining employers. Which means once things start going downward, the longer you stay in, the more of the bag you are left holding.

Which precipitated the recent bailout of some multi employer pension plans, since they had enough political sway:

https://www.nytimes.com/2021/03/07/business/dealbook/bailout...

Will only work assuming population and economy will continue to grow in the future. While this has always been the case in the USA, it is not always the case globally.

Not paying pensions should be illegal.

I think after Sears and the rest, people prefer money now vs money later. But if I knew the money was good, I'd rather not manage it myself.

There are very low effort ways like target date funds. Of course, that means you have to pro-actively take money out of your paycheck and deposit it.

A bankruptcy does not mean the pension funding is gone. In the case of Sears it transferred to the PBGC with the federal government. In my case, the pension administration is handled (well outsourced) by the current owner of my long ago employer.

Does your employer not (optionally) manage your 401k? Mine has been doing better than my other accounts on index funds.

I've never heard of such a thing. For me, it's always been a choice of funds (and maybe company stock) held at a brokerage that allows me to reallocate investments as I wish.

I have to believe that if a company is "managing" 401k investments, it's just an abstraction on top of some agreed-to investment strategy at the brokerage.

Depends on what you mean by "manage". The money is explicitly yours, the company can never touch it. However; you are locked into the company agreement with the custodian (e.g. Vanguard and their list of investment funds).

Not locked. You can roll it over into a IRA/ roth IRA and manage yourself. You won't pay early withdrawal taxes as long as you roll over within 60 days.

An 401k custodian that allows an in service distribution (rollover while employed) is rare, and I think it is not even allowed by law before age 59.5.

Rollovers typically only happen after employment has ended.

https://www.investopedia.com/terms/i/inservicewithdrawal.asp

How is a governmental DB pension stealing? Or are we talking about Libertopia "taxation is theft" garbage?

The way pensions are currently implemented in the state is "don't invest, just transfer tax revenue to pensioners" social security style. The issue is todays tax payers did not agree to those pensions. The people who voted for the pensions are mostly no longer working, they foisted all the costs onto their children and grand children.

No, this is not true. CalPERS is a huge investment fund. My own much smaller pension has a (nominally) large investment fund and believe me it ain't sitting in a money market fund at Wells Fargo. I don't have survey data for you but I am going to go ahead and state that the vast majority of money in pension funds is invested to hit some assumed rate of return with minimized risk / diversification targets.

Im talking specifically about Illinois pension funds, which were unfunded for decades. There's no money sitting in them at all, everything that comes in immediately goes out.

Pay-as-you-go is more risky and more costly overall but it's not an unworkable system.

Since you clarified that you mean one specific state has this system, then I'd say the rest of your post is bogus too. Current taxpayers didn't agree to build old bridges or whatever either. Few people living agreed to build out the state highway system. Yet taxes today pay for their maintenance and upkeep and it's not some great moral problem.

Bridges and infrastructure benefit everyone. I get no benefit from someone who's been collecting a pension since before I was born.

Not all infrastructure benefits everyone. No doubt some of the taxes you pay today cover the costs of maintaining boondoggle projects or wastes of money. And the pension might not directly benefit you today, but let's say those pension benefits go to a woman who used to maintain the bridge. Now today the bridge is in better shape than it otherwise would have been if they'd been done by some high-turnover, low quality employee.

boondoggle projects are also theft.

How do you know? Perhaps that person built or improved something very important to your life. Even if they stamped papers at the DMV for 40 years, someone needed to do that work if we're to have a functioning society.

And don't wave that away saying that worker could now be replaced by a kiosk and AI, or a contractor in India. Someone needed to do that work, manually and in-person in the 80s and 90s when that wasn't an option. If you want to slim down the civil service today, that doesn't erase the work done by those workers in the past.

Finally, remember that you don't personally benefit from every tax dollar, but as long as many (or sometimes even a few) do, then that dollar wasn't wasted on those grounds alone.

I think these are all reasonable arguments. It’s just hard for me to take them seriously with how corrupt our government is. Yes these are all factors, but the main thing is just that politicians 60 years ago decided to give themselves bribes instead of funding the pension and now I’m paying for it.

But it kind of is a great moral problem: A whole lot of infrastructure in the US is way overbuilt, with maintenance sent forward decades. The cost of the infrastructure isn't really handled by the people that built it, or those that use it today: It's left as a giant ball of debt to children and grandchildren.

A major reason for problems with old suburbs is that, unless they massively appreciated in value, and accept very large taxes, the per-house costs of rebuilds and maintenance isn't handled by the people that live in said suburb, but kicked outward. There's all kinds of very bad incentives, caused by how we have this kind of infrastructure. It's all over midwestern cities, and the outer suburbs that are getting built are doing the very same thing.

CalPERS is only 80% funded according to their own rosy assumptions, even after a historic annual stock market increase. See top right of page 130.

https://www.calpers.ca.gov/docs/forms-publications/acfr-2022...

In fact, the system is so corrupt, 80% funded (of that rosy number) is considered “fully funded” for taxpayer funded DB pensions, so kicking the can forward for the remainder 20% is just par for the course.

The real situation is worse though, and clearly evident in the ever increasing proportion of the budget going to pay for deferred compensation schemes, whether it is the “normal cost” for this year’s accrued benefits or to make up for underfunding from previous years’ benefits.

> CalPERS

CalPERS the fund that famously didn't put a dime in for basically a decade? The one everyone was sure was going to bankrupt California until they lucked out and the stock market saved them?

CalPERS was prudent in planning that the federal government would, as usual, backstop asset price growth even if it meant near 0% interest rates reducing purchasing power of the USD. Aka, taxing future generations to pay for the underfunding. And even after all that currency devaluation, CalPERS is still only 80% funded, by their own calculations.

At least previous California legislators were generous enough to not bake cost of living increases for DB pensions into their state constitution like Illinois.

The simplest explanation is politicians excluded taxpayer funded defined benefit pensions from any regulations ensuring their solvency, such as ERISA 1974 and PPA 2006. Why? Because future taxpayers can always make up for underfunding.

Voters today want lower taxes today. Politicians today want votes today. Government employee union members want maximum compensation, and union leadership is composed of older employees who will collect benefits in the short term.

So, how do you deliver both lower taxes (than a competing politician) and market pay? By using benefits where you can fudge the numbers with plausible deniability.

For example, the federal government requires non taxpayer funded pension plans to calculate the present value of the benefit using corporate bond yield curves, which were ~4% and below for the last 10+ years.

https://www.irs.gov/retirement-plans/pension-plan-funding-se...

In the meantime, most taxpayer funded pensions were using 7%+, some even 8.5% return on investment assumptions to calculate present value of the benefit.

The higher the discount rate (or ROI) assumption, the cheaper the benefit is today (since you are expecting the investment to pay the benefit to grow quicker). And as a rough estimate, the sensitivity of the discount rate is 15%, meaning a 1% difference in the discount rate assumption will change the present value (or liability) by 15%.

Which means when a government uses a discount rate 2% and 3% above what non governments have to use, that means your government is understating liabilities by 30%+, which means either they have to make up for it by investing in riskier investments, and most likely hosing down future taxpayers to make up for the underfunding.

These reports show a ranking of the levels of deferred compensation funding throughout the US. Note the relatively bad position of Chicago and Illinois, hence why this thread exists.

https://www.truthinaccounting.org/resources/page/state-repor...

https://www.truthinaccounting.org/resources/page/city-report...

Aside from the challenges of switching over deeply-ingrained systems, it's really hard for me to make the case for DB pensions today, especially with them largely gone from the private sector.

Yes, a lot of people don't voluntarily save for retirement as much as they should to supplement social security and other benefit programs. But my response to that is something the lines of "OK. Let's stipulate that's an issue. Why are we only solving it for public sector employees?" I suspect the answer is at least partly because voters won't give us enough money to pay today's salaries so we need to obfuscate our costs and kick the can down the road. But that's not a very satisfactory answer.

I'd say it's a very easy case to make.

Pensions are much cheaper than individual private plans and place various financial risks on the party that can actually afford to manage it (and spread it across the entire employee base). The pension holds the risk for me that I live longer than I planned, or that the market crashes the month before I turn 65. Being a large professionally managed fund, it's in a great position to do so, and it even spreads the cost around! I don't have to pay some insurance company a huge premium to get an annuity, the pension gives me the annuity at cost and probably with much better terms.

The only argument you give is that the private sector got rid of them. Well, don't ask me to eat shit just cause you're happy to.

> Pensions are much cheaper than individual private plans and place various financial risks on the party that can actually afford to manage it (and spread it across the entire employee base).

This is obviously false given the underfunded states of pretty much all taxpayer funded pensions in the US.

> Being a large professionally managed fund, it's in a great position to do so, and it even spreads the cost around! I don't have to pay some insurance company a huge premium to get an annuity, the pension gives me the annuity at cost and probably with much better terms.

A pension fund manager is not doing anything more special than a simple target date retirement fund does. The job has been automated away. The only savings comes from shafting future taxpayers, which is why almost no non taxpayer funded entity offers DB pensions anymore.

Also, there exists a defined benefit pension plan for all US residents called Social Security. But the federal government has the power to issue new money, which no one else does.

>This is obviously false given the underfunded states of pretty much all taxpayer funded pensions in the US.

You have confused two different but related issues. Let me be more explicit.

My pension fund provides all employees who join with certain benefits. Let's say over the course of 50 years we look at what it costs to provide these benefits in some constant dollars and it's 100 bucks. I claim that the cost for all employees using individual retirement accounts to achieve the same benefits as the pension, they would have to had paid e.g. 110 bucks. I can't prove this claim but can provide some explanation:

Each individual fund is much smaller and is paying much higher fees, both management fees and transaction type fees.

Each individual is much harder to insure than the group and has to go to a for-profit insurer to get an annuity (as they have with the DB pension). They pay the risk and for the insurer's profit.

Each individual has to manage pre-retirement market risk and pay a price to do so, e.g. they're using target date funds and the money is in low-yield bonds for the last few years before they retire, losing returns at exactly the time it's most costly.

The question of funding is separate. It's up to my employer to decide if they want to set aside the whole 100 bucks up front that the pension costs or if they only want to set aside 80 bucks. So, either the pension is fully funded, or 20 short, either way it's cheaper.

I do not see why costs arising from agency risk, as seen pervading the US on state and county and city levels, should be disregarded.

> Each individual fund is much smaller and is paying much higher fees, both management fees and transaction type fees.

Compared to Vanguard/Fidelity/Schwab/Blackrock/etc offerings that are easily available in any brokerage/IRA/401k?

> Each individual is much harder to insure than the group and has to go to a for-profit insurer to get an annuity (as they have with the DB pension). They pay the risk and for the insurer's profit.

And yet insurers are able to pay annuities without needing the power to tax entire populations. There is clearly a disconnect between the theory and practice, due to the aforementioned agency risk.

> Each individual has to manage pre-retirement market risk and pay a price to do so, e.g. they're using target date funds and the money is in low-yield bonds for the last few years before they retire, losing returns at exactly the time it's most costly.

Another way to look at it is they are invested in lower volatility investments because they are at a point in their life where they can not afford volatility.

> The question of funding is separate. It's up to my employer to decide if they want to set aside the whole 100 bucks up front that the pension costs or if they only want to set aside 80 bucks. So, either the pension is fully funded, or 20 short, either way it's cheaper.

Yes, it is cheaper and great for those who are early enough in the scheme to be a benefit recipient, which is why I specified older employees who compose union leadership in my original post.

It is not cheaper for younger taxpayers and younger government employees shunted into lower paying tiers of the pension. I have a sister in law who is 7 years older than my other sister in law. Both work for a state government, and the older one has worked a lower paying job her whole life than the younger, by at least $20k per year. However, the older one will retire with a benefit worth at least 2x as much as the younger one.

>I do not see why costs arising from agency risk, as seen pervading the US on state and county and city levels, should be disregarded.

Fair point, but individual accounts have similar issues. People give their money to wealth advisors or whatever all day long.

>It is not cheaper for younger taxpayers and younger government employees shunted into lower paying tiers of the pension. I have a sister in law who is 7 years older than my other sister in law. Both work for a state government, and the older one has worked a lower paying job her whole life than the younger, by at least $20k per year. However, the older one will retire with a benefit worth at least 2x as much as the younger one.

I'm arguing that benefit-for-benefit, the pension does it cheaper. It would be cheaper for a pension to provide your older sister's benefit and cheaper for a pension to provide your younger sister's benefit. But yeah, this kind of thing is fucked up and I don't know why unions agree to it.

>which is why almost no non taxpayer funded entity offers DB pensions anymore.

In fairness, my (utterly non-expert) understanding is that tax law changes factored in as well. Though, to the degree they understand that pension funding isn't "free," a lot of employees would prefer to do their own saving, including in tax-advantaged accounts, without strings attached.

From a mental accounting point of view, yeah, it's nice that I'll have some "free" money coming in from decades ago but it was presumably not actually free in that offered benefits presumably factored into pay scales at some level.

No, it was the Pension Protection Act of 2006, and the accompanying adoption of International Financial Reporting Standards (IFRS) that made DB pensions a nonstarter. In conjunction with the advent of nearly free equity index funds.

The former made it so no more fantasy discount rate assumptions could be used to understate liabilities by 30%+. The latter made it so paying the costs of active fund managers was a waste of money when you get the same results with a 0.03% to 0.06% expense ratio passively managed fund.

Thanks.

Related to the index funds, although a lot of people lost quite a bit of money during the dot-com bubble popping, that period also democratized and made buying and selling stocks/index funds/other mutual funds much less expensive and accessible.

401(k)s had been around for a while but it was probably around then that online trading was really normalized as opposed to something that investment professionals largely handled for you out of sight out of mind.

Again, discount rate assumptions don't directly affect the cost of the pension. The liabilities will be what they will be. Returns will be what they will be, though of course assumptions impact the amount of risk you take as you attempt to achieve the assumed return.

And even with passively managed indexes the pension fund will win. Who's paying fewer basis point for this index fund, you or the billion dollar pension fund? If they achieve similar results then still the pension will have you beat.

I think we are referring to costs in different contexts.

If I may switch to a different term, the outgoing cash flow will be what it will be, the question is where and when and from whom is the incoming cash flow?

In the context of this thread, apparently some of it will be from people who pay parking meters for the next 70 or so years. Is that what the plan was when this cash flow was promised to voters and recipients 20, 30, 40 years ago?

>In the context of this thread, apparently some of it will be from people who pay parking meters for the next 70 or so years. Is that what the plan was when this cash flow was promised to voters and recipients 20, 30, 40 years ago?

I don't know about the City of Chicago but most pensions were pay-as-you-go til the 80s or 90s, so the voters then probably agreed that they should pay benefits for retirees then and future citizens and taxpayers should pay for benefits now. The advent of the pension fund means that it's now more common for taxpayers today to set aside a separate fund from which some or all future benefits will be paid. Just a different way of doing things.

That DB pension still has interest rate risk over a period of decades. And, although with some exceptions (charitable trusts and the like), an equivalent annuity is mostly not a great investment for individuals, there are a lot of other ways to manage risk if you're happy with a modest 6% or whatever return. For starters, I can buy long-term treasuries although that may be too safe by itself. And almost certainly wouldn't be the optimal investment for an early-career employee who may be starting to think about saving for a house down payment.

I'm perfectly happy to have an early-career pension coming that I probably didn't really think twice about at the time. However, overall, myself and I imagine most of the people here would prefer to invest their own money rather than count on the pension from the company they worked for long ago (assuming they worked for them long enough).

But maybe you just prefer effectively being forced to save at a low-risk rate which is what a DB pension is.

>That DB pension still has interest rate risk over a period of decades.

That's the employer's problem, not the pensioner's. Again, the large corporation that can afford to manage the risk is forced to, rather than the individual retiree.

>But maybe you just prefer effectively being forced to save at a low-risk rate which is what a DB pension is.

No, it's an effective guarantee of the benefits I'll receive upon retirement. I don't invest in anything as part of the pension.

Now, I'll agree that some individuals would long-term beat the 6% that the pension fund will get (presumably with higher risk).

But for the entire employee base to each individually beat it seems very unlikely to me. Even to collectively beat it and accept that some unlucky duckies will eat dog food when they retire, I think is not very likely.

Another argument is the risk of early death means that the earned benefit resulting from a lifetime of work defaults to the pension plan (as part of the agreement) rather than to the heirs of the person who worked a lifetime and suffered the early death.

Many people are OK with that tradeoff, but nowhere near everyone is.

Taxpayer funded pensions frequently come with cushy terms that allow a spouse to continue receiving benefits after the retiree dies, called joint and survivor benefit.

Most pension plans offer the possibility of a cash out or transfer of actuarial benefit to a 401k-type plan. Except in the case of accidental death where there genuinely is no time to do so, if you were sitting on your deathbed you could at least theoretically take the money and run. And most pension plans offer death benefits while you're active so the calculation may not be so cut-and-dry whether the pension is better or if you'd have been better off with an individual account.

But yes, you can certainly find individual cases where a specific person would have been better off with 401k for this or other reasons. My claim is that it's systematically better for almost everyone and better overall.

My pension currently uses around 6% assumed rate of return for the purposes of calculating unfunded liability, and has, over the past 24 years, returned 6.03%.

Further, keep in mind that the real pension costs are actual dollars leaving the fund and are not directly affected by assumed discount rates. The effect of a low discount rate is simply to have more money in the pension fund, but at the end of the day the liabilities are the liabilities and the discount rate doesn't enter into it. It may be wise to put more away now, but even pay-as-you-go pensions have a long history of working out even if there is greater risk.

> may be wise to put more away now, but even pay-as-you-go pensions have a long history of working out even if there is greater risk.

What is the definition of working out? Of course they work out, as long as there is enough of a tax base to keep soaking. But that is a poor definition of working out, as I have no interest in paying for labor performed decades ago.

When it doesn’t work out is when you get into a Detroit situation. Or most recently, Chester, PA, where there isn’t a sufficient tax base to soak anymore.

Definition of working out would be the pension costs are still a reasonable and manageable cost as compared to e.g. payroll or the budget.

City bankruptcies do occur, I'd argue that blaming pensions is just a scapegoat, but hey, that's me. I haven't looked into Detroit's books, much less Chester PA, Detroit city limits population right now is sub-1920 levels and around 1/3 of where it was in 1950. Such a change would put enormous stress on the finances of any large city, pension or no.

A properly funded pension should be a non factor in a city’s finances.

The fact that leaders in previous decades punted costs (unnecessarily) into the future when the city’s economic productivity ended up not being able to afford is the problem, and what we are discussing on how to avoid (by simply not offering deferred compensation).

The problem is a bit deeper in that these workers were paid less while employed on the basis that they'd have a sweet pension. So the government employer double dipped on faking their finances.

Hence the only solution being to make all deferred compensation schemes for taxpayer funded entities illegal.

A secondary benefit will be more transparent prices in the labor market that allow quicker responses to changes in supply and demand.

I think the shift away from defined benefits retirement was the shafting of a generation. Any fixed sum of money saved away got killed when interest rates were slammed to zero. It was theft on a massive scale.

It’s easy to pick on defined benefit plans when they are underfunded, but they do have advantages for the employer - when the retiree (and spouse) die, the obligation is over. A given contribution can fund more people at a higher level if the obligation ends when they die.

Is that really true?

It's an actuarial calculation. They win some they lose some.

It's an actuarial calculation with good statistics on (for governments and large corporations) very large populations. So the estimates are accurate. But mostly, defined benefit pensions do not go the the heirs, so there is more money for the people getting the pension.

> But mostly, defined benefit pensions do not go the the heirs,

Right, most DB pensions I've seen, public or private, extend benefits at full value to exactly one designated person after the covered worker dies, for life, and then expire.

I have not seen that in the US. Usually, you get to choose how much benefit you want to go to a spouse, inversely correlated with the benefit you receive.

So you can choose your whole monthly benefit for just your life, then less for a joint and survivor (J&S) 50% benefit, and an even lesser amount for J&S 75% benefit, and finally a J&S 100% benefit option.

Thanks, I had wondered how that worked.

My grandmother had a pension which came from her late husband (in addition to her own pension). She avoided remarrying because that would have also terminated that survivor pension, apparently. She cohabited for decades with a man (my de-facto grandfather) who also collected a similar pension from his late wife. A rather silly restriction, if you ask me. They made the right call.

> Having a lien on future taxpayers is literally the only difference between taxpayer funded defined benefit pension funds and 401K/IRA.

The other difference is that the governmental authority cannot "borrow" money from the pension fund if each employee owns his or her own 401K account.

The problem with a lot of these insolvent pension funds is that they are nothing but a stack of IOUs.

> The moral hazard of letting today’s voters and today’s politicians and today’s senior government employees (the union leaders) steal from taxpayers 30 years in the future is obvious.

You don't seem to want to state the other obvious solution--all defined benefits plans should have to be funded as the person is paying in.

The problem with defined benefits plans is that they are allowed to be funded when the person retires rather than as the person is working.

That simple change takes the problem out of defined benefits plans.

That "simple" change involves a ton of agency risk, which we already have. Who is going to force the politician to make the payment? Who is going to force the pension plan board of trustees to use appropriate assumptions in their calculation of liabilities and the requisite funding? Who is going to watch out to make sure the board members are not investing in their brother in law's cousins' real estate project?

>n cases where a pension job paid less than prevailing wages,

How often is that actually the case? I think it was the ideal and expected result at one time (civil service job + pension = private market job) but the connection was broken long ago.

It's probably a pretty tenuous connection given a lot of large private sector companies used to have defined benefit pensions too. It was one of a bucket of benefits that was sort of expected. At some level, modulo tax effects, a dollar in benefits is theoretically a dollar not paid in salary but that's not really how things work--certainly not on a 1:1 basis.

If I weren't going to start collecting a pension soon from some ago company that by now has gone through a couple generations of acquisitions would I have been paid more at the time? Maybe I guess. But it's very indirect.

The problem was a few companies went bankrupt and then the workers discovered not only did they lose their job, but it turns out the pension they had been in for decades was invested in company stock and thus worthless.

We have a lot of laws around pensions these days to prevent that. However they were written when the investing environment was different (higher interest rates made AAA bonds a great investment, so investing in risky stocks didn't make sense). The result is pensions are generally have a terrible return on investment. You are much better off with a well managed 401k in modern funds (at least as I write this and the 30 years before, while I can only guess what the future will hold I think that trend will hold for the next 10 years at least).

401k has one other advantage: it is clear where the money is and who controls it. Pensions often are setup as a great deal if you work for the same company for 40+ years (25-65), but if you switch jobs you don't get nearly as much, even if all the other companies have a pension plan your total is much worse.

>401k has one other advantage: it is clear where the money is and who controls it.

I'll add another one: the investor can tailor their risk to where they are in life. At some point, it probably makes sense to put even most of my savings in very low risk, low yield bonds.

But that point is probably not when I'm in my twenties.

I actually understand the appeal of a (presumably) low risk "guaranteed" annuity payout at retirement that may have been a long ago benefit you never really thought about. But it probably wasn't really free and probably doesn't represent a better investment than if you were given the actuarial share of the money paid into the pension on your behalf instead.

A pension should be able to look at demographics and even better manage that risk. You have no idea if you will live to 105 (a few years ago I saw a headline suggesting 175 might be a reasonable life expectancy for young people today - even more unknown though I don't know if it is true), or die at 63. You might have some family history as a guide, but odds are yours is average: sometime between 65 and 95 with a peak around 78. Realistically, for almost everyone our expected lifespan is so close to even that we shouldn't be tailoring our investing to anything out than our age.

A lot risk annuity payout is a great insurance against living to 105. I tell people when they retire they need to figure out the minimum they need to live on and invest in a guaranteed annuity that will pay that amount (ideally inflation adjusted) until they die. However because annuities are not really a great investment, don't put any more than that in them. Plan for a more normal lifespan.

I pretty much agree with all that.

An annuity or two isn't bad. I'll have one through a long-ago DB pension and another through a charitable trust that wasn't really a great financial "deal" but I wanted to donate and it provides another income stream. But they're pretty much just nice add-ons (in addition to social security of course).

I'm not against annuities, including DB pensions. I just don't think (honestly funded) DB pensions are this fantastic benefit that's been yanked away from people who could have taken the same amount of money and invested it otherwise.

DB is better only because many of people who think about their investments are falling for a scam.

That comes close to being: "Let the professionals handle it and you'll be fine." I mean, I can also pick a financial advisor at one of the major brokerages and they'll take their skim but probably won't do anything really bad.

I know enough people who have fallen for scams...

> It's probably a pretty tenuous connection given a lot of large private sector companies used to have defined benefit pensions too.

They stopped because tax policy was adopted to incentivize more portable, defined contribution plans, as a deliberate effort to both increase retirement insecurity and promote labor mobility.

Visit governmentjobs.com and search for a job title you're familiar with the private sector pay range on. I think you will be enlightened.

For federal jobs, the 2210 series is the one that hn readers would probably be able to best compare. GS-13 is realistically where you'll top out without being something like a regional administrator

State and federal governments are almost entirely this case, at least for technical positions.

> think it was the ideal and expected result at one time (civil service job + pension = private market job) but the connection was broken long ago.

Long ago, private sector jobs also had defined benefit pensions, and civil service jobs still were notorious for having lower pay outside of low-end labor (where, sometimes, civil service jobs still, in addition to pensions, have competitive pay and better pre-retirement benefits.)

maybe those employees shouldn't have screwed up the county then.

The Illinois constitution prevents any change to existing pensions, so they're stuck there. The state constitution has to change first.

As I understand it they could do something like not offer pensions to new employees, but that probably wouldn't work out well.

well, there's now a two-tier pension system, with newer pensions being much less generous. e.g. https://ctpf.org/member-resources/new-members/tier-1-vs-tier...

But the tier-1 pensions can't be retroactively changed per the state constitution.

You cannot renegotiate or cancel pensions. But you can simply tax their receipts as income.

yes, Illinois doesn't tax pension income, though maybe it could. (Maybe it even could with a residency exemption; perversely many Illinois pensions are being taxed by other states...)

That's perfect. Tax anything over poverty level at 80 percent until we're balanced.

A softer way of renegotiating the contract is to pay the parking enforcement officers out of the parking meter revenue. The less revenue submitted back to the city would mean less enforcement, and therefore less meter compliance, which is less revenue back to the outsourcing company.

One potential issue may be the clause that the city must pay the outsourcing company to make up for lost revenue under their expected amount in the contract. For instance when they raised the rates and less people started parking, the city had to pick up the tab.

You missed the part where Chicago is on the hook for "lost" revenue. Arguably determined by clever accounting on CPM's part.

How exactly do you "end" the contract? Part of the deal with contracts is you don't just get to back out whenever you feel like it.

Seems as though Chicago would be better off tying pensions for politicions to city financial stability so that they have some motivation to ensure money is wisely spent.

Never forget that the Covid relief bill from DC bailed out government pensions more so than small family run restaurants.

Good. Pensions are more important than small family run restaurants [1] [2]. There was enough PPP money ($800 billion in low-interest uncollateralized loans) to go around.

[1] https://www.gao.gov/financial-security-older-americans

[2] https://www.ncoa.org/article/latest-census-bureau-data-shows...

"Old people are more important than young people." - t. Gerontocracy.

Old people are more important than wealthy/high income people. Top 40% of US taxpayers pay into the general fund (bottom 60% don't have a federal income tax liability), and most young folks don't earn enough income to hit the highest marginal rates, let alone have any material assets to speak of (real estate, securities, businesses). There is enough wealth (not fiat, wealth, they are distinct) for this, just gotta get it. Bezos doesn't need to go to the Moon, and Ellison doesn't need yet another carbon fiber sailing yacht, very roughly speaking.

There is a balance to be found, but pitting all old people against all young people when its really the wealthy who soaked up most of the wealth over the last 40 years (pensions shed for 401ks, globalization, a reduction in labor power) is sort of disingenuous [1] [2] [3] [4].

[1] https://www.cnbc.com/2021/10/18/the-wealthiest-10percent-of-... (The wealthiest 10% of Americans own a record 89% of all U.S. stocks)

[2] https://www.madisontrust.com/information-center/who-owns-mos... (Who Owns the Most Land in the United States?)

[3] https://slate.com/business/2021/06/blackrock-invitation-hous... (Investment Firms Aren’t Buying All the Houses. But They Are Buying the Most Important Ones.)

[4] https://ustrustaem.fs.ml.com/content/dam/ust/articles/pdf/20... (2022 Bank of America Private Bank Study of Wealthy Americans: The impact of shifting generational attitudes amid an historic wealth transfer) [Only 27% of the ultra wealthy are self made; 70% of Americans who hold more than $3 million are over 56 years old.]

(i am self aware enough, and sufficiently familiar with statistics and survivorship bias, to realize that I am not a temporarily embarrassed ultra wealthy person, ymmv; i don't fault lucky people of course, just don't try to lie to the rest of us that it wasn't luck)

There are many political fault lines simultaneously in play, including old vs young. From the federal government backstopping real estate prices, stock market prices, and spending increasing proportions of the budget on healthcare for old people, all efforts are made to appease them first, and then younger populations.

Which makes sense since without old people's support, you are not winning elections. There is no reason for Medicare to reimburse healthcare providers more than Medicaid, other than to direct more resources to older people than to younger people.

Old people get cash and benefits, young people get debt, which then helps increase the value of assets older people own.

Will be interesting to see this play out with proportionally fewer and fewer young people.

Brilliant plan. I was getting tired of all the local restaurants anyway, not enough copycat chains IMO. Glad we prioritized old people who no longer contribute much to the economy.

> Glad we prioritized old people who no longer contribute much to the economy.

Should have just let them starve and be homeless, hell yeah brother. Maybe even straight to the incinerator once you retire and stop contributing to the economy. After all, the GDP must flourish!

You are being sarcastic, but Texas Lt Governor Dan Patrick was quoted on the record essentially unironically saying this about old people during COVID [1]

1: https://www.nbcnews.com/news/amp/ncna1167341

If you want to complain where PPP money went, you should ask the republicans why they removed all oversight from the system.

GP is suggesting that both parties voluntarily agree to end the contract. The government applies suitable incentives to gain cooperation.

No, you don't get to back out. But a starting point would be to find out where the investors would be willing to be bought out, and then start negotiating from there. One can put a dollar value on how bad this deal is, and that is the cost of getting out of it.

> How exactly do you "end" the contract? Part of the deal with contracts is you don't just get to back out whenever you feel like it.

That’s not true if you’re a country. They can nationalize privately owned assets (https://en.wikipedia.org/wiki/Nationalization), default on loans (https://en.wikipedia.org/wiki/Sovereign_default), print money to devalue loans, etc. without repercussions other than loss of trust.

Nationalising (Statelizing?) the parking meter provision sounds like a great way to get of this contract.

The constitution makes this a bit sticky. It specifically says contracts with the government can not just be ended whenever the government wants and that nationalizing assets requires the government pay the owner fair market value. You can always go full Andrew Jackson and just ignore the courts I guess but that's a tough road.

Pension bloat/spiking is an easy thing to fix: just tax pension earnings as income.

The problem is that the government of Chicago is incredibly corrupt, and even if Mayor Johnson successfully clawed back some of the worst deals the damage is already done and now there's a precedent for the government reneging that will allow Daley number 3 to come in and loot the city again.

This will set a bad precedent and harm other potential public/private partnerships. Public/private partnerships can be useful like what Brightline is doing.

https://web.archive.org/web/20230515004534/https://www.chica...

The mayor who sold Chicago’s parking meters had a father by the same name (Richard Daley) who was also a corrupt mayor of Chicago, and who infamously reneged on a desegregation deal with Martin Luther King Jr.

https://www.nbcchicago.com/news/local/how-mayor-daley-outfox...

"corrupt mayor of Chicago"

Is there another kind?

"unpopular", "one term", etc.

"former"

The Daley machine has been very effective at building infrastructure, adding housing stock, and attracting investment to the city. It turns out that a lot of people are willing to overlook some corruption in exchange for results.

(It helped that the Daley family always kept things relatively clean when it came to their own affairs. Most of the serious corruption happened one or two levels below them.)

I'm curious what corruption means here.

From what I can tell, a 10x return over 75 years is about a 3% annualized return. That's not a tremendous return during the Zero interest rate phenomena. It's almost a money loser in today's environment.

I do understand the concern about not being able to repurpose the parking spaces, etc. but somehow having been involved in repurposing discussions, I seriously doubt Chicago "Motorists" will ever let a parking space be repurposed into anything else.

As someone who purchased every edition of Microsoft Flight Simulator from the beginning, I am still salty about Daley bulldozing Meigs field in the middle of the night.

https://www.nytimes.com/2003/04/01/us/chicago-mayor-bulldoze...

Laughably incompetent.

Also the man behind the 68 DNC beatdowns

Any government based contract that is 75 year is unethical in my opinion.

75 years is something like ~3 human generation.

3 whole generations that don’t get to decide how to govern themselves because their grandparents signed away their future in an iron clad contract.

Exactly, and these are not projects to like move mountains what requires enormous investments

A 75 year lease is pretty standard in lots of these kinds of government contracts, and I'll explain why.

I work with a nonprofit that is negotiating a (standard length) 75 year lease for a piece of parkland. The nonprofit will have to invest many millions of dollars into buildings and improvements on this land (all publicly accessible). Without the 75 year lease, there is no way the nonprofit could run a capital campaign to raise money for the improvements - nobody would be willing to donate money if in a couple years the government could choose to change their minds and rip up the contract. This type of dynamic exists (someone else needs to make a huge upfront capital expenditure, and they need some sort of guarantee that they won't get "rug pulled") all over the place.

Case in point, in 2017 Austin leased part of the airport for another company to run as the "South Austin Terminal". The original lease was for 40 years, and then only a couple years later the city changed their mind and decided they wanted that land back to do a major overhaul of the airport, and they tried to get it back with some extremely shady eminent domain tactics (and they basically got their ass handed to them in court). I actually hate the South Terminal (it's confusing and not connected in any way to the major Austin airport), I'm glad to see it go, but I'm also glad the city can't weasel their way out of a bad decision just because they changed their mind: https://communityimpact.com/austin/cedar-park-leander/transp...

I agree that there needs to be some way to hold previous office holders accountable for decisions that affect a locale long after the original signers are gone, but just saying we can only have leases for 20 years or so isn't the right way to do it.

But why should the government be privatizing parkland management? Give away all the actual public oversight (via public meetings, talking to local officials, elections, etc.) for what benefit?

What if the government is, in fact, unable to competently manage the park lands for whatever reason? Then the benefits of such choice become obvious and quite alluring: why acquire competency if you can make someone else (who is already competent) to do it instead of you and also pay you for the privilege of doing this work? It's a win-win situation.

transferring control of parks to non-profits is a relatively common workaround to for a conservation-friendly government to ensure that parks outlast the current government.

if you keep protected areas within control of the government, there's always a concern that the next government decides to cancel those protections and sell that park off to industry or development. but if it's already "sold off" to a non-profit who wants to keep it a park, then it can't be sold to industry.

Your argument here is essentially "if the government wants to lease out the operation of a public good to the private sector then it has to be a long lease because otherwise who will put up the capital to take that on". And it's true!

But I think the underlying point is that maybe we just shouldn't do that? Our governments should be able to competently administer things like parkland and street parking. And the cost of giving up on them doing that is unacceptable because as you say, you can't do it without giving up control for an intolerable length of time. So sure it's necessary to do that if you're gonna do it, but that's precisely why you absolutely shouldn't do it, it's an absolute dereliction of duty.

Why should the government administer an airport terminal? It is ultimately a place for private businesses (airlines) to have reception and waiting rooms. I'd argue that the airlines should be buying their own land and building their own airports. Of course it makes sense (except maybe the busiest airports) for the different airlines to share a runway, and so it start to look like a public place. Airports are not public places though, and so I don't see why local governments should administer them (the FAA does have some safety operations at an airport).

While your typical playground makes sense for the city to administer, if the park is really a zoo it makes more sense for the city to not run it at all. However since the city benefits from the zoo it does make sense for the city to help the private zoo get started in a good location.

That's a great case for the abolishing the TSA and having private firms take over airport security.

Yeah, the reason I didn't include airports in my list is because I agree that the case that these should be government run is much weaker.

I don't really disagree that much with your point, but I'm also thinking it needs to go into the "Sure, and I'd like a pony" bucket.

Point being that municipal governments have tons of responsibilities: airports, parks, health districts, roads/sidewalks, etc., etc. There is just no way they can be competent in all these different areas, and indeed they aren't. There are good examples of non-profits that manage public resources much better than city government can, at a much lower cost (the Trail Foundation in Austin comes to mind for me). We shouldn't throw away the baby with the bathwater.

But in this case, wasn't the basic parking meter infrastructure already in place when the deal happened? It wasn't like the company had to invest millions of dollars and many years of development just to begin collecting revenue. I'm sure they probably did invest a lot in getting operations up and running internally, but as for the physical meters wasn't this more of a turnkey type of deal?

The parking company replaced all the old meters with the boxes and wrote an app, so they definitely did invest a bit. The boxes alone easily cost millions of dollars

What people miss about this deal is that the city was literally losing money on parking meters before the deal because it was so incompetently managed. Chicago retains all the revenue from tickets, which are much more frequent now, so overall the city is making a lot more money from street parking today than it used to.

Now, ideally the meters would have been run correctly with municipal ownership, but that was apparently not within their capabilities.

But the city also has to guarantee the company lost revenue if the city removes meters. So any efforts to redesign streets with less cars and parking can't proceed.

It is, in a word, awful. A perfect example of this is on Chicago Avenue, where the city added dedicated bus lanes… except they aren’t really, because even though you can’t drive in them unless you’re a bus, you can still park in them.

Absolute Kafkaesque urban planning.

I'm sure there's something in the contract to prevent this, but couldn't they keep the meters and then post a "No Parking" or "Bus Parking Only" or even "Parking from 11:59PM-12:00AM"?

Keep the parking, but make the entire street bus only. Good luck getting to that parking spot!

Or put cowcatchers on the busses and drive right on through the bus lane. Sure you can legally park there, and you can get your car legally demolished in a bus collision.

The city would then have to pay out of their pocket for the revenue miss due to not collecting parking on that "entire street bus only". the guaranteed payments are the crux of the matter. (Not that I feel sorry for the city of Chicago or its citizens. Why did they keep electing the same corrupt people over and over again?)

The thing about the contract law is that it is adjudicated by humans who are enthusiastic about shooting down BS attempts to wiggle out of binding terms.

Nice try but the contract has revenue guarantees. The city has to pay whether or not the parking spaces get used.

I mean, if they're allowed to remove the parking (even if the city still has to pay) that means they could get rid of the Kafkaesque bus lane situation, no?

Yeah, they just can’t get out without paying.

Where are you thinking of? I live in West Town right along Chicago Ave and nobody parks in the bus lanes there.

The city itself would be losing that revenue if it retained control, and even with the deal they still need to budget the loss in parking ticket revenue.

The primary reason the parking deal never goes away is that it allows the city to blame "investors" for doing something it was already wants to do (keep lots of street parking).

> The city itself would be losing that revenue if it retained control

Ok but as an urban planner it's a whole lot easier to tell your boss "hey we're removing 5 parking, spaces we'll lose x dollars per year in parking fees" than it is to say "hey we're removing 5 parking spaces and we need to come up with $5 million to pay the parking company"

What does the contract say about costs to replacing broken meters?

Or broken windows at the company' C level suites houses?

The "answer" here is either to suck it up (which will happen) or, if you allow room for it, it starts with little acts of violence and ends with effective change or full blown riots

Just to clarify - I'm not advocating for anything like that. I'm just saying - try to picture the people from Paris in this situation and tell me what would happen (and if the contract would stand)

The courts absolutely fold versus popular pressure

>> any efforts to redesign streets with less cars and parking can't proceed.

Why? Is "parking" limited to cars? The city can apply the meters to bicycle/scooter/ebike/skateboard parking. Once upon a time many bicycles were regulated and some even required license plates. Chicago seems free to switch people other modes of transport and simply continue the parking fee system accordingly.

It’s a revenue guarantee: they can’t put in a streatery or bus/bike lane without paying the company what they would have made if it remained normal street parking. It’s so fabulously corrupt that they should have a team working full time trying to find grounds to invalidate the contract.

> But the city also has to guarantee the company lost revenue if the city removes meters

This makes complete sense though. The company and the city signed a deal for X amount of meters for Y amount of years. That no doubt went into the financial planning for Profit/Loss. If the city were to remove meters they would be breaking the contract as there are no longer X meters and that much less revenue that the company paid upfront for.

Most people's complaint about this is that Y is an excessively high number.

You might be able to negotiate a shorter term with increased rates.

The "incompetently managed" mostly came down to the fact that it undercharged drivers. The price of parking downtown nearly doubled a few years after the deal went through.

Yes, and they refused to appropriately increase pricing because it was a cheap political gimmick.

Maybe this points the way forward for the federal budget. We can outsource the IRS to a few big banks and let them set tax rates as they please. They'll raise taxes, because they're definitely too low by most comparative standards, and then people (and our elected leaders!) can all curse those evil greedy banks for the high taxes instead of the government (who no longer has any control!)

(This comment is not serious, btw.)

It sounds like the real problem with the deal isn’t the financial aspect but the length. 75 years is just too long without the opportunity to renegotiate or change vendors. If it had been 10 or 20 years then the city would be in a much better negotiating position.

But it sounds like 75 years was what Mayor Daley needed to make up the budget shortfall that year, so Chicago is stuck.

Have they tried negotiating a rate hike and a term length shortening to get the same return on investment?

"Defund, make sure things don’t work, people get angry, you hand it over to private capital." -- Noam Chomsky

What people miss about privatization is that deliberate defunding and deliberate enshittification are always the first and second steps.

Then the private sector "rescues" you from the deliberately engineered incompetence of the public sector while taking a fat, fat cut.

It's the same reason why I'm struggling to see a doctor in the UK right now (the tories want US style healthcare profit margins). Or why the USPS has to fund pensions for yet to be born employees.

The point of parking meters and tickets is not to make money. It's to keep the roads usable and equitably distribute a finite resource.

Looking at parking like a profit center is perverse, and treating it that way creates perverse incentives.

Not to make money? Is that true in the US? London UK does just that. In toto, the London Councils (2018-2019) took in more than 700 million pounds and spent around 270 million running the service.

Yes, they're there to solve a problem not related to government revenue. Some cities use them as a revenue generator and they're examples of the effects of perverse incentives.

Do you think the point of vending machines is to equitably distribute soda?

No. How did you read my comment and think I might think that? This can't be a serious question.

It seems like a reasonable inference from a shocking statement.

> The point of parking meters and tickets is not to make money.

According to whom? Is it equitable because all citizens have the same amount of money?

Nothing I said is shocking to anyone who is familiar with the subject. That's sensationalist.

You took a word I said out of context and asked me something unrelated to my point. That's trolling behavior.

It's shocking to consider that any fee system is ever equitable, because people vary drastically in their wealth, and I hope that's not an assertion that requires a citation.

An equitable system would involve each citizen receiving an equal number of parking tokens annually.

This deal did more to reduce street parking than anything the city could've done because it quadrupled the price.

Chicago resident here. The city making more from parking tickets is not exactly a selling point if you're the one paying them.

Before the deal we had 20-year-old meters which were generally 25 cents or 50 cents per hour (quarters only). Lakefront parking was generally free outside downtown.

After the deal, rates quadrupled or more and many more meters went up, including at the lakefront. Now there is always a worry about whether you're paid up enough to finish a picnic. At least we can pay with credit/debit cards through an app (progress!).

The deal was a con from the beginning to help fill a budget shortfall and every resident who drives felt the effects, and will for the rest of their lives.

What seems to be an economic innovation is also often a political innovation. If Chicago was losing money on parking, they have the obvious remedy of raising the price. But they would face significant political blowback.

So instead they "sell" the parking revenue to a "private" operator who then raises the price. The service provided by the metering company is not just operating the meters but also taking the blame for the cost of parking. This way the city government — i.e. the people in the city government — get to throw up their hands and point at their predecessors.

http://en.wikipedia.org/wiki/Principal–agent_problem

The incentive structure affecting the politicians is the root cause.

Perhaps the solution is that all government contracts must be renewed, when the executive leadership is re-elected.

No contractual, perpetual hostage holding.

It would require an act of Congress+, so I don’t see this ever happening.

Straight out of the Ticketmaster playbook.

I don't even think this would be a bad thing if negotiated properly without corruption. Honestly seems like a good solution to the political parking problem

(Former Chicago resident here)

Higher parking rates means fewer people driving, which is a long-term win. I highly doubt this was the top priority for the people who set the Chicago parking rates, but it's actually a good thing for the city.

Yes, you can argue "it just means parking is for rich people" -- to which I'd respond "keep increasing the parking rates, along with some other tactics, and even rich people will turn to other means of transportation."

Here in Amsterdam, the city government is deliberately doing things like raising parking rates, closing streets to car traffic and removing street parking -- all in an effort to reduce car usage.

> Higher parking rates means fewer people driving, which is a long-term win.

Only if they have decent alternatives.

Indeed. Our elevated trains are excellent (even though everyone complains) but even with recent expansions they don't serve huge swaths of the city.

https://www.transitchicago.com/assets/1/6/ctamap_Lsystem.png

If you're on the NW or SW sides in particular, you're going to need a car.

We're getting more and more bike lanes but they're also very unequally distributed and biking is...not great for winter.

There are many in Chicago

Two issue - US is incapable of building transit infra. We should be able, but the last 50 years have shown otherwise. Making driving harder and praying that somehow makes transit good is not a solution, though many cities are now trying that.

I think a lot of Euros misunderestimate (to quote Dubya) how much more extreme North American city climates are. Using wikipedia data, Amsterdam's lowest mean temperature month is January at 3.8C, and highest mean temperature month is July at 18.1C. Chicago has 3 months below 3.8C per year, in fact it's below 0C for 3 months. Plus 4 months above 18.1C. Some of our climates just aren't terribly comfortable for biking here. NYC is not much better either.

The US has built lots of transportation infrastructure over the last 50 years, including astounding amounts of highways.

I think the bigger issues here are (1) a regulatory environment that heavily disfavors mass transit, and (2) a suburban (and, increasingly, urban) culture that prefers isolation to the risk of "undesirables" brought into their neighborhoods by mass transit.

As a small example of this: DC's metro was conceived a little over 50 years ago, and opened its first line about 47 years ago[1]. It's still expanding, and yet many of its stations are inconveniently placed because the communities it served didn't want DC's plurality black population entering their segregated suburbs[2].

[1]: https://en.wikipedia.org/wiki/Washington_Metropolitan_Area_T...

[2]: https://ggwash.org/view/98/racial-politics-kept-college-park...

DC metro was falling apart with massive service cuts as recently as like.. last year wasn't it? As I recall they had some massive deferred maintenance on the rolling stock causing derailments.

The DC metro's funding scheme can be most succinctly and politely described as "bonkers"[1]. I brought it up as an example of the US successfully constructing mass transit in the last 50 years, not a shining example of municipal management.

[1]: https://en.wikipedia.org/wiki/Washington_Metropolitan_Area_T...

The U.S. is capable of building transit infra. We are incapable of overcoming multiple nesting, competing, and ensnared layers of local, regional, state, and federal bureaucracies to actually get them built, even when there is a taxpayer desire/mandate for such projects.

That's somewhat true. Government does have the power of eminent domain to ram projects through if they want to (e.g. much interstate highway development). However, the willpower to accomplish may rightfully be tempered (e.g. fatal opposition to interstate spurs in many major cities). A state government, using eminent domain, reserves the right to seize land for "public use", which especially includes interstate highways. A "public use" project providing real, tangible benefit for a region without unsustainable cost burdens for the governed should go through, full send.

That's not to dismiss the value of local advocacy but merely to highlight the careful balancing act performed by government to maintain favor in eyes of its constituents. The fundamental tension between the People and the Government should err toward the People, as long as you place stock in a government "of the people, by the people, for the people."

long way of saying "incapable"

Transit is a false choice if your trip takes 30 min by car and 2 hours by bus.

This is why I am not a fan of congestion pricing even though I want a more transit oriented US. The US across the board gets less transit for its money than the rest of the world. Until we get costs under control it’s hard to imagine our cities building enough of the right kind of transit.

Chicago in particular was frustrating as a tourist as I found pretty much any trip not involving the loop to be tedious and lengthy.

It's not incapable. We used to have massive passenger rail networks 100 years ago. Lobbied interests destroyed them. They can only come back with a fight.

I mean sure, yes. But the loudest voices right now are the "ban cars" crowd.

Which seems like all that will do is make life even more miserable in hopes of.. then forcing transit to be built?

Congestion pricing in NYC is a convoluted mess with perverse incentives because even the anti-car lobbyists are not actually our friends.

The plan as it stands will actually penalize private car drivers while allowing ubers/lyfts/taxis to enter/exit the congestion zone unlimited times per day for 1 toll fee. Given that Manhattan 9-5 weekday traffic is largely for hire vehicles, this is completely screwed up.

Transportation Alternatives for example, lists 2 of its biggest donors being Lyft & an automated toll/ticketing tech company, lol.

Penalizing private car owners in favor of taxis in a borough where less than a quarter of households own a car seems about right.

We're talking about Chicago. It already has transit infrastructure.

Would more be better? Sure. But this is a city where many trips can already be as fast or faster via transit than driving, depending on how difficult parking is and how far your "last mile" is.

The big thing that sucks for Chicago is that this shit deal makes it expensive to remove existing street parking and use the space for other things.

I know Chicago has transit. I was responding to the assertion that "parking being unaffordable is good because less people will park"..

Decreases in availability/access and/or increases in cost of private vehicle use, without offsetting improvements in transit are not a good thing.

I would argue that in general that's probably true but not always. Reducing car trips can also relieve stress on the communities living in these urban communities or improve the quality in specific locations. Here outright banning or discouraging driving is done to improve walkability, reduce noise and quality of stay.

Communities living in cities also need traffic calmed, quieter places nearby. Banning cars here is often a good first step and reuse the street with cafes, restaurants and transportation by bike, public transport and cars only if parked somewhere else.

Naive question here: Taking out a block of parking would have decreased the City's bottom line already, right? They wouldn't get to collect from those meters. That would have affected the city's budget. The only difference here is that the City will now have to cut a check, but the effect on the City's budget seems similar. The piece I don't know is whether the amount is different, like if the vendor is allowed to raise rates as much as they want and ask the City to reimburse at that rate instead at the rate the City "would have" chargee to park if they'd retained the ownership.

It's an interesting question. I'm just assuming the cost-per-space-removed under this regime is far greater than the lost-revenue-per-space-removed that they would have otherwise suffered, but that's just based on the fact that the deal is known to be especially bad for the city. It stands to reason that they would have gotten screwed on this point as well, but that's just a guess on my part.

Here in Amsterdam

Yes, the car culture of Amsterdam, in one of the most densely populated counties on the planet, surely should be the car culture of a country with endless tracts of land.

Voters (the important part of a democracy, you see) want to drive in the US. Therefore, there should be no attempts to thwart people in that goal.

And to speak to that, Amsterdam has ample places to bike, a strong bike culture, paths, public transportation. It makes sense to remove unused parking spaces, and Amsterdam already has loads of places you cannot drive.

This is not Chicago. Suggesting people remove parking spaces before providing strong, complete, full alternatives, such as extensive piblic transport, and alternatives to cars, should be criminal.

It's the wrong way to approach the problem.

it's not the wrong way because it's not always about the needs of the suburban/commuting community. Reducing car traffic can be a goal itself because it calms the neighbourhood for the community living in the urban areas or enables car-free, walkable zones reused for cafes etc. Those places can often fundamentally not coexist with cars. Parking can also be removed just because it's needed for other infrastructure, e.g. bike lanes. There are many reasons to remove parking spaces.

So I would say that usually it's about providing incentives to use public transit and reduce the incentives to drive, but sometimes it's purely about reducing traffic.

The poster also said that he's a former chicago resident (in his bio it says he's actually from chicago), so he exactly knows what he's talking about.

The poster also said that he's a former chicago resident (in his bio it says he's actually from chicago), so he exactly knows what he's talking about.

That's a logical fallacy.

So I would say that usually it's about providing incentives to use public transit and reduce the incentives to drive, but sometimes it's purely about reducing traffic

It should never be about either of these. Instead, provide public transportation people want to use. Carrot, never stick.

> That's a logical fallacy.

No it's not? It gives him credibility. You can not lecture someone about the car culture in an area they've lived in. He has literally lived there and in his case, as I understood it, even grown up there. It seems like you are suggesting he only knows amsterdam and does not get that chicago is different.

> It should never be about either of these. Instead, provide public transportation people want to use. Carrot, never stick.

This really ignores the effects of car traffic on the communities. Reducing traffic is a valid goal and sometimes the really only goal. It might be because of and unacceptable level of noise, or pollution or something else like an increase in safety for people on foot. Then the current amount of traffic is just not acceptable, you might not care that much if they end up not taking the trip, switching to public transit or driving somewhere else because your only goal was the reduction of car traffic in a specific area. A good example is barcelonas superblock concept, where you minimise through-traffic through specific blocks to enable more walkable, bikeable and livable neighbourhoods for the inhabitants of these urban neighbourhoods. Within reasonable bounds, neighbourhoods should have the ability to limit excessive car traffic in the area they are living in.

That seems shockingly cheap. Was it really with paying someone to collect the coins and maintain the meters?

In the center of Copenhagen parking during the daytime is $6/hour!

25 cents/hour was indeed shockingly and delightfully cheap. I miss those days.

I suppose it still is, compared to $6/hour.

The metered street parking right now in LA is usually $0.50-$2.00/hour depending on the area so that seems quite normal to me. Our meters are pretty good too and you can pay in coins or card: https://ladotparking.org/parking-meters/single-multi-space-m...

That meter costs about $700 plus installation costs! http://www.mapc.org/wp-content/uploads/2018/03/IPS-MAPC-2018... Though I suppose it makes the money back quickly enough.

In much of Europe, rather than cheap 50¢/hr or whatever parking, it's more common to have no fee but still a time limit. (Or, in city centres, a high fee and a time limit.)

It's not true privatization, if the taxpayer covers losses and enforcement, nor if taxes previously collected for the service aren't reduced.

It's a merger of corporation and state, which is somethig Sorel advocated.

Free/cheap parking is a driving subsidy. In fact the old prices were even worse than that; the prices were not high enough to actually keep spaces available, so it ended up being more like a lottery system. The correct solution would have been to just raise prices and fix enforcement, but the city dug themselves into such a financial and political hole that it wasn't feasible to do without the sale.

Who gives a damn if the city "loses money" on parking?

I had to delete a few versions of this comment because I got dizzy with anger.

What is wrong with people thinking government should make net profit on fees from every individual service?

Perhaps transit and parking charge nominal fees to ensure the users of said services aren't abusing a limited resource. But the cost of operating city services should ultimately come from taxes.

A city should not have the profit expectations of a publicly traded company.

It is a tax, on parking.

Because if it loses money, I, a taxpayer that does not drive is paying for you to park your car. No thanks.

I see. You don't think taxes should go to anything you don't directly use. A libertarian.

I would argue that subsidizing driving is a net negative for the city. Cheaper parking means more cars. This means more traffic and more pollution. Normally subsidies funded by tax dollars are for net positives. A fire department existing in the city is a net benefit, even if I don't personally have a house fire.

I get that perspective, though I am a bit more cynical about the ability of cities to transform. It's either cars or nothing, it's have decent parking availability downtown or let the city center die, in many places. Buses are shit, and light rail won't catch on until after the Collapse in most places.

A metered world where you only pay for what you use.

And presumably denied access to anything you don't pay for.

There's more than one sci-fi story including that premise

Realistically, the tax payer that doesn’t drive in Chicago is likely a fiscal drain. Which is ok, but it’s silly to pretend that folks who drive are being subsidized by folks who don’t, outside of maybe a small number of upper income taxpayers in NYC.

Tons of tax payers who don't drive are young single people who are almost always fiscal positives because they don't use many services.

It is surprising that parking isn't handled like toll roads where they just send you a bill for the toll if you don't have a pass. You have my license plate, just bill me if I'm set up in your system and send me an invoice if I don't or if my account has a problem.

What is it about parking that makes it harder than toll roads? Is it that parking is muni rather than govt-chartered enterprise?

You can easily take a picture of the license plate of every car driving through your toll point.

You can't easily take a picture of the license plate of every car parked on every single parking spot in a city.

You can easily take a picture of the license plate of every car driving into and out of a parking garage.

Alerting street-side towing for unauthorized parking seems to be well-incentivized activity.

As a Chicago native, this gives me no end of amusement.

Richie Daley's father would never have fallen for this. He'd send the Building inspectors to that company's offices every 4 hours, finding a new and very serious violation each time. Or something.

Daley didn't get fleeced. It was a sweetheart deal since he and his allies got a bunch of stuff from CPM and friends. It was the taxpayers that got fleeced.

A few weeks after the deal went down, Daley got a job at the law firm that negotiated the deal: http://theexpiredmeter.com/2011/06/daley-takes-job-with-park...

You're talking about a guy who was so corrupt he destroyed an airport in the middle of the night.

Please be more vague

https://jalopnik.com/chicagos-former-mayor-once-destroyed-an...

Huh? I'm not being vague in the slightest.

Daley bulldozed the runway at Meigs Airfield in the dead of night.

https://chicago.suntimes.com/2023/3/31/23662485/miegs-field-...

By far the best thing he ever did

I don't think he could send building inspectors to Saudi Arabia.

Mayor Daley (his first name was "Mayor") would find some way.

Regardless of the specifics of the deal, signing a 75 year deal with a single company is anti competitive. How did it get up? Weren't all the other parking companies outraged?

Around here, deals like that never last more than years. They have to be re-tendered frequently.

Chicago doesn't stand for corruption, they demand it, yet voters continue to approve and send the same people back, so Chicagoans must also approve of the corruption.

Unless the alternative is even more corrupt?

Could be the lesser of two evils.

I hate to get political. But the candidate leading in the polls by a wide margin for one of the major political parties has 91 indictments hanging over his head and loved by the “Christian right”.

People don’t care about the ethics of their politicians.

You can see examples of this in all parties over many years. In a few cases you can find an example of people who decide to care, but overall if the corrupt person is mostly on their side humans will ignore corruption as "just a minor thing", while corruption on a different side is a major problem.

I hope you take the above and examine everything closely to make sure you are not falling for it. Fight corruption where ever it is found, even if it is on your side.

Maybe rant?:

Just so this doesn’t come across as a beat up on Republicans post, while I don’t agree with everything my states governor - Kemp -has done as far as policy, I’ve got to give him and the Secretary of State credit for not kowtowing to the crazies in his own party and standing behind the DA of Atlanta when the state legislators are trying to remove her to protect Trump

https://www.wsbtv.com/news/local/atlanta/gov-kemp-says-speci...

He also pushed through a ban on citizens arrest after what happened to Aubrey

https://www.npr.org/2021/05/11/995835333/in-ahmaud-arberys-n...

I’m the last person to shill for Republicans. But I’ve got to give credit where it’s due

Both parties have their good and bad points. And things go back and forth all the time.

People vote for party, not person. But that's the only thing that really makes sense in a 2 party system.

Chicagoans only care that the streets are clean of trash and snow, that the poor people stay in their place, and the police keep up the security theater around where they live and work.

It's just legalized corruption at this point.

It would be interesting to have a 10 year cap/sunset agreement on ANY government agreement.

The Fed Chair already has a 10 year appointment, so extend it to contracts, leases, and even laws.

There are a few things that might need longer but in those cases, buying or going without (where someone doesn't want to sell) might be a better option.

But who's going to invest in parking meters if you have to recoup that in 10 years? It would seem the only way out is by placing it in the hands of the body that actually needs it, the Chicago administration in this case. But that didn't work, bringing us back to square 1, or measures from a higher authority, effectively overruling the city's voters.

Bad public governance is a mess.

Parking is a subset of transportation and transportation is a core competency of a city administration.

There needs to be deeper questions asked of why can't Chicago fulfill one of it's core competencies. And why is that that a outside, private investment firm can do a better job than the city itself.

The answer can't be "well they just can't do it, so go ahead and outsource it". What next? we outsource elections and schools? Lord knows we already outsourced criminal justice in the form of private prisons). Where does our society end in 100 years of this path?

100? You're an optimist. But the only way is placing strict rules on governance, both public and private, and enforcing them. Once the corrupt politicians and bribing CEOs are sent to prison, changes will come.

Where is "around here?" That's kind of important.

As others have said elsewhere, most government contractors that require a private entity to outlay millions of dollars have a similarly long term (75 or 99 year are both common) to prevent the government from just changing its mind after the capital improvements have been made. As the article states it took a decade for CPM to make back the $1.16B it spent on the contract, which probably doesn't include any actual improvements they made, if any.

There is a podcast about this - "The City That Sold Itself To Wall Street":

https://www.pushkin.fm/podcasts/cautionary-tales/the-city-th...

It's always interesting to me when topics like this pop up in several places at once. I wonder what the common prompt was.

Cautionary Tales (a great podcast, BTW, if folks aren't already familiar) published that episode last week. Half as Interesting also published a video about it a couple weeks before that.

99% Invisible brought it up in a parking related episode back in May (I wouldn't be shocked if that's what prompted HAI and CT to look into it), around the same time as this Chicago Tribune piece.

Not sure if it's related to this specific parking meter deal, but I'll share my worst Chicago parking horror story:

It's Black Friday, maybe 2010. My siblings and I go out for a drink somewhere downtownish. Street parking is tight. So we pull into parking for a corner business center (anchored by a bank, with a few other retail stores, all closed for the evening). There's some tiny "no parking here unless you're a business patron" sign that we genuinely don't see.

After our very happy evening drinking reasonably-priced Chicago beverages, we return to the car.

It's got a boot on it. The guy who installed the boot is just sitting there in his truck, waiting for us to get back. He tells us that we parked illegally and need to pay $150 (maybe more? at least that) to get the boot off.

Something about it felt like society was eating itself alive. Just funneling money into some cynical investors' bank accounts while restricting us from making use of totally available, no-cost resources (an empty lot) that are themselves supported by ux taxpayers.

Why do we do this to ourselves?

I had this happen at a smaller city in NY state, except they had the car towed instead of booting it. In retrospect I’m not sure it’s totally unreasonable, since running a night time public parking lot could bring different risks and costs than a daytime lot. There is definitely a cash grab component though.

Parking in most of the city is incredibly tight, and there is a land and maintenance cost to having it. You shouldn't be looking for using that space for free.

Even in the suburbs there are situations where parking is for that business and that business only.

Yeah, we parked in the wrong place and they towed our car.

Had to take a taxi down to the impound and pay $100+.

That was over 20 years ago.

This is very, very common in Chicago. Many business parking lots have a guy parked there all through the day to just boot you immediately and then take your money when you return.

You might be interested to know that putting a clamp on a car is illegal in the UK. You can still 'fine' illegal parkers, but you can't clamp them. It is not really a fine though, it is a civil matter similar to breach of contract. I successfully appealed one due to inadequate signage, but I had to go to the tribunal.

Better still, in France there was mass civil disobedience at the introduction of clamping. Random people put superglue in the lock of any clamp they saw until they were withdrawn! I have always admired the French for that.

This has nothing to do with Chicago specifically. You parked in a private parking lot and got booted.

I once had my car parked in an un-zoned spot. Took my dog for a walk (~8am) and walked by the car to make sure everything was ok. Took my dog for another walk when I got home from work (~5pm). Walked by the car, it was gone, there was a big hole in the ground where my car had previously been located and NO PARKING signs were up that were definitely not there in the morning. It also looked like regular maintenance work, nothing catastrophic (could have waited a day or two for the cars to clear out).

My car was nowhere to be seen.

I found the car a few minutes later down the block. It had been towed to another spot. Unfortunately they left it in a zoned area and I had been ticketed for parking without a zone permit.

Just one of the many fun parking experiences I had living in Chicago!

There was a sign saying no parking, you parked anyway, and got fined. Hardly society eating itself.

I don't know if the term is as long, but the toll roads being constructed today also include a 'minimum revenue' guarantee by the state governments. It's not just Chicago that's robbing tax payers blind, they've just done it long enough to be effectively insolvent.

Yep. The “Lexus Lanes” around DC are like this.

Usually they’re international companies, so in some ways worse than just “Wall St”.

I know we get the government we deserve, but holt shot it’s infuriating for roads to be outsourced this way.

Please explain how Chicago is "effectively insolvent."

The taxes are already high, the population is decreasing, and that's not counting enormous pension underfunding at the city and state level. There has been lots written about this for decades, during which the problems got worse. See e.g. https://www.chicagofed.org/publications/chicago-fed-letter/2...

None of those prove “effectively insolvent” and most are false, anyways.

Chicago population grew according to 2020 census. Then the Census Bureau acknowledged that was undercounted. Any "news" on this is likely using the admittedly bad calculations to push a narrative. [1]

Taxes aren’t particularly high for a city. There is no city income tax and property taxes aren’t in the top 10. [2]

The pensions are absolutely an issue, but huge progress has been made in the past 5 years and they are making actuarial payments as of now. They got a bond rating upgrade recently and are solidly investment grade.

"On October 21, 2022, Fitch Ratings upgraded the City of Chicago's general obligation bonds from BBB- to BBB. This was Fitch's first upgrade of Chicago general obligation bonds in 25 years due to the City's improved financial condition, rather than a change in the rating agency's methodology." [3]

[1] https://www.nbcchicago.com/news/local/illinois-undercounted-...

[2] https://learn.roofstock.com/blog/cities-with-highest-propert...

[3] https://www.civicfed.org/civic-federation/blog/chicagos-rece....

That’s actually encouraging. I haven’t followed as closely since I moved out a decade ago.

"Fortunately" for Chicago, there's a decent chance they will, in fact, declare bankruptcy well before the 75 years are up.

Whether the parking meter situation would actually be better run or less exploitative under Chicago's city government is, of course, debatable.

> Way back in 2009, Chicago’s inspector general confirmed that the city had sold out for far less than the lease’s value. A report by Bloomberg Business said CPM stood to earn about 10 times what it paid over the life of the contract. Any way you slice it financially, Chicago got taken to the cleaners.

That’s approximately a 3% annualized return on investment (1.03^75 ~= 10). EDIT: Nope. See downthread.

That’s really not bad at all, especially if the vendor has to pay to administer, maintain, and update the meters.

I wonder how the IG got the idea that effectively selling a $10B 75-year taxable bond for $1B (in a year when high-grade muni bonds were yielding over 7%) was remotely a bad deal. Unless I’m missing something, this is a fantastic deal for Chicago and its taxpayers.

Maybe the report already discounted the future cash flows? I agree it would be pretty ridiculous if they didn’t.

So when the report says “10 times what they paid”, it means “10 times the amount the $1B would be worth in 75 years at the currently-forecasted risk-free rate of return”?

I can’t imagine that’s true, but who knows I guess.

10 times the inflation adjusted number seems to be the implication.

However, the company receives money every year not a single lump sum at the end. If I lend you 10$ and you agree to pay me an inflation adjusted 1$/year for 100 years that’s vastly better than getting an inflation adjusted 100$ in 100 years.

In the initial example the first dollar is discounted X%, the second X%^2, the third X%^3… Where getting paid an inflation adjusted 100$ after 100 years is fully discounted X%^100. The first case is equivalent to a bond paying nearly 10% + inflation with annual payments where the second is closer to 4.7% + inflation without annual payouts.

PS: Further it’s ~zero risk as the contract states the city is responsible if revenues fall below projections.

It's local news, I'm absolutely positive it's just raw numbers. $1.16 billion paid and ~$11.6 billion in total estimated revenue over 75 years. No reporter is doing discounted future cash flow calculations even if they know how to (they don't).

If the city of Chicago had just raised prices instead of leasing out the meters and letting someone else raise prices, it would have been a much better deal for the city of Chicago.

It would have been a worse deal for the politicians who brokered it.

This would likely be impossible politically though.

Then the lease should have had language against setting politically impossible prices.

>That’s approximately a 3% annualized return on investment (1.03^75 ~= 10).

That isn’t accurate, the cash flows should according discounted by the period they’re received in (this contract produces some profits in year 1, more in year 2, etc). What you’ve done is treated it as if the 10x payment is received all at once in year 75.

Love the idea that people can project how much parking there will be in 75 years. It's possible there won't be cars at all in the areas parking meters currently make most of their money in Chicago.

Presumably any explicit policies along these lines would require the "true up" payments described in the article. If you mean a non-mandated move away from cars in that time, the only plausible scenario I'd imagine that happening is one where Chicago has much more serious problems than a bad contract.

There's a clause in the contract about guarantees for lost revenue, so the city may have to pay anyway.

It's possible, but as others are saying, there are guarantees in the contract. All things being equal, this makes it more likely that Chicago will do what it can to motivate people to park cars next to meters for 75 years to come.

Nice catch, it's actually an ~13.5% annualized rate of return when taking into account the cash flows (assuming annual payments distributed evenly across the contract life, I'm sure you could refine it further).

It's still unclear that this is a bad deal financially. What percentage of that return is going to the vendor's costs? What costs would the city incur if they tried to do it themselves? What were the city's other options in raising cash?

If there was a cheaper muni float option on the table and Daley went with this deal instead, then that feels worth investigating to see whose pockets got lined. Otherwise, it's probably not as bad of a deal as the headlines make it seem.

This is unquestionably not a "fantastic deal for Chicago and its taxpayers". Did you read the article or just do a brain-dead interest calculation?

The deal forces the city to remain car-dependent, which is absolutely not in the best interest of the people. We should be moving away from cars and making things friendlier for pedestrians, cyclists, public transit and ride-sharing, not just for the climate but for the safety and the health of the city overall.

Yikes. Honest mistake. Try to be civil on this forum please, this doesn’t add anything to the conversation.

Calling this a "fantastic deal" is the opposite of civil. The article literally has "disaster" in the title and goes into excruciating detail about how damaging it has been to the city.

I’m sorry you’re so angry about this, but direct personal attacks are in a different category from commentary on an article. It’s generally not considered “uncivil” to question the premise of a headline. Calling another commenter “brain dead”, however, is not acceptable here.

You didn't "question the premise", you disregarded the content of the article and why it was written. Doing this opens yourself up to criticism.

I’m not sure where you’re used to commenting online, but here criticism and personal attacks are different things. As you can see above, naturalauction criticized my comment, identifying a mistake in my approach. You attacked me personally and gave rise to an incredibly boring thread that I hope for everyone else’s sake ends up [dead].

I’m done here.

Who is deciding what is in the best interest of "the people?"

Motor vehicles are an absolute necessity in the United States, both for economic and personal reasons. If people didn't need cars, they wouldn't buy them. Mass transit will never be able to replace motor vehicles, and trying to shoe-horn an wholly ideologically-driven agenda will blow up in everyone's faces spectacularly.

I agree with everything above minus the last part. Bikes, walking, and mass transit can (and should) absolutely replace car usage if the infrastructure is there to support it. This has been proven in many European cities, Americans are just stubborn and carpilled.

So the double amputee with no feet is going to bike to go food shopping?

America isn't Europe. We have spaces between places and are not packed in like sardines.

> If people didn't need cars, they wouldn't buy them.

This is a chicken-and-egg problem. US cities have spent billions on highways and parking and rewrote ordinances to require low density, car-dependent development. You could argue all of that is an honest reflection of voter desires (or at least voter desires of 40 years ago, when most of that stuff happened), but many have undoubtedly bought a car because their environment was designed that way.

This is clearly presented with a slant. I'm curious if there is a more neutral reporting on this? Like the article points to the 10x returns over 75 years as an example of the city being fleeced... But that sounds kinda like normal returns to me?

I first heard about the story on this podcast episode of “Cautionary Tales”. I thought that an article would be a better post.

https://overcast.fm/+5K6ZISYMc

That explains why this appeared on HN the day after I'd listened to it!

The book "Paved Paradise" by Henry Gubar that was the source of the podcast, looks an interesting read:

https://www.amazon.com/Paved-Paradise-Parking-Explains-World...

I read this over the summer, it's a great read.

I remember when this stunt was pulled. It was loudly reported on all sides an obvious fleece for a quick buck. No one in the city supported this except Daley and the aldermen. Daley avoided having to actually deal with a budget shortfall, and then got a job with the firm that negotiated the deal.

As for “normal returns”, it was sold well below value, and the whole enterprise is literally just rent seeking.

The deal is objectively awful. If Chicago needs to move parking meters or removes them in order to do construction work or change the road infrastructure (e.g. add sidewalk seating, bus stops, bike lanes), the city needs to pay the company for the lost revenue from those spots. Hell, if too many people get handicap placards and use them to get free parking, the city needs to pay for the lost revenue. Also, Chicago needs to make up any shortfalls if revenues don't match inflation.

It's really hard to come up with a deal that does a better job at effectively preventing any changes to road and street infrastructure.

Normal cities forego the revenue for themselves when they close parking spaces, so it's never free. If they payed those fees out of the billion dollars in advance revenue they got at the start of the contract, it wouldn't seem so bad. Perhaps the real problem is how they spent that money too quickly.

The deal being awful doesn't mean this article isn't.

I would love to hear a steel man argument justifying the deal.

The city needed the cash today, not in 75 years. They did a similar deal with the Chicago Skyway. Both deals had a heads-I-win-tails-you-lose vibe when implemented.

I'm outside the US.

Typically I'd think of a city having a contract with a service company for them to manage and service a city's parking meters for a cut of the revenue, "the city in control of its subcontractors".

This reads very much as the City of Chicago tightly subcontracted to maintain the 72 year revenue stream of Chicago Parking Meters LLC, "the tail wagging the dog".

As per the article Chicago needed cash, and quickly, to fill a budget shortfall, so they sold a lease up front to fill the hole.

As per the implication in the article, the former Mayor and close circle pushed an asymmetric "cash now, big trouble later" deal through in exchange for (implied) kickbacks and as a result of leaving office with zero chance of having to deal with the consequences.

There's much to be said for tying some form of liability to office holders who make a deal.

Sounds very much like that story of Jacob and Esau where Esau sold his birthright for a bowl of soup.

10x over 75 years is a ~3% risk-free annual return. It looks like ordinary government long-term bonds (like 30-year treasuries) were yielding around 4% in 2008, making this look at first glance like a good deal for Chicago.

However, municipalities with a good credit rating can usually issue bonds that pay out about a third less yield than treasuries, thanks to favorable treatment of municipal bonds in the US tax code. I don't know how healthy Chicago's rating was in 2008 but even if somewhat mediocre, it's likely they could've gotten 3% or less on the bond market.

So at a minimum there was no advantage for the city in signing up for a sweetheart deal with strings attached, instead of covering the shortfall by issuing a bond.

This deal was secured by something other than Chicago's taxing power, so it should have less effect on Chicago's creditworthiness and ability to issue other bonds.

In any case, if it was 3% it's economically very comparable to issuing a regular bond and not the "fleecing" that's talked about. If the city regrets the deal, it should be able to issue a regular bond and use it to buy out the investors, or issue regular bonds annually and use them to pay the penalties, all at roughly a wash economically.

I'm not sure 3% is correct, though. I'd like to see another source on that. It reads like it has some protection against inflation. If it's 3% + inflation, that's a really enormous return.

Basically they've committed to have parking meters for the next 75 years - want to install bike racks, bus/bike lanes, ban parking in busy streets at rush hour, widen pavements for restaurant tables, close a road for a party, it all requires compensation to CPM. If in 2070 Chicago citizens are using hover cars or being dropped off by their Teslas which then drive home, the parking meters will still be there.

If this hastens us toward a car-less future, maybe it will turn out for the better. Probably won't do that though, probably will just fleece those already dependent on cars.

It will do the opposite. City officials will be more hesitant to close parking spaces. Even if it turns out that the revenue paid out to CPM is still lower than the added benefit the city receives.

The revenue is guaranteed, not the profit, so just require like 10 times the number of meters throughout the city, but make the cost per meter cheap. So the company gets the revenue, but their costs go through the roof. Make them beg to come back to the table ;)

(This probably wouldn't work because there are probably other nefarious terms in the contract)

This is the city that invented the idea of selling 99-year leases of public land and infrastructure. Every time there’s a budget issue, they sell off a piece of the city rather than addressing the actual budgetary problems (ie spending too much damn money!).

It’s also unsurprisingly a single party city, and State too, with the Democrat party being in continuous control of the city for 85+ years.

City yes but Illinois' last governor before Pritzker was a Republican and had a Republican governor from 1976-2002.

Principal-agent problem, no? Daley's job was to help out some buddies at CPM. He did it successfully. Chicago is the principal. He was the agent. But you can't align a city's objectives with that of the guy running it because he's essentially managing something that has the potential comp on the (black) market equivalent to a high-end hedge fund manager for the pay of a chump.

If you put someone in charge of something, they will extract all the surplus from it that they can. The idea of governance that rests upon electing the incorruptible is a bit silly.

Hard to manage, though. Do you say that every city deal over 5 years must go to a proposition? That no deal can exceed 10 years? In a nation with massive state power, the state would renege on the deal and CPM would be left up shit creek. In the US, individuals and groups of them negotiate as equals often.

The state occasionally strikes back, but it's not privileged in any sense. Some pluses, some minuses.

The city could just tear up the deal. What're the investors gonna do? Sue? Ok. Let 'em. At this level, this is a matter of politics, not law. You can bend or break or make the law do whatever you want if you have the will to do it and the political muscle to back you up.

Half as interesting did a really nice video on the subject a couple weeks ago: https://youtube.com/watch?v=HG6KA6V4T7w

It is absolutely bonkers how one-sided the deal was and seems to be costing the city billions

Just spitballing: Defund the meter maids to de facto legalize ignoring the meters. Or tell the cops to look the other way while everybody smashes the meters up with sledgehammers. Or ban street parking to screw the meter company.

Who? Who is supposed to do these things and why?

> Under the contract, the city must maintain at least 30,000 meters in any given year

If the people think the above is a good idea, they can also ignore the contract. It is not like there is some kind of supernatural power that enforces contracts.

No, it’s a very natural power—the courts. If Chicago ignores the contract, they’ll get sued and have to pay even more.

That natural power is just people. Ignoring the contract is only significant if people choose to stand by the contract. But if the people believe what's contained in the original comment is a good idea, why would they stand by the contract? Without a supernatural power to uphold the contract, and without people to uphold the contract, there is nothing.

True but there are many other contracts that are critical to our daily functioning.

If the city honors this terrible beast of a contract according to the rule of law, that bodes well for all the good contracts the entire government of the States has.

Smashing parking meters in some "clever" attempt to evade the contract already doesn't bode well for other contracts. Once you've gone that far down the rabbit hole, the contract already means nothing.

Obviously in the real world it is unlikely that the people would think that the above is a good idea, but if they did then the contract is only as worth as much as the paper it is written on. It can simply be ignored. It is not like there is some kind of supernatural power that enforces contracts.

Very true - that's why some places are much easier to do business in. The USA is very good for this

Because of the rule of law? A court does not have the power to annul a contract simply because they think it was a really bad idea. Although I guess there ought to be some sort of a escape hatch for forced renegotiating of contracts that are as detrimental to the society at large (ie. the taxpayers) as this one. I have no idea whether there is one.

The rule of law is just people. It is only as good as their willingness to uphold it. If the people believe what is told in the original comment is a good idea, why would they uphold the contract? It is not like there is some supernatural power that enforces contracts.

You can say that about anything. All laws are just enforced because people agree to do so. What you’re proposing is literally anarchy, and nothing good comes from that.

As much as people might be annoyed by their city’s foolish agreement, most people nevertheless believe that a deal is a deal, because that is fundamentally what our society is based on. If you abandon that, you revert to the tyranny of the strongest, and that’s no good for anybody except the strongest. And to head off the argument that strength comes from the people, well, history has shown time and time again that that’s only true in societies where a deal is honored as a deal; in the vast majority of cases, a deal doesn’t mean anything to those who wield absolute power.

> What you’re proposing is literally anarchy, and nothing good comes from that.

I am not proposing anything. I am surprised I have to say this, but it is best to read the comments before replying.

Oh, please. You are proposing that people just ignore a contract that they don’t like, because, according to you, if enough people do so there are no consequences.

> I am surprised I have to say this, but it is best to read the comments before replying.

You’re not serious here. You know full well I read your comments; to pretend otherwise to prove some weird point is downright insulting. I assume you now intend to play word games about the meaning of “propose”. I have no interest in debating an obvious troll. Kindly take your semantic quibbling elsewhere.

> You are proposing that people just ignore a contract that they don’t like

Not even close. In fact, even if somehow there was a misinterpretation earlier, I just got finished explicitly clarifying that this is not the case – literally stating "I am not proposing anything." The only possible way you can still hold onto this is if you haven't read the comments. Read the comments first.

…and if the voters refuse to raise enough taxes to pay the fines?

detroit says hello

Doesn't the article begin by talking about how the courts are siding with the corporation?

”If” does not imply that the people do believe the above is a good idea. It is merely hypothetical.

One of the US’s biggest assets is its trust-ability. People around the world clamor to do business in the US, and creating outsize demand for the US’s currency because of it.

Obviously, the people of the US can choose to reduce that perception, but there are tradeoffs. See Somalia and their currency’s purchasing power at the other other end of the spectrum.

Obviously the people wouldn't actually think that smashing parking meters to renege on a contract is a good idea, but, as we said, if they thought it was a good idea then it wouldn't matter if the contract states something about not smashing meters. There would be nothing to enforce the contract. It is not upheld by a supernatural force.

Can't they be creative and put all of them in some place where they won't be used? Example, the emergency lane of highways, roads where nobody parks, etc.

Lower Wacker Drive waves hello!

But actually I think the contract accounts for this though, my memory is there's some kind of year-over-year value promise. (Plus inflation!) If true, moving the parking meters to a low demand location means the city would have to pay the difference in potential revenue, on top of the relocation costs.

The parking meter company would have had to employ some astonishingly incompetent lawyers if they had left such an obvious loophole in the contract text.

It's the exact same thing as with scientists. Any time some lay person on HN or Reddit or wherever asks about some research or a new phenomenon or whatever (textbook example: dark matter) a question of the form "but have they considered <some very obvious idea>?" the answer is "yes, they have because that's their job and they're not stupid!"

Yes, and if revenue goes down because of where they places them, the city itself has to make up the difference.

I've skimmed through the contract. The city is contractually obligated to have the meter maids but I think they could tell them to stop writing tickets. Problem is the city needs the money. There's a parking app now so smashing the boxes won't work. Anyway no matter what you come up with there's a clause that basically says "if the city does anything that causes us to lose money they have to reimburse us" so we are well and truly fucked.

The city can get out of it. They could just flake out of the contract. The company is actually holding the risk because they think they can debt trap the city. They are holding the dragon by the tail and think they are in control.

If the city just flakes on the contract and lets parking be free. Then everyone will be happy. The company will fight back in the courts and the city can just grind down that process for as long as possible. It doesn't have to settle, it can investigate back and do all sorts of things to cause trouble.

If the city just ignores the contract, it will be sued. You can't delay a court hearing forever. Eventually it would have to pay all the lost revenue plus interest plus court fees. That's a terrible idea.

I believe the contract guarantees a certain level of income. The city would no doubt have to pay for this if attempted.

Sorta related: A community near me recently experimented with "automated" parking enforcement. Basically, cameras around a parking space detected if the same car was parked longer than was paid for, and if so, the system fired off a ticket to the registered owner of the vehicle (by OCR'ing the license plate). I heard a few rumors regarding why the experiment stopped:

- people were really PO'ed for getting parking tickets in the mail, days or weeks later.

- cheating husbands were getting caught by their wives: "What's up with this parking ticket from downtown when you told me you were visiting your mother in Big Bear?"

- vandals (heroes?) were spray painting the cameras, then parking for free.

>vandals (heroes?) were spray painting the cameras, then parking for free.

Why would they be heroes for unfairly preventing others from using the parking spaces?

I worked in the parking biz for a decade. It's an industry that attracts a lot of scumminess because a lot of money passes through it and controls are lax.

We had more than one customer unhappy with our system because it generated tight, accurate audit reports which meant that nobody could skim.

I also recall an effort to put all parking meters in San Francisco under the purview of the department of weights and measures, but IDK if that was successful.

So... what if these meters suddenly started breaking all over the place? Who's contractually liable to keep them operational?

The lessee. Early on a lot of unhappy people damaged the meters - you don't have to pay if the meter is broken. They learned from this and the current meters are very robust.

It only takes a can of spray paint, one need not bring a hammer. But now that it's all mobile-enabled all that doesn't help as much as it once did.

Point taken :)

It appears that spray paint is still illegal to sell in Chicago - obviously nobody has it. Right?

https://codelibrary.amlegal.com/codes/chicago/latest/chicago...

Robust to thermite? Asking for a friend.

Half as Interesting had a good video on this topic a few weeks ago: https://youtu.be/HG6KA6V4T7w?si=TXh71B1xoHGGID84

FYI: the "si=xxxxx" bit in the end of Youtube share urls is an unique identifier that points to your specific user account and most likely contains specific metadata on how and when it was shared.

You can, and should, remove it when sharing Youtube links.

For that link the correct format would be: https://youtu.be/HG6KA6V4T7w

There are many people here calling the mayor corrupt. If a business bribed a public official to get a contract, and the city could prove it, then the deal would be void, wouldn't it?

Is this a "disaster" because this private company is making money from their investment?

Is this a "disaster" because they are making more money than expected?

Is it reasonable to describe purchasing parking meter rights and raising the rates as "making money"? Who did the "making" of anything here?

If you rewrite your question with "taking" instead of "making", does that make a certain answer more obvious?

It's a disaster because the city government is granting one company a monopoly by delegating to it a government power, and the contract is too difficult to renegotiate, and it fleeces the city's citizens in ways that they can't petition to redress (the city can't lower parking fees, and it can't even remove the meters from streets where maybe now there should be no paid parking).

This sort of deal is very suspicious. One wonders if there's been kickbacks of any sort. Chicago is famous for its corruption after all.

Move unwanted meters into abandoned parking lots. Maybe there's an old run-down airport somewhere? Put parking spots on the tarmac.

Unfortunately by the terms of the contract the city has to pay a penalty for doing things like that to make up for lost revenue.

There is still a possible, but very difficult and improbable, way out of this.

The appropriate legislature can change contract law. This may be difficult if it’s federal law that needs changing, but it’s still possible.

If necessary, new judges can be appointed/elected who will decide in the city’s favor.

Then they can take a new case to court and have the contract voided.

Sounds like "substantial penalties for early withdrawal". Buyer beware.

10x the investment over 75 years kind of sucks.

That is some really bad writing.

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