The company that owns the rights to the money from Chicago's curbside parking meters has gone to court against City Hall, seeking to enforce an arbitration panel's decision that the city owes $2 million for refusing to enforce the city's parking meter rules at the beginning of the Covid pandemic.
The company known as Chicago Parking Meters is also asking a judge to require the city to potentially pay millions more for allegedly redesignating thousands of metered parking spaces as "reserved" spaces, allegedly wrongly allowing the city to pocket at least $9 million.
On April 23, Chicago Parking Meters LLC (CPM) filed suit in Cook County Circuit against the city.
Lori Lightfoot was mayor of Chicago during much of the time referenced in Chicago Parking Meters' legal action over alleged lax parking enforcement.
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The lawsuit landed five days after CPM secured a decision in its favor from a panel of arbitrators, affirming that CPM may have valid claims against the city for allegedly violating the terms of the longstanding concession agreement between CPM and the city.
In 2008, under then Mayor Richard M. Daley, the city famously agreed to sell away the rights to its future curbside parking meter revenue to CPM under a 75-year lease, in exchange for $1.1 billion. The agreement was reaffirmed with some amendments in 2013.
The parking meter lease deal has been the subject of controversy from the start. The city, for instance, has defended against lawsuits accusing the city of improperly granting CPM a monopoly over Chicago's on-street parking, while essentially still serving as the enforcer of parking rules and laws. Lawsuits have asserted the city has imposed excessive fines on people parking on the streets, essentially using parking tickets to recover millions of dollars in parking revenue the city otherwise lost to CPM.
According to a report published in June 2023 by the Chicago Sun-Times, CPM raked in $140.4 million in parking meter revenue in 2022, the most the company had reaped since the lease began.
However, CPM in recent months has filed complaints against the city, claiming it has still been shorted tens of millions of dollars in the past few years.
Under the terms of the lease, all disputes between CPM and the city are to be settled by binding arbitration.
In complaints filed before a panel of arbitrators, CPM has leveled three primary accusations against the city.
First, CPM claimed the city has violated the terms of the lease by seeking to reduce an annual "True Up" payment to CPM by essentially reducing the number of metered parking spaces available to CPM.
Under the contract, the city has the right to add or remove parking spaces from the system. For all spaces that are simply metered, CPM receives 100% of the revenue. But the city can also classify spaces as "reserved." Under that designation, the city keeps 85% of any revenue collected, while paying management fees to CPM.
In 2021, taking advantage of suppressed values resulting from reduced parking traffic in 2020, the city reclassified more than 4,000 spaces as "reserved." However, the city a year later returned 2,600 of those spaces under higher estimated values. This then resulted in a credit of $13.8 million to the city under the contract.
All told, arbitrators estimated the city's maneuvers resulted in net revenues of $9 million to the city, while also decreasing its True Up payment by $1.9 million more.
CPM cried foul, and the arbitrators agreed.
How much the city may need to pay, however, will be determined at future proceedings through an appraisal process, according to the arbitrators' decision.
CPM further persuaded arbitrators to back its claim to $2 million more it claims the city owes under the agreement, for allegedly refusing to enforce parking meters in the months immediately following Gov. JB Pritzker's decision to institute so-called "stay at home" orders at the onset of the Covid-19 pandemic in the spring of 2020.
The arbitrators agreed Pritzker's directives issued through a series of emergency executive orders carried the force of "law." Among other directives, Pritzker's orders forbade so-called non-essential government functions.
The arbitrators agreed that the city could argue it was simply following the law by deciding that parking enforcement was "non-essential," and thus should be set aside for several months.
But the arbitrators also agreed with CPM that the city's refusal to enforce parking rules and regulations in neighborhood zones from March to June 2020 still violated its compensation agreement with CPM.
The arbitrators agreed Chicago owes CPM $2 million, plus interest for refusing to enforce parking rules in the spring of 2020.
However, arbitrators turned aside a different charge accusing the city of allegedly failing to "effectively enforce parking rules and regulations" from 2014-2022. CPM claims the city's alleged failure to write enough parking tickets cost CPM at least $36 million.
However, the arbitrators determined a letter sent by CPM did not meet the requirements of proper notice to allow CPM to enforce that claim.
While the arbitration decision was handed down April 18, CPM still filed suit just five days later, seeking a court order requiring the city, now under Mayor Brandon Johnson, to pay what it says the city owes.
Chicago has not yet responded to the lawsuit.
CPM is represented in the action by attorneys Joseph L. Motto, A. Matthew Durkin and Tyler C. Richards, of the firm of Winston & Strawn, of Chicago; and Robert Y. Sperling, of Paul Weiss Rifkind Wharton & Garrison, of New York.