CHICAGO - With its affection for privatizing existing assets showing no signs of abating, the city of Chicago on Friday opened a search for firms interested in bidding on the right to take over the long-term operations of its lucrative parking meter system for an upfront cash payment.
The deadline for firms interested in submitting their qualifications to later participate in a bidding process is Friday, March 14 at 4 p.m. Central Time, according to the 20-page request for qualification document. The city and Chicago Park District's parking system generated total operating revenue of $21.9 million in 2006 and $22.9 million last year. After paying operating expenses, the system generated $16.6 million in income in 2006 and $18.9 million last year.
"Our goal will be to maximize the upfront payment due as part of the agreement, while promoting the implementation of innovative parking meter technology and enhancing customer service," the city's chief Financial Officer, Paul Volpe, said in a statement.
The city launched the nationwide trend of establishing public-private partnerships involving existing assets with its groundbreaking 99-year lease of the Chicago Skyway toll bridge to a private consortium for $1.82 billion in early 2005.
The city followed up that deal with another 99-year lease of four downtown parking garages to a private operator for $563 million in 2006. The city has prequalified seven teams to participate in a due diligence process to eventually bid on a lease/concession contract to operate three recycling and waste centers though no date has been set yet for bidding. The city also continues to work out the more complex details of a concession deal involving the operations of Midway Airport.
Similar to its past concession deals, Chicago took the first step towards an eventual deal by launching a request for qualifications from private operators. The city and Park District are working with William Blair & Co. as lead and Gardner Rich & Co. and Samuel A. Ramirez & co. Inc. as co-financial advisers on the process. Legal advisers include Katten Muchin Rosenman LLP, Charity & Associates PC, Gonzalez Saggio & Harlan, and Burke Burns & Pinelli Ltd.
Companies deemed qualified would be allowed to bid for the right to operate 106 pay and display machines, 31,207 electronic and mechanized single-bay parking meters and 1,427 electronic double-bay parking meters for a total capacity of 34,399 on-street parking spaces and 17 metered parking lots with 1,215 spots. In addition, the park district's five pay and display machines and 327 single bay spots capable of accommodating 547 spaces are also part of the deal.
Chicago officials are also considering adding new parking meter operations and lots to the concession contract. The system, currently managed by the city's Department of Revenue, is one of the largest in the nation, behind Los Angeles with 41,194 spaces.
Market participants have said the deal could raise more than $1 billion depending on the term and details. The parking garages privatized in 2006 for a $563 million payment generated revenue of $24.8 million in 2005, and net income of $12.2 million.
The RFQ anticipates a minimum term for the concession of at least 50 years. Enforcement activities would remain under the city's purview. Gross operating revenues have grown by 16.5% since 2003 and the concession contract would anticipate an initial increase in parking rates with provisions for future increases.
A tentative timeline anticipates that qualified bidders would be named in late March with final bids taken in June. The Chicago City Council and the Park District board would need to approve any deal. q
