4 ms·

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 t

by smsm42 3y ago

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.

taylodl 3y ago
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.
- smsm42 3y ago
  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".
  - mjevans 3y ago
    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.
    - smsm42 3y ago
      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.
- MengerSponge 3y ago
  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.
  - b112 3y ago
    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.
  - smsm42 3y ago
    > 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.
    - bobthepanda 3y ago
      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 https://en.wikipedia.org/wiki/Meigs_Field

by smsm42 3y ago

taylodl 3y ago

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.

smsm42 3y ago
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".
- mjevans 3y ago
  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.
  - smsm42 3y ago
    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.
MengerSponge 3y ago
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.
- b112 3y ago
  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.
- smsm42 3y ago
  > 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.
  - bobthepanda 3y ago
    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 https://en.wikipedia.org/wiki/Meigs_Field