New financial reports from Chicago Parking Meters, LLC show dramatic increases in meter revenue but also what looks like a recognition Mayor Emanuel's negotiated settlement with CPM is having a impact on the company's bottom line.
Gross parking meter revenue was up nearly 29% last year according to CPM's most recent income statement. Revenue rose from $108 million in 2011 to over $139 million in 2012--an over $30 million increase. Parking meter rates rose only 16% between 2011 and 2012.
"At some point you have to laugh at how much revenue they're bringin in," said Alderman Scott Waguespack (32nd). "At this rate the company will recoup their investment in just 10 years."
The original meter lease deal back in 2008, gave CPM a 75-year lease for a one time payment to the city of $1.16 billion. Waguespack was one of only five no votes on the lease and at the time, strongly believed the payment low-balled the true value of the nation's third largest metered parking system. Although originally the bulk of the billion plus dollars was earmarked for rainy day savings, most of the proceeds have already been spent.
But CPM's financial statements also seem to reveal the dramatic fiscal impact to the company's bottom line from the hard fought settlement Mayor Rahm Emanuel and his team's recently negotiated.
Emanuel had publicly battled with CPM for months, refusing to pay tens of millions of dollars in bills from the company for lost meter revenue from street closures, changes to the meter system, and an overuse of disability parking placards which was allowed under the contract.
But early last week, Emanuel announced his administration had reached a settlement with CPM which included deeply discounting the millions the company claimed it was owed, and agreeing to the city's calculations on what's called "True Up" revenue moving in the future.
A line item on CPM's recently released income statement entitled "Loss on settlement of accounts receivable" shows a $33 million expense--an expense that didn't exist on 2011's figures.
According to the notes to CPM's financial statement, "On April 27,2013, as part of the settlement agreement discussed in in Note 8, the City agreed to make a payment to the Company of $8,900,000 in settlement of the claims and interest totaling $40,997,848 at December 31, 2012. As a result, a loss on settlement of accounts receivable of $32,097,848 has been recorded by the Company for the year ended December 31, 2012 on the accompanying statements of income."
So while CPM's financials still list the original True Up bills, the loss from settlement expense effectively negates the majority of those invoices.
On the invoices for excessive use of disability placards the city did not fare as well cutting only $1.5 million from the original bills for nearly $55 million.
But this unexpected total expense of $34 million dropped CPM's net profit from $27 million in 2011 to just $20 million in 2012--despite the tens of millions in additional revenue the company rang up last year.
Under the parking meter lease, CPM is entitled to be compensated when meter revenue or system value is affected. The Mayor's office believes the changes they negotiated to how this True Up revenue is calculated, will produce a recurring annual savings which will add up to at least $1 billion by the end of the lease term in the next 71 years.
True Up is the term used to calculate when events or changes have a negative impact on CPM's revenue. This could be from streets closures due to construction, utility work and street festivals or any changes which reduce the system's value like taking out metered spaces to add a loading zone on a street.
While aldermen seem to be supportive of the discounted payments and savings from changes to how this True Up revenue is figured, many are upset over another aspect of Emanuel's proposed change to the meter lease deal.
At last week's press conference, Emanuel said he wants free parking at meters in most neighborhoods on Sundays. Although the meters in the Central Business District (the area between Lake Michigan and Halsted, Roosevelt and North Ave.) would still have to be fed seven days a week.
“These changes provide relief on Sundays in Chicago’s neighborhoods, some convenience for those that choose to use it and significant savings for taxpayers,” Mayor Emanuel said at last week's press conference. “While we cannot turn back the clock and undo the parking meter deal, we have shown we can improve it and can certainly learn from it.”
But as part of that particular concession, meter enforcement would be extended one hour until 10 PM, Monday through Saturday and a whopping three hours until midnight in the River North entertainment district.
Alderman Brendan Reilly (42nd), who's ward encompasses River North, is actively opposing that aspect of the Mayor's plan. Other alderman are reportedly similarly concerned about that aspects of the settlement.
Mayor Emanuel plans to introduce the ordinance with the proposed changes to the meter lease at Wednesday morning's City Council meeting. Spokesmen for the Mayor say they'll be provided with more details and data to better explain the settlement and to hopefully woo them to vote in favor of the ordinance.