Seventh Circuit upholds Chicago’s 75-year parking privatization deal

CHICAGO (CN) — The Seventh Circuit tossed an antitrust challenge to Chicago's infamous parking meter privatization deal on Friday, affirming a lower court ruling that the deal is perfectly legal.

The deal in question dates to 2008, when at the urging of then-mayor Richard M. Daley, the Chicago City Council sold the city's public street parking meters to the aptly-named Chicago Parking Meters LLC for $1.15 billion. The agreement won't expire until 2084.

CPM it has made its $1.15 billion investment back and then some since it took ownership of the parking meters 15 years ago. It reported $500 million in profits off the arrangement by 2019, and the deal's multidecade length all but guarantees profitability into the foreseeable future. CPM is owned in majority by Morgan Stanley, though initial investments also came from Alliance Capital Partners and the Abu Dhabi Investment Authority. Per the company's 2020 financial statements, just shy of half the company's shares are now owned by Deeside Investments Inc., a Florida investment firm owned by two private investors.

While the deal has been incredibly lucrative for investors, that profitability is borne off the wallets of Chicagoans themselves. Prior to the sale, street parking in most areas of the city cost only 25 cents an hour. Those rates quadrupled to $1 per hour in 2009, and have only increased since then. Free parking hours in the city also shrank after the deal was struck, and meters began appearing on what had previously been free parking streets. Today the rates run as high as $7 per hour in the downtown Loop area, making Chicago street parking among the most expensive in the country.

It's such a one-sided arrangement that the Better Government Association has called the deal "a lesson in worst practices."

The now-failed antitrust suit, filed in June 2021 by Jacobin editor Micah Uetricht and two other Chicago drivers affiliated with the Democratic Socialists of America, was only the latest of several legal attempts to overthrow the deal with CPM. The trio's initial complaint argued the deal violated the Sherman Antitrust Act of 1890, claiming that CPM's extensive control of the parking meter system had stifled competition and stymied developments in public transit.

U.S. District Judge Matthew Kennelly, a Bill Clinton appointee, tossed that suit in January 2022. He didn't contest that CPM had a monopoly over Chicago street parking options, but instead found that Chicago's municipal government was within its rights under the doctrine of state action antitrust immunity to turn over the parking meters to a private company.

"The state action immunity doctrine shields state action from federal antitrust liability if the challenged conduct is 'clearly articulated and affirmatively expressed as state policy,'" Kennelly wrote. "This immunity extends to a municipality if its 'anticompetitive activities were authorized by the state pursuant to state policy to displace competition with regulation or monopoly public service.'" 

An appeal followed, with a Seventh Circuit panel consisting of Bill Clinton appointees U.S. Circuit Judges Diane Wood and David Hamilton and Donald Trump appointee U.S. Circuit Judge Amy St. Eve hearing arguments in the case this past September.

The panel unanimously agreed with Kennelly's ruling on Friday after months of consideration. They did not deny the deal may have been bad for Chicago residents, but found the city government had the right to sell off its public parking meter system if it wanted.

"The deal itself might have been foolish, short-sighted, or worse, and if one is to believe news reports, it may have saddled Chicago with the most expensive street parking in the country... but that is not enough to state a claim for a violation of the antitrust laws," Wood wrote in the 28-page opinion.

She added further into the ruling that "immunity does not turn on whether, on balance, this was a good or a bad deal. All that matters is that it was one that was authorized by state law and that remains under the regulatory power of the city. We agree with the district court that state-action immunity applies here, and so we affirm its judgment."

CPM did not return a request for comment on the development. Uetricht declined to comment, as did his attorneys in the suit with the law firm Despres, Schwartz and Geoghegan.

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