Planet Money

When Chicago pawned its parking meters

December 12, 2025

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  • Chicago leased its 36,000 parking meters for 75 years to a private company for a \$1.16 billion upfront payment during the 2008 recession to avoid raising property taxes. 
  • The deal was mathematically flawed because the city used an overly aggressive discount rate and a 75-year term, resulting in Chicago receiving only about half the true present-day value of the meters' future revenue. 
  • The privatization deal became notorious because Chicago residents directly interface with the meters, leading to immediate rate hikes and city payments to the private operator whenever public works required meter removal, effectively making citizens rent back their own public space. 

Segments

Introduction to Parking Meter Lease (Unknown)
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Financial Concept: Time Value of Money
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(00:11:34)
  • Key Takeaway: The time value of money dictates that future earnings must be discounted to determine their present value, a critical factor in long-term asset sales.
  • Summary: Calculating the worth of 75 years of future parking profits requires understanding the time value of money, where money today is worth more than money later due to interest and inflation. This calculation relies on the discount rate, which determines how much future earnings are reduced when calculating their present value. A longer timeframe results in a larger discount, potentially reducing future value to near zero.
City Council Vote and Pressure
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(00:13:50)
  • Key Takeaway: Aldermen approved the parking meter deal quickly despite concerns, swayed by the immediate billion-dollar influx and pressure to avoid tax hikes.
  • Summary: Many Chicago City Council members were surprised by the deal’s speed and felt pressured by Mayor Daley’s administration to approve it immediately to secure the revenue and prevent budget collapse. Alderman Scott Wagesbach, one of only five ’no’ votes, felt the deal was fundamentally wrong and noted colleagues admitted to not reading the extensive contract documents. Politicians often prioritize short-term crisis resolution over long-term consequences tied to election cycles.
Post-Deal Problems Emerge (Unknown)
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Deal Valuation and Profitability (Unknown)
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