[naturalauction]

>That’s approximately a 3% annualized return on investment (1.03^75 ~= 10).

That isn’t accurate, the cash flows should according discounted by the period they’re received in (this contract produces some profits in year 1, more in year 2, etc). What you’ve done is treated it as if the 10x payment is received all at once in year 75.

[didgeoridoo]

Nice catch, it's actually an ~13.5% annualized rate of return when taking into account the cash flows (assuming annual payments distributed evenly across the contract life, I'm sure you could refine it further).

It's still unclear that this is a bad deal financially. What percentage of that return is going to the vendor's costs? What costs would the city incur if they tried to do it themselves? What were the city's other options in raising cash?

If there was a cheaper muni float option on the table and Daley went with this deal instead, then that feels worth investigating to see whose pockets got lined. Otherwise, it's probably not as bad of a deal as the headlines make it seem.

[onlyrealcuzzo]

Love the idea that people can project how much parking there will be in 75 years. It's possible there won't be cars at all in the areas parking meters currently make most of their money in Chicago.

[dharmab]

There's a clause in the contract about guarantees for lost revenue, so the city may have to pay anyway.

[cool_dude85]

Presumably any explicit policies along these lines would require the "true up" payments described in the article. If you mean a non-mandated move away from cars in that time, the only plausible scenario I'd imagine that happening is one where Chicago has much more serious problems than a bad contract.

[dfxm12]

It's possible, but as others are saying, there are guarantees in the contract. All things being equal, this makes it more likely that Chicago will do what it can to motivate people to park cars next to meters for 75 years to come.