NorthSideSox72 Posted February 23, 2010 Author Share Posted February 23, 2010 Daley now floating the idea of privatizing McCormick Place operations. I like this idea as well, and unlike the parking meter situation, this would actually decrease costs to users, as well as get city government out of something it doesn't do well. And, would probably bring more conventions, and more tourism dollars, to the city. McPier is a city/state joint venture, so the state would also have to sign onto the idea. I'd think they would jump at the chance. Link to comment Share on other sites More sharing options...
southsider2k5 Posted February 23, 2010 Share Posted February 23, 2010 QUOTE (NorthSideSox72 @ Feb 23, 2010 -> 11:46 AM) Daley now floating the idea of privatizing McCormick Place operations. I like this idea as well, and unlike the parking meter situation, this would actually decrease costs to users, as well as get city government out of something it doesn't do well. And, would probably bring more conventions, and more tourism dollars, to the city. McPier is a city/state joint venture, so the state would also have to sign onto the idea. I'd think they would jump at the chance. I think that would also destroy all of the incredible union costs and contracts that make the place a moneypit. Link to comment Share on other sites More sharing options...
NorthSideSox72 Posted February 23, 2010 Author Share Posted February 23, 2010 QUOTE (southsider2k5 @ Feb 23, 2010 -> 12:31 PM) I think that would also destroy all of the incredible union costs and contracts that make the place a moneypit. That's the get-the-city-out part I referred to. The whole situation can be made more efficient this way. Link to comment Share on other sites More sharing options...
Texsox Posted February 23, 2010 Share Posted February 23, 2010 I like the idea, unless they structure the bid where the contractor has to use union labor. I do not need a f***ing electrician to plug in my lamp at a trade show. Have them inspect the booths, that's fine with me, but I was so pissed when they made me hire a union electrician to plug in a light. Link to comment Share on other sites More sharing options...
Balta1701 Posted February 23, 2010 Share Posted February 23, 2010 QUOTE (Tex @ Feb 23, 2010 -> 06:19 PM) I like the idea, unless they structure the bid where the contractor has to use union labor. I do not need a f***ing electrician to plug in my lamp at a trade show. Have them inspect the booths, that's fine with me, but I was so pissed when they made me hire a union electrician to plug in a light. You'd have been more pissed when the guy 100 rows down screwed up plugging in that lamp and burned the whole place to the ground. Link to comment Share on other sites More sharing options...
StrangeSox Posted February 24, 2010 Share Posted February 24, 2010 You do not need electricians to plug in consumer appliances or carry in more than two bottles of water. Link to comment Share on other sites More sharing options...
Texsox Posted February 24, 2010 Share Posted February 24, 2010 QUOTE (StrangeSox @ Feb 23, 2010 -> 06:22 PM) You do not need electricians to plug in consumer appliances or carry in more than two bottles of water. It may have changed, but because the lights were part of a display case, it was ruled we needed a union guy to check it out and plug it in. Link to comment Share on other sites More sharing options...
StrangeSox Posted February 24, 2010 Share Posted February 24, 2010 QUOTE (Tex @ Feb 24, 2010 -> 07:10 AM) It may have changed, but because the lights were part of a display case, it was ruled we needed a union guy to check it out and plug it in. Sorry I wasn't clear, I was agreeing with you. McCormick requires that work to be done by union electricians but there is absolutely no reason that I am not just as capable of plugging in a lamp. Link to comment Share on other sites More sharing options...
southsider2k5 Posted February 24, 2010 Share Posted February 24, 2010 QUOTE (Balta1701 @ Feb 23, 2010 -> 05:38 PM) You'd have been more pissed when the guy 100 rows down screwed up plugging in that lamp and burned the whole place to the ground. Now the entire City is pissed because their contract priced people into places like Orlando and Las Vegas. Link to comment Share on other sites More sharing options...
Rex Kickass Posted February 24, 2010 Share Posted February 24, 2010 The thought that Chicago is higher priced than Vegas is kind of a myth. A company I worked for used to do shows. Although pricing in Chicago was higher than I thought to be acceptable, we were also charged $500 a day to access Wi-Fi on the convention floor for a show in Las Vegas. Link to comment Share on other sites More sharing options...
NorthSideSox72 Posted February 24, 2010 Author Share Posted February 24, 2010 QUOTE (Rex Kicka** @ Feb 24, 2010 -> 08:28 AM) The thought that Chicago is higher priced than Vegas is kind of a myth. A company I worked for used to do shows. Although pricing in Chicago was higher than I thought to be acceptable, we were also charged $500 a day to access Wi-Fi on the convention floor for a show in Las Vegas. Its not that its higher than Vegas. Its that they prefer Vegas, so Chicago needs to be significantly cheaper to keep the business. Link to comment Share on other sites More sharing options...
Balta1701 Posted August 9, 2010 Share Posted August 9, 2010 Chicago drivers will pay a Morgan Stanley-led partnership at least $11.6 billion to park at city meters over the next 75 years, 10 times what Mayor Richard Daley got when he leased the system to investors in 2008. Morgan Stanley, Abu Dhabi Investment Authority and Allianz Capital Partners may earn a profit of $9.58 billion before interest, taxes and depreciation, according to documents for a $500 million private note sale by their Chicago Parking Meters LLC venture. That is equivalent to 80 cents per dollar of projected revenue. Standard Parking Corp., which runs 30,000 spaces at the city’s O’Hare and Midway airports, earned 4.84 cents on that basis last year, data compiled by Bloomberg show. The deal illustrates how Wall Street banks, recipients of more than $300 billion in taxpayer bailouts in the worst credit collapse since the Great Depression, are profiting from helping states and cities close record recession-induced deficits by selling bonds and leasing public properties. Chicago gave up billions of dollars in revenue when it announced in 2008 that it leased Morgan Stanley its 36,000 parking meters, the third- largest U.S. system, for $1.15 billion to balance its budget, said Alderman Scott Waguespack. While Chicago has the right to “repossess and assume operational control” of the meters if the Morgan Stanley partners default on their obligations, the bond document says, the contract doesn’t expire until 2084. “The next couple of generations will pay the price,” said Waguespack, 40, a Democrat from the 32nd Ward. “It’s despicable, the way it went down,” said Waguespack, one of only five aldermen among 50 who voted against the lease. ... The deal was “dubious” for Chicago, its Office of the Inspector General said last year, because the city’s chief financial officer, who negotiated the agreement, failed to calculate how much the system would be worth over 75 years. The present value of the contract was $2.13 billion, more than the $1.15 billion the city received, it said. Bloomberg Link to comment Share on other sites More sharing options...
NorthSideSox72 Posted August 9, 2010 Author Share Posted August 9, 2010 QUOTE (Balta1701 @ Aug 9, 2010 -> 09:00 AM) Bloomberg Heh, Waguespack is my alderman. So, On a % basis, JPM makes like a 10% profit on the deal over a very long period. The City of Chicago gets its few billion almost entirely upfront, and gets out of a slightly better than break-even operation. They get that cash at a time they need it most, in a deep recession. The city's residents start paying meter rates that are equivalent to what private lots charge in similar areas. And they also get a private company doing the work, instead of the city, which most people seem to want. I'll say it again, this deal only looks bad if you pick the gross numbers to look at. If you take it all into account, it was a good deal for the city to make, and I am saying that being one of its residents. He's looking to do the same again for Midway, BTW, and I'm in favor of that too. City government will be much more effective if they can focus on fewer, more core tasks, and have more cash to spend in bad times. That last part will also keep the city more competitive than it otherwise would have been. Link to comment Share on other sites More sharing options...
southsider2k5 Posted August 9, 2010 Share Posted August 9, 2010 QUOTE (NorthSideSox72 @ Aug 9, 2010 -> 11:37 AM) Heh, Waguespack is my alderman. So, On a % basis, JPM makes like a 10% profit on the deal over a very long period. The City of Chicago gets its few billion almost entirely upfront, and gets out of a slightly better than break-even operation. They get that cash at a time they need it most, in a deep recession. The city's residents start paying meter rates that are equivalent to what private lots charge in similar areas. And they also get a private company doing the work, instead of the city, which most people seem to want. I'll say it again, this deal only looks bad if you pick the gross numbers to look at. If you take it all into account, it was a good deal for the city to make, and I am saying that being one of its residents. He's looking to do the same again for Midway, BTW, and I'm in favor of that too. City government will be much more effective if they can focus on fewer, more core tasks, and have more cash to spend in bad times. That last part will also keep the city more competitive than it otherwise would have been. And the federal government could learn from all of that. Link to comment Share on other sites More sharing options...
StrangeSox Posted August 9, 2010 Share Posted August 9, 2010 The end result of it is that private citizens pay more. Either though higher taxes to support the city spending or through higher parking rates that go to corporations. Link to comment Share on other sites More sharing options...
NorthSideSox72 Posted August 9, 2010 Author Share Posted August 9, 2010 QUOTE (StrangeSox @ Aug 9, 2010 -> 11:40 AM) The end result of it is that private citizens pay more. Either though higher taxes to support the city spending or through higher parking rates that go to corporations. That is true - a specific segment of citizens (those that drive to places they probably don't have to), will pay significantly more money to park on the street. Never said otherwise. I know it seems strange, but sometimes it benefits people to pay more for a service. There are all sorts of positive side effects to this, but again, that isn't shown if all you focus on is the big gross numbers. Link to comment Share on other sites More sharing options...
NorthSideSox72 Posted August 9, 2010 Author Share Posted August 9, 2010 QUOTE (southsider2k5 @ Aug 9, 2010 -> 11:39 AM) And the federal government could learn from all of that. I'd like to see that as well, in many cases. Not all, or even most - but there are businesses the government (federal, state, local) is in that could be done more efficiently by private business. And if those businesses can be run profitably, so much the better - because that means they have value, and the government can get some cash out of it too. By the way, do people think that $10B profit (over 75 or however many years it is) just gets sucked into a hole and dies? That money will create more jobs. Furthermore, have we already forgotten, again, the time value of money? Link to comment Share on other sites More sharing options...
Balta1701 Posted August 9, 2010 Share Posted August 9, 2010 QUOTE (NorthSideSox72 @ Aug 9, 2010 -> 12:46 PM) By the way, do people think that $10B profit (over 75 or however many years it is) just gets sucked into a hole and dies? IF it's in the hands of a bank/investment firm right now...that's exactly what is happening to it. Link to comment Share on other sites More sharing options...
Balta1701 Posted August 9, 2010 Share Posted August 9, 2010 QUOTE (NorthSideSox72 @ Aug 9, 2010 -> 12:37 PM) I'll say it again, this deal only looks bad if you pick the gross numbers to look at. If you take it all into account, it was a good deal for the city to make, and I am saying that being one of its residents. The reason I found that version particularly interesting is that the new state estimate was that the appropriate price for that deal should have been >$2 billion. Link to comment Share on other sites More sharing options...
StrangeSox Posted August 9, 2010 Share Posted August 9, 2010 (edited) QUOTE (NorthSideSox72 @ Aug 9, 2010 -> 11:46 AM) I'd like to see that as well, in many cases. Not all, or even most - but there are businesses the government (federal, state, local) is in that could be done more efficiently by private business. And if those businesses can be run profitably, so much the better - because that means they have value, and the government can get some cash out of it too. But what are we going to do when the city has sold off all of its cash-generating operations to fix short-term budget gaps? Instead of having some profit come in over the next 75 years from parking (and Midway and the skyway and whatever else is privatized), they get some money upfront. Instead, these profits will get funneled to wealthy board members and shareholders instead of supporting local government. I don't see that as a winning solution in the end. By the way, do people think that $10B profit (over 75 or however many years it is) just gets sucked into a hole and dies? That money will create more jobs. Furthermore, have we already forgotten, again, the time value of money? That's why the article said: "The present value of the contract was $2.13 billion, more than the $1.15 billion the city received" quick edit: there is something to be said about selling off pieces of your business to restructure and refocus on your core competencies, I'm playing more of a devil's advocate here. Edited August 9, 2010 by StrangeSox Link to comment Share on other sites More sharing options...
NorthSideSox72 Posted August 9, 2010 Author Share Posted August 9, 2010 QUOTE (Balta1701 @ Aug 9, 2010 -> 11:49 AM) The reason I found that version particularly interesting is that the new state estimate was that the appropriate price for that deal should have been >$2 billion. There are a total of, as I recall, two companies in the US who even do the kind of work that is required here (not talking the bank here - I mean the operator). What it SHOULD have been is entirely subjective, the reality is what someone was actually willing to pay. Do you really think the City would have not tried to get best money here? No one wins on that. By the way Balta, one of the big side effects of this over time is one I'd think you'd fall in love with. Link to comment Share on other sites More sharing options...
NorthSideSox72 Posted August 9, 2010 Author Share Posted August 9, 2010 QUOTE (StrangeSox @ Aug 9, 2010 -> 11:50 AM) But what are we going to do when the city has sold off all of its cash-generating operations to fix short-term budget gaps? Instead of having some profit come in over the next 75 years from parking (and Midway and the skyway and whatever else is privatized), they get some money upfront. Instead, these profits will get funneled to wealthy board members and shareholders instead of supporting local government. I don't see that as a winning solution in the end. That's why the article said: "The present value of the contract was $2.13 billion, more than the $1.15 billion the city received" What you will get when its done selling off what it reasonably can, is a smaller, less costly, more transparent, more effcient government... more private industry jobs in the area where there is growth potential with those companies, not dead end jobs alone... and less debt to saddle future generations with. Those alone are a lot of good. That's not even getting into smaller things. PV calculation based on what run rate? And again, PV gives you a target, not a sale price. Sale price is subject to counterparty. Using NPV like that is only useful when looking at a bulk of held assets or cash that you can sink when all else is zero'd out - government runs too cyclically for that to be useful as an exact number here, and you aren't including the opportunity cost and savings either. Its more complex than that. Link to comment Share on other sites More sharing options...
Balta1701 Posted August 9, 2010 Share Posted August 9, 2010 QUOTE (NorthSideSox72 @ Aug 9, 2010 -> 12:52 PM) There are a total of, as I recall, two companies in the US who even do the kind of work that is required here (not talking the bank here - I mean the operator). What it SHOULD have been is entirely subjective, the reality is what someone was actually willing to pay. Do you really think the City would have not tried to get best money here? No one wins on that. By the way Balta, one of the big side effects of this over time is one I'd think you'd fall in love with. 1. I can take the same opinion as the Hudson deal here...if you're holding a possible investment vehicle, and every price that you are offered in exchange for it is a low-ball offer, then you don't make the deal. Simple arithmetic spells it out here. If I were to be holding a $1 billion investment and it returned a whopping 3% over 75 years, that would total that same $10 billion that they're saying the contract would be worth for JPM. The city basically bet that the returns on their $1 billion investment now would be 3% or less over the next 75 years. While, that may be somewhat true given the conservative economic era we're in, historically that'd be a very bad rate of return. The big side effect I'd like? Higher taxes? (Temporary stimulus now is the side effect I'd assume you're saying, but that doesn't mean it's a good investment) Link to comment Share on other sites More sharing options...
Balta1701 Posted August 9, 2010 Share Posted August 9, 2010 QUOTE (NorthSideSox72 @ Aug 9, 2010 -> 12:56 PM) What you will get when its done selling off what it reasonably can, is a smaller, less costly, more transparent, more effcient government... more private industry jobs in the area where there is growth potential with those companies, not dead end jobs alone... and less debt to saddle future generations with. Those alone are a lot of good. That's not even getting into smaller things. What exactly can you cite from recent history that suggests that government contracting with the private sector, and in particular contracting with banks, produces lower costs, increased transparency, or more efficiency? Link to comment Share on other sites More sharing options...
NorthSideSox72 Posted August 9, 2010 Author Share Posted August 9, 2010 QUOTE (Balta1701 @ Aug 9, 2010 -> 11:57 AM) 1. I can take the same opinion as the Hudson deal here...if you're holding a possible investment vehicle, and every price that you are offered in exchange for it is a low-ball offer, then you don't make the deal. Simple arithmetic spells it out here. If I were to be holding a $1 billion investment and it returned a whopping 3% over 75 years, that would total that same $10 billion that they're saying the contract would be worth for JPM. The city basically bet that the returns on their $1 billion investment now would be 3% or less over the next 75 years. While, that may be somewhat true given the conservative economic era we're in, historically that'd be a very bad rate of return. The big side effect I'd like? Higher taxes? (Temporary stimulus now is the side effect I'd assume you're saying, but that doesn't mean it's a good investment) I was actually referring to the effect that people are already driving less, and taking public transit more often, as a result. Trib documented it recently. Anyway, yes, obviously, you need to draw a line somewhere going in, as to your bottom line. How bad is your need for that cash, plus value of side effects, such that below some certain $ amount, its not worth doing. Why is $1.2B too low, but $2.1B good enough? How did you determine that? Your calculation is too thin, because 75 years os a LOOOOOOOOOOOONG time, and the risk that you are not attenuating for is HUGE at that time scale. Link to comment Share on other sites More sharing options...
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