The Company that Helped Destroy City Finances is Managing Chicago Teachers Pension Money

The William Blair Custom High-Net-Worth team is dedicated to serving the wealthy

I asked the Chicago Teachers Union at a recent House of Delegates meeting to tell Mayor Brandon Johnson that he should look into reopening the disastrous parking meters privatization deal that has cost the city over a billion dollars in revenue. 

I then discovered that the company that engineered the worst civic deal in history for the city’s people (but a wonderful deal for the investors) is today handling investments for the Chicago Teachers Pension Fund (CTPF). And yes, they are continuing to screw us over because they have been put on a Watch List for troubled money managers.

According to Pensions & Investments, William Blair was put on watch for performance reasons last year. They have managed $198 million in international equities for CTPF. And Blair was the company that put together what many call the worst financial deal ever for Chicago.

“The parking meter deal was the worst civic deal in American civic history,” Tom Tresser, co-founder of the Civic Lab, told Second City Teachers. 

Tresser is the city’s No. 1 civic watchdog whose TIF Illumination Project has exposed the corrupt city real estate deals that line corporate pockets at the expense of the people. 

I asked Tom who I have interviewed on our podcast about the Parking Meter Deal now that the Mayor is asking for a short-term high interest loan to prevent massive city layoffs and school closures.

Tresser pointed out to me in an email how much our city lost from this deal. 

“Mayor Daley took us to the payday loan store for expensive debt,” he said. “Morgan Stanley gave us a little over $1 billion in 2008 – which was quickly spent. The bankers went to the capital market for funds – as Chicago easily could have – to get the funds. The oil rich kingdom of Abu Dhabi is a major investor! As of 2023 the meter czars have recouped their money PLUS $500 million and they still have 60 years to go!” 

Tons of lawsuits have been filed against this investment consortium.

“Every time the city needs to close a street – for a festival – for repairs – for NASCAR – we have to pay the bankers for lost meter revenue,” Tresser said. “Some 11 or 12 years ago the meter company sued because they were losing too much money to people with handicapped permits and they required all people with handicap permits to go back to their doctors to get certification that they really were impaired in order to get a new permit which allowed the user to avoid paying meter fees.” 

William Blair & Company acted as the lead independent, third-party financial advisor to the City of Chicago in connection with the City’s evaluation and execution of the long-term concession for the Chicago Metered Parking System. 

“Our work on this transaction began in July 2007, and an engagement letter relating to our services was entered into in January 2008,” stated their transaction summary paper dated June 30, 2009. “In our role as independent financial advisor, we assisted the City in evaluating the financial feasibility of the transaction, estimating the value of the System to both the City on a continuing basis and to prospective private sector bidders, managing a request for qualifications process to identify and qualify prospective bidders, structuring and negotiating the terms of the transaction, coordinating the bidder due diligence process, and managing the competitive bidding process for the Concession.”   

William Blair stated in its summary that the city’s goal is to pursue ‘long-term public-private partnerships involving infrastructure assets only when there is substantial financial benefit to Chicago taxpayers and residents.'

“In our view, the Concession of the System was a sensible and responsible transaction that satisfied these criteria. We worked closely with the City and its advisory team to determine the potential value of the System to bidders, as well as the value of the System to the City.”

William Blair said Chicago has been the leader in what they described as ‘successfully partnering’ with the private sector - but successful for whom? They cited the Chicago Skyway, the underground parking garages in Grant and Millennium Parks and the Parking Meters privatization. “Many other American cities now hope to copy Chicago’s success.” (sic)

According to the Sun-Times, these privatization deals were a disaster for the City. They wrote: “The parking meter deal is considered by many to be a disastrous deal for the city:   In 2008, Mayor Daley sold Chicago's parking meters to a private company, Chicago Parking Meters (CPM), for $1.16 billion in exchange for 75 years of parking meter revenue. The city must pay the company for any lost revenue if streets are closed for events or if parking meters are removed. And CPM, which could have worked with the pandemic-stricken city, chose not to. The consortium has already turned a more-than-healthy profit from its initial investment, making money hand over fist and pocketing $150 million last year alone. CPM had no obligation to make any concessions to the city, but would have earned some goodwill by doing so. Chicago is bad at it. And the sales never benefit taxpayers in the long run. The Skyway generates more than $100 million a year in toll revenue, not for Chicago taxpayers, but for a trio of Canadian pension funds.”

William Blair noted that all three bond rating agencies upgraded the City's credit rating as a result. It should be noted that the credit rating agencies also rated the disastrous subprime securities sold to investors in 2008 before the economic collapse as Grade A. 

“Today, the City enjoys its highest credit ratings since 1978.  Using the valuation method described above, Blair initially established a valuation range for the Concession of between $650 million and $1.2 billion. While this range was refined during the bidding process, the top end of the range never exceeded $1.2 billion.”

The next question one has to ask is why then would this group that determined this deal was ‘sensible and responsible,’ but was in fact a disaster, still be in charge of handling the retirement money of our city workers? Why are they one of the Chicago Teachers Pension Fund money managers if their financial advice turned out to be the worst ever? 

So I asked Tom like I asked the CTU if he thinks there is any way we can get back this money stolen from the people of Chicago. 

He said years ago, public interest lawyer Clint Krislov sued the meter company and sought to have the contract voided. However, Mayor Emanuel sent his corporation counsel to court to tell the judge the city was OK with the contract. The case was then thrown out of court. 

“I believe the city should contest the deal as it was done with no time for oversight by the City Council,” Tresser said. “I believe the deal is a private taking of public assets and should be fought aggressively in court and in the streets.”

The Triibe, an online news site whose mission is to reshape the narrative of Black Chicago, asked a similar question in their recent article entitled “Today’s Chicago City Council regrets the infamous 2008 parking meter deal.”

“As Chicago undergoes the 2025 budget season, hunting for creative ways to close a nearly $1 billion gap shortfall, memories of former Mayor Richard M. Daley privatizing the city’s profitable assets haunts City Hall, especially the 2008 parking meters deal,” Corli Jay wrote. 

She interviewed University of Chicago economist Damon Jones who described the parking meter deal as a wash. “In the long run, when you sell an asset like that for the City, and you get cash today, it’s kind of an illusion,” he told The Triibe. “Today, you look like you’ve increased your finances, but in the long run, you foregone a lot of future revenue.”  

Jones said the deal highly favored the investors, with the city getting the very short end of the stick.    

“If this company has already made back their money in 15 years, over a 75-year deal, that tells you that that company got this on a steal,” he told The Triibe.  We should add that Mayor Richard Daley who engineered the theft is a paid consultant to the parking meters consortium to the tune of $250k per year.

So Mayor Johnson to fix our budget problems please reopen this case that continues to rob us blind. And Trustees of the Chicago Teachers Pension Fund, fire William Blair who took credit for the ultimate deal that screwed our City!