Indep. Voters of Ill. Endependent Precinct Organizing v. Ahmad

13 N.E.3d 251

INDEPENDENT VOTERS OF ILLINOIS INDEPENDENT PRECINCT ORGANIZATION, and Aviva Patt, Plaintiffs–Appellants

v.Amer AHMAD, Comptroller of the City of Chicago, and Chicago Parking Meters, LLC, Defendants–Appellees.

No. 1–12–3629.

Appellate Court of Illinois, First District, Sixth Division.

June 20, 2014.

Krislov & Associates, Ltd. (Clinton A. Krislov and John Orellana, of counsel), and Depres Schwartz & Geoghegan, Ltd. (Thomas H. Geoghegan and Mike Persoon, of counsel), both of Chicago, for appellants.

Mara S. Georges, Corporation Counsel, of Chicago (Benna Ruth Solomon, Myriam Zreczny Kasper, and Julian N. Henriques, Jr., Assistant Corporation Counsel, of counsel), for appellee Amer Ahmad.

Winston & Strawn, LLP, of Chicago (Robert Y. Sperling, Bryna J. Dahlin, and Christopher J. Letkewicz, of counsel), and Winston & Strawn, LLP, of Washington, D.C. (Elizabeth P. Papez, pro hac vice, for appellee Chicago Parking Meters, LLC.

OPINION

Presiding Justice ROCHFORD delivered the judgment of the court, with opinion.

¶ 1 This is a taxpayer challenge to the City of Chicago's (the City) concession agreement with Chicago Parking Meters, LLC (CPM), pursuant to which the City transferred to CPM its metered parking system and all revenue produced from the parking meters for 75 years, in exchange for a one-time payment of $1,156,500,000. The circuit court dismissed certain of plaintiffs' claims pursuant to section 2–615 of the Code of Civil Procedure (Code) (735 ILCS 5/2–615 (West 2010) ) and later granted summary judgment in favor of defendants on the remainder of plaintiffs' claims pursuant to section 2–1005 of the Code (735 ILCS 5/2–1005 (West 2012) ). Plaintiffs appeal from the dismissal and summary judgment orders. CPM filed a conditional cross-appeal from one of the circuit court's findings regarding plaintiffs' standing to file their complaint, asking that we review this ruling in the event we reverse the decision of the circuit court based on plaintiffs' appeal. Because we affirm, we will not address CPM's conditional cross-appeal.

¶ 2 I. Background Facts Regarding the Concession Agreement

¶ 3 In 2008, the City announced that it sought to enter into a contract pursuant to which a private entity would take over from it the obligation and expense of operating the metered-parking system in Chicago, and would be granted the right to keep the fees paid at the parking meters. The announcement invited interested parties to supply information showing their qualifications to be the concessionaire who would operate the metered parking system. The City determined that certain of the responding entities, including CPM, were qualified, and provided a form for each to submit a binding offer specifying the amount it would pay the City for the concession “based upon the final form of the concession agreement.” CPM submitted the highest bid of over $1.15 billion and the City declared it the winning bidder.

¶ 4 An ordinance authorizing City officials to execute the concession agreement with CPM was required in order for CPM to operate and maintain the metered parking system. On December 4, 2008, the city council enacted that ordinance (the Metered Parking System Ordinance) by a vote of 40 to 5 to approve the concession agreement with CPM. The Metered Parking System Ordinance (Chicago City Council, Journal of Council Proceedings, Dec. 4, 2008, at 50508), found that the concession agreement “is in the best interests of the residents of the City and desirable for the welfare of its government and affairs” and further provided that “[t]he City shall appropriate amounts sufficient to pay when due any amounts payable by the City under the concession agreement.” Id. at 50509.

¶ 5 Before executing the concession agreement, the City asked it's outside counsel, Katten Muchin Rosenman LLP (Katten), to provide a legal opinion addressing whether the city council had the authority to enact the Metered Parking System Ordinance, which would authorize City officials to execute the concession agreement. On February 13, 2009, Katten issued the requested opinion, which concluded:

“1. The City is a municipality and home rule unit of local government, duly organized and existing under the Constitution and laws of the State of Illinois.

2. The city council of the City has (i) duly adopted the Metered Parking System Ordinance, which remains in full force and effect, (ii) duly authorized and approved the execution and delivery of the Agreement and other documents related to the transactions contemplated by the Agreement and (iii) duly authorized and approved the performance by the City of its obligations contained in the Agreement. The City has the power and authority to adopt the Metered Parking System Ordinance, to enter into the Agreement and do all acts and things and execute and deliver all other documents as are required under the Agreement to be done, observed or performed by the City in accordance with the terms thereof.”

¶ 6 The concession agreement closed on February 13, 2009, and CPM promptly paid the concession fee of $1,156,500,000 to the City in return for the City's transfer of control of the approximately 36,000 on-street parking meters to CPM for a 75–year period. CPM agreed to operate, maintain and improve the parking meter system. CPM proceeded with upgrading the parking meter system by installing “Pay and Display” pay boxes that permit payment by credit or debit card, allow more cars to park on the street, and allow customers to purchase “portable time” (i.e., the right to park in multiple meter locations without paying duplicative meter fees). The concession agreement transferred to CPM the right to keep the parking fees at those devices for the 75–year term.

¶ 7 After receiving the $1,156,500,000 from CPM, the City used that money to set up: (1) a $400 million revenue replacement fund to generate $20 million a year in expected annual interest that could be used for the City's ongoing operations; (2) a $100 million human infrastructure fund to support a variety of programs aimed at providing resources to the City's businesses, homeowners and residents most in need; (3) a $325 million mid-term reserve fund to supplement revenues in the City's corporate fund through 2012; and (4) a $324 million budget stabilization fund to pay any amounts the City might owe CPM under the concession agreement and for any other purposes authorized by the city council.

¶ 8 Pursuant to section 3.1(a) of the concession agreement, the City retained its home rule authority over the parking meter system, which was defined to include “the exercise by the City of those police and regulatory powers” relevant to “Metered Parking Spaces” and the “regulation of traffic, traffic control and the use of the public way,” including: the power to decide when and where to add and remove metered parking spaces; the periods of operation of, and the limits of stays in, such parking spaces; the amounts of fees paid at parking meters; and the amounts of fines for metered-parking violations. See concession agreement § 1.1 (definition of the City's “Reserved Powers”).

¶ 9 Under section 7.6(a) of the concession agreement, the City must “adopt and enforce rules and regulations with respect to the Metered Parking Spaces,” and “[t]he City agrees to establish, maintain and undertake procedures for the enforcement of parking rules and regulations that are designed to deter parking violations.” Section 7.6(a) explains that CPM is not entitled to collect or share in “punishments” (i.e., monetary fines) imposed in “the adjudication of parking violations.” Instead, any fines or proceeds generated from parking meter violations go exclusively to the City. The City's annual appropriations ordinance for year 2010 estimated that the City would receive almost $263 million in revenue that year from “fines, forfeitures, and penalties” while spending less than $9.8 million to pay the salaries of personnel who perform “Parking Enforcement” and “Boot and Tow” functions.

¶ 10 The concession agreement contains multiple provisions requiring the City to pay compensation to CPM (concession compensation) for certain “Compensation Events,” i.e., the City must make payments to CPM for the exercise of any police powers that reduce metered parking revenue. These compensation payment provisions are based on the premise that the approximately $1.15 billion CPM paid the City for the concession represents the estimated 75–year value of an assumed number of parking meters assets, whose value may change as a result of the City's exercise of its home rule powers over meter inventory or operations. Accordingly, the City agreed to compensate CPM as necessary so as to allow CPM to maintain the benefit of the bargain.

¶ 11 The concession agreement specifically enumerates the compensation events triggering payment by the City of concession compensation to CPM. Such compensation events include the following:

(1) The City's changing of the operating standards, defined as the “standards, specifications, policies, procedures and processes that apply to the operation of, maintenance of, rehabilitation of and capital improvements to, the Metered Parking System” (see concession agreement, §§ 1.1, 6.3(a), 6.3(b));

(2) The addition of any “Competing Public Parking Facility,” defined as: “[A]ny off-street public parking lot or public parking garage that (i) is (A) owned or operated by the City or (B) operated by any Person and located on land owned by the City, or leased to the City, (ii) is within one mile of a Concession Metered Parking Space, (iii) is used primarily for general public parking; (iv) has a schedule of fees for parking motor vehicles that is less than three times the highest Metered Parking Fees then in effect for Concession Metered Parking Spaces in the same area; and (v) was not used for general public parking on the effective date of this Agreement” (see concession agreement, §§ 3.12(a), (c));

(3) The City's (i) lowering

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