The Cost of Money Now vs. Money Later - The Chicago Parking Meter Debacle

💲Money now will always be preferred over money later, but there are circumstances where the benefits of money later outweigh immediate access to funds.

💰The city of Chicago leased their parking meters to Morgan Stanley for 75 years to fill a budget deficit, but the private company has profited significantly while the city lost out on potential revenue.

📊Calculating the benefits of money now versus more money later requires considering factors like inflation, discount rates, and predicted revenue.

📈The city of Chicago's predictions for the revenue generated from the leased parking meters were overly optimistic, resulting in a bad deal for the city.

🚗Leasing parking meters to a private company can have negative impacts on traffic control and long-term city planning, as decisions are influenced by profit motives rather than public interest.

Why did Chicago lease their parking meters to a private company?

—Chicago leased their parking meters to a private company to fill a budget deficit without raising property taxes.

Did the city of Chicago make a good deal?

—No, the city of Chicago made a terrible deal. The private company has already recouped the entire purchase price and made an extra half a billion dollars in net revenue.

What factors are considered when calculating the benefits of money now versus later?

—Factors such as inflation, discount rates, and predicted revenue are considered when calculating the benefits of money now versus later.

Why were the predictions for revenue from the leased parking meters overly optimistic?

—The predictions for revenue from the leased parking meters were overly optimistic due to a lack of thorough analysis and consideration of potential risks and variables.

What are the negative impacts of leasing parking meters to a private company?

—Leasing parking meters to a private company can have negative impacts on traffic control and long-term city planning, as decisions are influenced by profit motives rather than public interest.

00:00In 2008, the city of Chicago made the decision to lease their parking meters to a private company for 75 years.

04:59The private company, Morgan Stanley, purchased the parking meters for $1.57 billion.

16:57The predictions for revenue from the leased parking meters were overly optimistic, resulting in a bad deal for the city.

19:55Leasing parking meters to a private company can have negative impacts on traffic control and long-term city planning.

20:42The city council made a bad deal, and the private company has profited significantly while the city lost out on potential revenue.