Local governments should be wary when turning public functions over to the private sector; Chicago’s privatization of their parking meters should serve as a warning of the risks involved. As time ticks away on Chicago’s lease of their parking meters, the city grows more frustrated.

In 2008, Chicago agreed to lease its parking meters to CPM for 75 years for a lump-sum payment of $1.15 billion. Under the lease contract, parking meter rates across Chicago were raised, and new meters were placed in residential areas. Chicago residents were in an immediate uproar over the drastic increase in parking rates. The lease also gave CPM the right to bill the city of Chicago for any revenues that they deemed were lost due to out-of-service parking spots. Out-of-service parking spots included streets closed for cleaning, festivals and parades.

The city of Chicago has become increasingly frustrated with the lease contract. In the summer of 2012, CPM billed Chicago $14.5 million for revenue lost during the NATO summit. Mayor Rahm Emanuel has refused to pay the bill, stating that there was “no basis to it.” The amount in dispute has now reached $50 million, with Chicago still refusing to pay it. The argument has turned bitter, and in October 2012, Mayor Emanuel had called for an outside audit of CPM.

Governments should make sure that privatization of functions are advantageous for the city. This is not to say that governments should completely avoid the use of privatization, but it should be avoided when a company is allowed to bill the city at their own discretion. A private company’s main objective is to make a profit and in the case of Chicago, a profit is being made at the expense of the city and its residents.