Parking has gotten worse in Chicago, and many see Mayor Richard Daley's decision to privatize parking meters as the culprit. Daley has been a privatization pioneer, starting with his leasing of the Chicago Skyway for 99 years. So, when a consortium led by Morgan Stanley offered $1.2 billion for the right to collect street-parking fees over the next 75 years, it seemed like a no-brainer. The plan sailed through the city council but ran into trouble almost as soon as it was implemented in February.

Parking fees quadrupled in some areas, running to $3.50 an hour in the Loop; downtown rates will rise to $6.50 by 2013. The need to stuff meters with 14 quarters a shot jammed many of them. Meanwhile, 250 pay-and-display devices that take credit cards broke down right after installation.

In June, David Hoffman, the city's inspector general, issued a report saying that if Chicago had kept control of the meters and raised the rates itself, it could have collected nearly $1 billion more than it got. Of course, raising rates is politically difficult. That's one reason privatization deals become attractive. But if the private corporation is raising the fees and the city is "taking the heat anyway," says Woods Bowman, a former Cook County chief financial officer, "why not get the money, too?"

Compounding the problem, Active Transportation Alliance, an advocacy group, claims that Chicago has ceded control of its streetscape. If the city wants to abolish parking in any of its 36,000 spaces in favor of, say, a bike or bus lane, it can do so. But it will have to compensate Chicago Parking Meters LLC for lost revenue at a rate that, the group claims, assumes a car were parked in the space for 24 hours a day.

Daley insists the deal will prove smart in the long run. Over the short term, Chicago used $150 million from the deal to plug a budget shortfall this year and plans to continue the practice, even though it may not be the wisest policy to use proceeds from a long-term lease for short-term expenses.