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Emanuel administration sues over $58 million parking-garage tab

City Hall is now suing over $57.8 milliarbitratiruling favor private investors who took over four city-owned parking garages downtown Chicago

City Hall is now suing over a $57.8 million arbitration ruling in favor of the private investors who took over four city-owned parking garages in downtown Chicago for allowing this competing parking garage to open at the Aqua building, 225 N. Columbus Dr.

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Updated: June 25, 2013 6:13AM

Mayor Rahm Emanuel’s administration went to court Thursday to try to knock tens of millions of dollars off the nearly $58 million tab it owes to the private company that operates four city-owned parking garages.

A panel of independent arbitrators found earlier this year that former Mayor Richard M. Daley’s administration violated the city’s 99-year, $563 million deal with Chicago Loop Parking LLC when it allowed a competing public garage to open in the new Aqua building downtown on North Columbus Drive.

Now, in a lawsuit filed in Cook County Circuit Court, the Emanuel administration argues that the parking-garage company is no longer entitled to the entire $57.8 million arbitration award, even though the 2006 privatization deal says such rulings “shall be final and binding.”

City Hall’s lawyers say despite that, they think they can reverse the arbitrator’s ruling because they’ve worked out a deal to pay Aqua developer Magellan Development Corp. between $22.6 million and $28.5 million to stop allowing public parking in the Aqua garage­­ if the city prevails in court.

By making that deal with Magellan, they argue that “the city has ensured that the future damage assumed by the award will not happen.”

As a result, City Hall asserts, Chicago Loop Parking is due only $4 million — covering only past damages caused by the Aqua garage.

Factor in the possible future payment to Magellan, and the city says the overall cost to taxpayers would be “about $30 to $35 million less than the grossly inflated amount that the [arbitration] panel would have the city pay.”

“We inherited some big litigation exposures,” said Stephen Patton, Emanuel’s top City Hall lawyer. “We are doing everything we can to minimize the financial impact on the city and the taxpayers.”

As part of the garage-privatization contract, City Hall promised it wouldn’t allow any new, open-to-the-public parking within the area bounded by East Wacker Drive, Harrison Street, Lake Shore Drive and State Street.

But, within months of the deal being signed, the Daley administration approved plans for a new public garage at the 82-story Aqua tower at 225 N. Columbus.

Standard Parking Corp. won permission to operate the Aqua garage with the help of its lawyers at the firm of Michael Daley, the then-mayor’s brother, city records show.

Chicago Loop Parking — a consortium of investors put together by Wall Street financial services giant Morgan Stanley — filed an arbitration claim over the competing garage in 2011 and won the award from the arbitrator in February.

The latest move in the parking-garage dispute comes as Emanuel seeks City Council approval for a revamped deal with Chicago Parking Meters LLC — another Morgan Stanley-controlled company — to settle disputes with the operators of Chicago’s 36,000-space metered street-parking system.

The Bartlit Beck law firm is handling the parking-garage case for the city for free.

Lawyers for Chicago Loop Parking could not be reached for comment.

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