Critics of the city’s controversial proposal to privatize parking-meter operations are questioning language in the contract they say would obligate the city to pay Affiliated Computer Services Inc. $500,000 if the agreement is not approved.

A section of the 154-page document stipulates that the city would compensate Dallas-based ACS for the amount if the contract is terminated.

City leaders, however, say the penalty would be paid only if the city or ACS breaks the 50-year agreement after the City-County Council signs off on the deal, not if the contract fails to win approval. An ACS spokesman said the company agreed with the city's position.

"The city would only be obligated to reimburse costs if, and only if, after the agreement was approved and signed, the transaction did not close as a result of a city action or breach," said Michael Huber, deputy mayor for economic development. "Please understand that the agreement will not be signed by the city or ACS until after all approvals have been obtained."

Democrat Jackie Nytes, a City-County councilor, is unconvinced, however. She said she and other councilors have read the section of the contract, and they interpret it to mean the city is responsible for the fee if the City-County Council indeed fails to give its blessing.

“Some councilors who may have cold feet about the deal, with a $500,000 penalty kicking in, might approve the damn thing because they don’t want to squander the $500,000,” Nytes said. “That’s political blackmail.”

Nytes said she favors the installation of new meters, but contends the city is capable of managing meter operations itself.

City leaders plan to appear before the Rules and Public Policy Committee Tuesday at 5:30 p.m. to answer questions and present additional information about the proposal. The committee needs to approve the contract before the City-County Council can consider it.

The city last month proposed the long-term contract with ACS as a way to modernize meters and raise capital for infrastructure improvements. ACS would pay the city $35 million upfront and give the city a cut of revenue that could total as much as $400 million for road and sidewalk improvements in areas near the meters.

Critics have said the deal would restrict the city’s flexibility when it comes to urban planning while raking in lots of revenue for ACS—perhaps as much as $1.2 billion, according to an IBJ estimate.

Democrat members of the committee have invited a guest to speak at the meeting—Aaron Renn, author of urban-planning blog Urbanophile.

The Chicago resident and Indiana native has made clear his opposition to the proposal in many online pieces he has written about the subject.

Renn told IBJ he generally favors privatization efforts and supported the city’s water company transfer, as well as the state’s  leasing of the Indiana Toll Road.

But the parking proposal is different, Renn insisted, because meters are profitable, unlike the Toll Road, which “never earned the state a nickel.”

“Even though the city is getting some value downstream, it’s giving away future value to get $35 million now,” he said. “That really doesn’t pass the smell test to me.”

Huber said the city welcomes the debate.

“On a proposal this complex, it’s fair the public raises questions,” he said. “They want to know the city is getting a good deal, so we’ll take whatever time they need to answer those questions.”

The Rules and Public Policy Committee will meet in Room 260 of the City-County Building.