I've skimmed through the contract. The city is contractually obligated to have the meter maids but I think they could tell them to stop writing tickets. Problem is the city needs the money. There's a parking app now so smashing the boxes won't work. Anyway no matter what you come up with there's a clause that basically says "if the city does anything that causes us to lose money they have to reimburse us" so we are well and truly fucked.
The city can get out of it. They could just flake out of the contract. The company is actually holding the risk because they think they can debt trap the city. They are holding the dragon by the tail and think they are in control.
If the city just flakes on the contract and lets parking be free. Then everyone will be happy. The company will fight back in the courts and the city can just grind down that process for as long as possible. It doesn't have to settle, it can investigate back and do all sorts of things to cause trouble.
If the city just ignores the contract, it will be sued. You can't delay a court hearing forever. Eventually it would have to pay all the lost revenue plus interest plus court fees. That's a terrible idea.
