Parking garages and parking meters seem to be on the minds of everyone at 414 Grant Street and in particular the folks who hold offices on the fifth floor across from Pittsburgh City Council offices. Everyone knows that the city is in dire straights when it comes to our pension fund balance. This has been the 4,000 pound elephant in the room for quite a few years now. The big sexy idea is for the city of Pittsburgh to lease it's parking assets such as the Parking Authority controlled parking garages and there have even been discussions to include the parking meters in this plan. This plan has been dubbed by the Ravenstahl administration as "Saving the City's Pension Fund and Saving the City's Finances". A noble plan that comes touted as a saving grace and it seems to fix a lot of our problems at first glance. What could possibly go wrong with this plan you might ask? A lot.
The City of Pittsburgh Pension Fund has an unfunded liability of $577 million dollars or 64% while only holding $323 million dollars in assets. 11 cents of every city budget dollar goes to the pension fund.
Ouch is the best word that I could come up with to describe this problem. Rating agencies consider a pension fund that is 60% funded to be in severe trouble, one that is 30% funded doesn't even have a term for it inside the industry. I have an idea. How about "oh shit"?
The Mayor's office likes to tout examples of plans like ones in the cities of Chicago Illinois & Harrisburg Pennsylvania. The Chicago lease for their downtown parking garages was a 99-year lease for $563 million dollars and for their parking meters they have a 75-year lease for a staggering $1.157 billion dollars. The Harrisburg plan was actually voted down by their city council in December of 2008. To tout the Harrisburg plan is deceptive at best since it was never implemented there. How fair is it to use this as an example when it didn't even make it to fruition?
"We need to come up with an influx of money, the only solution I've identified is leasing these garages," said Mayor Ravenstahl.
It's a contract that they are hoping could generate $200 million or more. Even under Ravenstahl's proposal, the city's pension plan still seems to be hundreds of millions of dollars short of target. If the administration hopes to garner somewhere around $200 million then is the pension shortfall really being abated?
Let's take a look at the Chicago plan, which is always touted by this administration as a prime example.
In December of 2008 the city of Chicago leased its parking meter system to a fund managed by Morgan Stanley in a 75-year, $1.16 billion deal that was heralded as a plan that would bridge a budget crisis in that city. Chicago doesn't seem to be having the same pension shortfalls that we are having. This deal was planned to shore up some major budget issues. The deal covered more than 36,000 parking spaces, with rates on many meters expected to quadruple to $1 an hour. In August of this year a good government advocacy group, filed suit against the city and state in court on the grounds that the 75-year, $1.15 billion parking meter lease deal illegally uses taxpayer assets to benefit a private company.
City officials kept the bids to themselves, declining to show them to the public and refused to talk about the process. This would never happen here, right?
In June of this year, Chicago's inspector general issued a scathing report that slammed the deal for shortchanging the city and for being pushed through the city council without sufficient time for review. No one in the administration would ever present something to our City Council at the last minute, would they?
Chicago’s new parking meter operators are raking in more than $1.1 million a week and expect even more revenue next year.
From the New York Times on November 19th:
Financial experts who reviewed the data say Chicago could have made out much better in the long run had it just kept the meters.
“Had we done this ourselves, it could have made a lot more money,” said Alderman Scott Waguespack, one of the dissenters when the City Council took a quick 40-5 vote in favor of the deal. “It was too easy for the mayor to give it away and get the quick shot in the arm.”
“At this rate, it was a great deal for the parking meter company,” he said. “I don’t know if it was a good deal for the city. We should have just bit the bullet and done it ourselves.”
"Many meters became choked by the high flow of quarters needed to pay the new, higher rates. Because the company is not writing tickets, it seems many Chicagoans are getting away with parking for free. A company audit of a section of the North Side found 41 percent of occupied spaces filled by motorists who were not paying, according to the company records.
The city could have earned about $670 million more by keeping the asset.
Another problem that is appearing is that businesses in Chicago fear they could be on the hook for millions of dollars when they want to replace a parking space with a driveway or a loading zone. Developers have been told by city officials that they would have to pay the private operator for lost revenue from removed meters. The payments would amount to 75 years' worth of meter feeding. Developers are wary that the uncertainty could affect their plans and even reduce land values by adding costs to their projects.
The reason: Mayor Richard M. Daley's controversial $1.16-billion deal to privatize the city's parking meters requires that whenever a metered parking space is eliminated, somebody has to pay for it — and if it's not business, it likely will be Chicago drivers.
The Sun-Times and NBC5 have reported that pay-and-display boxes touted as the high-tech solution to over-stuffed and improperly calibrated parking meters have a problem of their own: they’re out of sync.
A spot check of about 50 newly-installed boxes found the time they show varies from machine-to-machine — leaving motorists confused about when to return to their vehicles to avoid getting a ticket.
Times displayed by boxes didn’t match, even though they’re on the same computer server.
Mayor Daley later apologized for how the parking-meter changeover was handled.
“I take responsibility for that,” Daley said at a public hearing Aug. 25. “The implementation was not good at all from the city’s side. You know that. I know that.”
Clearly this deal in Chicago was a bad one. It was a short term gain for the city that will not pay off in the end. This deal robbed future generations and budgets of money that will probably not be able to be made up. How will they ever get this money back? The short-term infusion of money is nice but in the end it sounds as if Mayor Daley screwed over his city and mortgaged his city because he did not have the long-term vision to see the potential problems of this leasing which were so clearly evident.
This plan may put a short-term infusion of cash into the pension fund but it will raise rates. How empty is Downtown now? It is almost like a ghost town after 6pm. How do they expect people to come to Downtown when the rates will be through the roof? How is this a benefit to the city? Who wants to pay more to park when the rates are already high? Merrill Stabile can talk all he wants that he doesn't think that rates will go up but he is only saying that because if our leased garages go up in price he can raise his prices and get away with it.
How is it that our administration is shopping around this plan that was clearly not welcomed and has had a lot of criticism with it? They are hoping that you are dumb and uninformed. This administration is clearly banking on people not knowing what really went down in Chicago. To me it seems as if the administration is hoping that you Yinzers out there won't do your homework on this one. They tout these flawed examples as if they are gold and that they are perfect systems that we should mimic.
Don't let this administration get away with this plan. They will undervalue the meters and the parking garages worth and it will hurt us as a whole in the long-term. Chicago is an excellent case study that I wish the administration would look a lot further into. I find it hard to believe that no one in the administration that has anything to do with this plan doesn't know about the problems that have plagued the city of Chicago.
Enough shortsightedness in this city. Let's take a long hard look at this plan and see if it is in our best interest. I hope that Pittsburgh City Council will tread lightly on this issue and listen to all sides. Let's also hope that this process isn't jammed down our throats.
The bottom line is that we can not trade in long-term stability for short-term gain.
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