I have been musing about this problem for some time. Chicago leased out its on street parking operation for what, half a billion, and is using the money to pay off loans and in some cases for ongoing operations. Is this a good thing? I’m not so sure. Yes, they got a liability off their books (the upcoming repair costs of the garage), but is this a good idea in every case. They are in the process of selling the onstreet operation, too.
Here’s an article about the city of New Haven. They are considering selling their Parking Authority. The reason – they need money. They sold a pumping station a few years ago simply to cover a budget shortfall. What are they going to do when they run out of things to sell?
I suggest a better approach might be a more short term solution. Privatization is not a bad deal. Most private companies work much more efficiently than the public sector. However if the city gets greedy and decides its wants its money all up front, the long term view may not be so rosy.
Of course from the point of view of the investment banks and the purchaser, this is a good deal. They get a property, usually at bargain basement pricing, and then get all the income from it. If they do their number correctly, they will find that the income from these operations is actually much higher than the city had been experiencing (this was the case in Chicago) and all is right with their world.
However the city, having sold the asset, now finds out that it was a gold mine but since they ran it poorly, they were the losers.
I wonder if a slightly different approach might be in order. What if a parking operation was run like a utility where the city received income based on giving the parking utility a monopoly, (like electricity or water) and perhaps a piece of the action. You would have the benefit of a for profit organization running the parking to maximize income and service, and the city would probably receive more income than they did when they ran the operation.