The City of Angels is looking to lease out its parking lots and meters. Following on Chicago Mayor Daley’s $500 million plus deal leasing four garages and $1.15 billion deal leasing 36,000 parking meters, LA mayor Villaregosa is looking to generate cash by doing the same. Fair Enough.
My only question is how much will LA leave on the table. I have spoken to a number of parking professionals who have audited LA city garages and it seems there is a lot of money not being collected now. Will the city use existing revenues as a guide, or go out for expert opinions as to what the garages are really worth.
Although citation writing is fairly good in LA, my guess is that less than 10% of all violations are ever ticketed. That being the case, will the successful bidder be able to step up enforcement.
I’m sure the Morgan Stanley/Laz Parking team will argue that if they write more tickets, the scofflaw rate will go down and thus revenue will follow.
Will the city realize that in infusion of a new management team and most likely equipment that didn’t come over on the Mayflower can make a huge difference in revenue generation, particularly when the revenue is theirs.
I have felt that Chicago left some money on the table, particularly with the four garage deal. I wonder if the folks working with hizzonner in LA will do the same.
Selling (leasing) assets to pay short term bills is not a good policy. Hey Mr. mayor. Why not spend less and collect the money due you now (like the parking tax and violation payments) to generate income. Milk the cow, don’t sell it.
JVH
2 Responses
The City may be leaving money on the table, but they are also removing any and all risk from that same table. The companies making these huge guaranteed payments may end up getting a return that is multiples of what they invested, but what happens if there is some sort of market upheaval? Let’s say Chicago or LA decides to levy some huge gas tax or congestion charge at some time in the next 10 years, or one or two major industries/employers move to the suburbs or overseas? I’ve seen downtowns become ghost towns overnight from the impact of bank and/or insurance company mergers or the closing of a single large employer. Parking is not a traffic generator in and of itself, it is reliant on outside forces to create demand.
I agree that these cities could probably generate more money if they were to simply implement better management themselves, but if they were capable of doing so my guess is they would have already done it and wouldn’t be looking to privatization to get them out of the budget mess they currently have. I would hope that they considered that option (and others) before they made the decision to sell off a major piece of their infrastructure, but I’m sad to say that I would not be shocked if they didn’t.
I see huge opportunity for the private sector in these types of arrangements, but there are equally huge risks that the payout might not meet the expectations.
While I agree with RTA that changes in city situations could affect the income from Parking operations but I think that most cities will do their best to keep their downtowns viable regardless of who owns the parking revenue. The bigger issue that I question is “if they were capable of doing so my guess is they would have already done it and wouldn’t be looking to privatization to get them out of the budget mess they currently have.” The problem is that cities have so many priorities and think because they see positive income from parking that it must be the most that they can get. Most businesses that have a net positive income do not realize that they can be making more if they made some changes. I doubt cities will put money in to upgrade something that is working when they are trying to find ways to fix the things that are not.