Triple “P” in Pittsburgh – How good a deal is this?

As you may or may not know, the City of Pittsburgh is “going out” for bids to lease out some (12) of its off street garages and a portion of its parking meter operation. They are among a long list of cities that are doing or considering. Pittsburgh has been invaded this week by parking consultants, auditors, financial wizards, and parking operators who are looking at the city’s garages and onstreet operations in preparation for providing the city a bid. In a couple of weeks, these same groups will move on to Los Angeles, to look over that city’s parking operations.

A blogger in Worster, MA made a short list in March:

• Pittsburgh is looking into how much its parking assets are worth. 
• New Haven is proposing a $120 million deal for 25 years’ worth of meter revenue.  I highly recommend reading that article, as there’s a great quote from community activist/poli sci professor David Cameron: “Greece was giving away revenue streams of the future [too].  That’s what got Greece in trouble too, not parking meters, but airport revenues.”
• Wilmington is exploring privatizing ticket-writing.  (Brockton had also considered privatizing parking enforcement, but decided against it.)
• Los Angeles is considering a long-term (50 year) lease of 10 parking garages (no meters) and is looking for $100-200 million.
• Atlanta just approved a seven-year lease of meters with an annual guarantee of $5.5 million.  (This is also an extremely interesting article; I like the short term of the lease, but it also means increasing metered parking spaces from 900 to 2,500.  Also, note that Atlanta has $7 million in uncollected parking fines.)
• Nashville is entertaining a proposal from Morgan Stanley.  Hmm…Morgan Stanley.  Why does that sound so familiar?

The list isn’t complete, but a quick look at each one will show similar issues. Each city is needing money, and are looking at some type of privatization of their parking operations to get some quick cash. We see it at all levels of government…They sell off assets to pay short term liabilities. Can’t make the budget shortfall, get a couple of hundred million from your parking operation to pay it off. Every single story above has issues like budget deficits, uncollected parking tickets, revenue losses and the like.

Parking is a business, and it’s a difficult one. City after city (San Francisco, Atlanta, LA, New York, Pittsburgh, just to name a few) are finding that there are millions of dollars that simply is uncollected. It could be parking revenues underreported so parking taxes aren’t collected, citations uncollected in the millions, lack of oversight of parking operations..the problems are rampant.

Damn, wouldn’t they be better off cleaning up their act, hiring folks who could collect the money, oversee the operations, collect the taxes, be sure people pay their tickets.

I’ll give you one current example. One city at the confluence of the Allegheny and the Monongahela has millions in uncollected parking tickets. They bought a license plate recognition vehicle that goes around a finds cars that have unpaid tickets, and then the cars are booted and the money collected. The problem that the system only can find about 20 or so a day. The locals shrugged, what to do, what to do? Gee maybe buy another five LPR units?

I just don’t see why this is such a problem. If cities ran these operations like businesses, (which they are), their “shortfalls” would be much smaller. Instead they sell them off at fire sale prices. No private company in its right mind is going to pay top dollar for a parking operation that is leaving millions on the table. Of course they believe they can run them properly and make money, but they will use the city’s own figures to keeps the prices down.

I ‘m no financial whiz, but this doesn’t seem right to me.

I note that the investment bank that bought the Chicago parking operation, Morgan Stanley, is “advising” the folks in Pittsburgh and taken itself out of the bidding in that city. They will get a couple of mil when the deal is completed. Did they learn something in Chicago?

JVH