Why LAZ Upped the Ante – They had good auditors…

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Why LAZ Upped the Ante – They had good auditors…

I was interviewed yesterday by a reporter from Pittsburgh – I was in heady company with Herb Anderson, NPA President, and Dennis Cunning auditor and sometime writer for PT also marked for questions.

Actually she did a fairly good job. We spoke for half an hour. Her concern was how LAZ et al could expect to make money when the city couldn’t. I said:

…private operators are quick to pick up revenue their predecessors missed.”With most parking garages, be they public or private, anywhere from 10 (percent) to 30 percent of revenue is not collected. It could be incompetence, administrative issues, all kinds of things. It’s just how the parking industry works,” Van Horn said.

Dennis was even more explicit:

“That J.P. Morgan came back … with an extra $40 million (after a run-off bid) tells you just how attractive it was,” said industry consultant Dennis Cunning. Cunning, who visited Pittsburgh to evaluate facilities for one of the losing bidders, said he noticed serious lapses in oversight at two city garages that were bleeding cash from the system. That’s not uncommon in municipal systems, he said. “Chicago was a prime example. We uncovered massive inequities there. We picked up at least $2 million a year in just the first year. They had 800 people in a garage who weren’t paying. We turned off their expired cards and picked up 700 payments a month there,” Cunning said.

Herb backed us up:

“Typically what you do is, number one, make facilities more efficient from a technology standpoint,” Anderson said. “By automating facilities, you have fewer people touching cash, and once you automate, you increase profit by making sure people pay.”

Local Operator Merrill Stabile, president of Alco Parking, a private company that controls about half of the parking spots in Pittsburgh rounded things out:

“These people (LAZ) want to see business thrive downtown. If they chase business away, they’ll starve. This will be a good thing. From what I know about LAZ, they’re very respectable operators,” he said. Stabile predicted that, if the deal goes through, his new competitors would market facilities aggressively, seeking partnerships with retail and residential property owners, and would invest in technology to make the business more efficient. “They’ll take a very entrepreneurial approach. With all due respect to the Parking Authority, they had to answer to a politically sensitive board, and that restricts your ability to be entrepreneurial on things like rate structures,” he said.

Yep – Remembering the interview I said all those things, including what Dennis, Herb, and Merrill said as I’m sure did they.. The reporter was smart, using different sources to give the article depth and credibility. Oh, yeah, there was a professor from Harvard who was all for the deal…

JVH

 

 

John Van Horn

John Van Horn

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