Over the last few years, Chicago has tapped over $1.7 billion through long-term leases of its downtown parking meter system and four city-run parking garages, effectively turning boring, old brick-and-mortar assets into sexy investment opportunities.
As I discussed here, these moves were a wake-up call to policymakers in other cities that didn't realize they were sitting on similar opportunities to extract capital from dead assets and get government out of the parking business, hardly a core function of government. Indianapolis, Pittsburgh and Allegheny County, PA appear to be out ahead of the pack in terms of becoming the next to follow in Chicago's footsteps.
The latest on Indianapolis, courtesy of today's Indianapolis Business Journal:
The city is set to release requests for qualifications from private operators interested in entering a long-term agreement to manage parking. The final deal should net the city tens of millions of dollars, said Michael Huber, director of the Mayor's Office of Enterprise Development. [...]
"We're trying to create a more efficient parking system that manages all of the downtown parking assets," he said. "Many of the garages, lots and certainly the meters could be more efficiently managed by one team." [...]
Under the proposal, management of the city's 4,000 metered parking spaces and 10,000 off-street spaces would be wrapped into a single, long-term lease.
Huber also declined to divulge the expected length of a lease [but] said it would be long enough for the chosen operator to recoup its investment in new parking meters it would install as part of the agreement.
In Indy's case, the proceeds of any parking asset lease would be used to fund citywide infrastructure improvements. By contrast, Pittsburgh is looking to parking asset privatization as a means of shoring up its vastly underfunded public pension fund to avoid a state takeover. Per the Pittsburgh Tribune-Review:
The Pittsburgh Parking Authority plans to hire a law firm on Thursday to provide legal advice for the privatization of the city's parking garages, lots and meters, city officials said today.
"We felt it was important to get the best and brightest for these transactions," said Scott Kunka, city finance director. "There are a lot of moving pieces, and you can structure it in any way you can."
Ravenstahl announced last year his plan to sell or lease the city's parking assets, which would include Downtown garages, and possibly surface lots and parking meters totaling 17,000 spaces throughout the city. Ravenstahl hopes to gross more than $300 million from a long-term lease. That money would pay off the authority's debts and pump $200 million into the city's pension fund to address a major shortfall. The pension fund contains about a third of the money it needs to cover nearly $1 billion in obligations.
Nearby, officials in Allegheny County, PA are considering a lease of parking facilities at Pittsburgh International Airport to retire $475 million in bonds used to finance a new midfield terminal in the 1990s. It turns out that debt service on those bonds is running $62 million per year compared to about $22 million in annual parking revenue, so the airport authority would save more per year by defeasing the bonds than it actually collects in parking revenue. Per the Pittsburgh Post-Gazette:
The Allegheny County Airport Authority board unanimously approved a contract with Walker Parking Consultants yesterday to appraise the Pittsburgh International parking lots and to evaluate the potential for privatization.
The airport authority board members have been considering the sale of the airport's parking garage and surface lots, 13,200 spaces in all, for months at the urging of Allegheny County Chief Executive Dan Onorato, who sees it as a means of driving down the airport's cost per enplanement, among the highest in the country. [...]
Mr. Onorato has said he believed that a sale could generate more than $500 million. Officials hope to generate enough money to eliminate the airport's $475 million to $480 million debt. The bulk of the airline payments each year go to pay down that debt, most of it stemming from the construction of the midfield terminal, which opened in 1992. [...]
If the authority could get enough to pay off the debt, fees to the airlines would plummet to almost nothing. [...]
Officials are hoping dirt-cheap charges would entice more airlines to take a chance on Pittsburgh after repeated cutbacks by US Airways left the airport a shell of its former self.
Seems to me like policymakers in each of these jurisdictions owe a debt of gratitude to Mayor Daley for entering the policy terra incognito and emerging with a roadmap. Thanks to this map, policymakers in Indy and Pittsburgh/Allegheny County have found their way to an innovative solution to help them address major fiscal and economic challenges.