With the policy discussion on Indianapolis Mayor Greg Ballard's proposed parking meter lease now moving to the City-County Council, the reliably anti-privatization U.S. Public Interest Research Group (PIRG) has entered the conversation, distributing a memorandum to elected officials and select media full of conceptual mistakes, inaccuracies, and false information designed to cast doubt on the proposed lease. The flaws in PIRG's report range from misleading to outright falsehoods, so city officials should take care to avoid the snake oil PIRG is selling, as I write in my latest Reason.org commentary here. Here's an excerpt:
Myth: The concessionaire "would have the authority to raise rates nearly 1,000-percent over the course of a fifty year lease. This means an hourly rate increase from $0.75 per hour to about $7.50 per hour." Elsewhere, the PIRG memo likens new meter fees to "a new tax."
Fact: PIRG makes several distortions here. First, it is absolutely false to claim that the concessionaire "would have the authority to raise rates," as the concession agreement explicitly preserves the City-County Council's exclusive rate setting authority. The concessionaire would not be authorized to unilaterally raise hourly parking rates under the lease; they could only adjust rates if the City-County Council approves it first.
Second, the current $0.75 hourly meter rate would rise to $1.50 over a two-year period under the lease. For the remainder of the term, all rate changes would require City-County Council approval, and any future rate increases would be capped and could not exceed the rate of inflation. Hence, PIRG's statement is not only speculative, but its math is entirely misleading. The "1,000 percent increase" figure is the maximum hourly parking rate that could possibly be charged if the City-County Council were to approve a steady flow of maximum rate increases over the 50-year lease term, a dubious prospect when one considers that the Council has left the current $0.75 per hour rate unchanged for 35 years.
Further, the sensationalistic PIRG estimates fail to account for the fact that just because one can charge a maximum doesn't mean that it will maximize revenues or otherwise make good business sense to do so. For example, if parking meters are left underutilized in a given area, then it's a strong signal that lowering the hourly rate may increase demand, and the concessionaire has already shared its intent to reduce rates in areas with underutilized meters.
Last, comparing metered parking fees to a tax demonstrates PIRG's failure to grasp the policy reasons for metered parking. Meters can be a vital component of traffic management that, through internalizing economic decisions, create turnover and availability, improve mobility and access to businesses, reduce urban congestion and mitigate pollution. Using the proposed lease to put in place a modern parking meter system-both in terms of pricing and technology-would give Indianapolis officials a far better ability to achieve these goals.
Read the whole article for more myths on Indy's proposed parking meter lease, and be sure to check out Reason Foundation's other analyses of municipal parking asset leases here.