Following in Chicago's footsteps, Los Angeles recently issued a Request for Qualifications (available here) for a potential 20-50 year lease of 10 City-owned parking garages (over 8,300 parking spaces). I've written repeatedly that Chicago's two parking asset leases were a smart way to (1) get government out of a non-core commercial enterprise and (2) unlock resources from underperforming assets to devote to core priorities in tough fiscal times. Not to mention that there's a robust parking industry in the private sector, so it's REALLY hard to defend governments being in the parking business in the first place. It's just NOT a core function of government, whether in good fiscal times or bad.
As such, I couldn't agree more with Los Angeles Business Journal editor Charles Crumpley, who penned a must read op-ed defending L.A.'s venture into parking privatization:
There are advantages beyond the up-front money. The city could step out of the debt service on those garages (which is a reason Hollywood & Highland lost money), it wouldn't have to bother with operating and upgrading them, and â?? not insignificantly â?? it would put assets in the local private sector where businesses could grow and wealth could be created.
Beyond all that, think how immoral this situation is. The city is subsidizing those who park in city garages at the same time it is looking to lop off a thousand or more employees and chop services.
Sure, privatized garages would mean we'd have to pay more than a couple of bucks to park. But better to pay a fair market rate to park than to get dinged by increased taxes or face the loss of police. Or drive another year on these ragged streets.
If anything, the city is being too timid. Instead of selling long-term leases on the garages and retaining a percentage of the revenue, why not just sell them outright? Sell the garages and all the future cash flow and any development rights that might go with the garages. How much would the city get then? $1 billion? More? [...]
When Laura Chick was leaving as city controller more than a year ago, she pointed out that everything from the operation of Ontario International Airport to part of the water system could be contracted out. Mayor Antonio Villaraigosa last year started pushing for the privatization of the Convention Center and the zoo. There's payroll processing and all manner of city properties and functions that could be turned over to businesses. Talk about economic stimulus for the private sector. And a bonanza for the public sector. [...]
It's best to the let private sector take over the functions and properties that rightly belong in the private sector. The tragedy is that it takes a financial crisis for the city to see that. The bigger tragedy is that many in the city still don't see it.
Read the whole thing.
More recent posts on parking meter privatization are here, here and here. And don't miss Chicago CFO Gene Saffold's recent article in Reason Foundation's Innovators in Action 2009, as well as my recent interview with him.