Indianapolis has become the latest city to initiate a bidding process for its parking assets.
The Indiana capital and largest city in the state Wednesday issued a request for qualifications for bidders interested in a long-term lease of its 3,456 parking meters – an asset which has “attractive infrastructure characteristics such as stable cash flows and high barriers to entry”, according to the request.
Bidders may express interest in the meters only, the management contract only, or both, according to the request for qualifications.
In issuing the request, Indianapolis becomes at least the third US city to begin a bidding process for its parking assets this year. On Friday, Los Angeles began qualifying bidders for ten of its parking garages; on 27 January, Hartford issued a request for information in regard to its integrated system of 1,645 on-street metered parking spaces and 4,751 off-street spaces.
A fourth city, Pittsburgh, is expected to publish a request for qualifications for its parking assets by the end of the month, according to a person familiar with the process. The city hopes to ink a transaction by year’s end in an effort to replenish the coffers of its under-funded pension system.
In Indianapolis, there may also be an opportunity for the private sector to take over the management of the parking spaces at the city’s major airport. The Indianapolis Airport Authority, which oversees the city’s Indianapolis International Airport, has issued a request for information with regard to 18,000 parking spaces under its management.
A request for qualifications asks interested parties to formally express their interest in participating in a bidding process, whereas a request for information solicits ideas and feedback from the market in regard to a future bidding process that may or may not take place.
Investment bank Morgan Stanley is the city’s sell side advisor on the request for qualifications for the parking assets. Morgan Stanley is also helping the Indianapolis Airport Authority with its request for information, though the authority has so far not made a decision whether to pursue any bidding process and has not hired a sell-side advisor.
In leasing out its parking meters, the city is hoping to improve service quality for their users and to modernize the meter equipment, some of which still uses mechanical, as opposed to electronic collection systems. The city is also hoping to raise money that will be invested in “critical infrastructure projects within the city”.
When Chicago leased its meter system for $1.16 billion in 2009, it also hoped to raise cash and provide for capital improvements in the system. Additionally, Chicago allowed the concessionaire, Morgan Stanley Infrastructure Partners-backed Chicago Parking Meters LLC, to raise the rates on the meter system.
It is unclear whether increased parking rates are also an option in a concession for Indianapolis’ system, as the details of the concession have yet to be worked out. Currently $.75 per hour, the system’s parking rates have remained “largely unchanged” over the last 20 years, according to the request for qualifications.
“Potential revenue upside,” or an increase in revenues, could come from “upgrading the equipment to increase flexibility of parking rates and ease of enforcement”, according the request.
Interested parties have until 5 pm on 15 March to submit responses to the request for qualifications for the parking assets.
Responses to the request for information for the airport parking are due at 5 pm on 26 March.