Denver, Colorado may soon become the latest city in the US to pursue a monetisation of its parking meters, following in the footsteps of Chicago, albeit more carefully, if one local politician has his way.
Denver City Councilman Doug Linkhart has brought the idea of pursuing a deal for the city’s 5,900 parking meters to the city council’s attention for discussion only. But following internal meetings with Denver’s Public Works Department, he told InfrastructureInvestor that he plans to bring the idea up for official consideration in the City Council Public Works Committee, of which he is a member, in November.
I wouldn't copy Chicago in very many ways
Linkhart said he is considering the idea in part to help the city of 600,000 shore up its budget. Denver Mayor John Hickenlooper has estimated a shortfall of $120 million in the next 18 months.
“We would probably do something like Chicago did, which is not to use the entire amount for the budget,” Linkhart said.
Chicago, which in December agreed to a 75-year lease of its 36,000 metered parking spaces for $1.15 billion, appropriated $895 million of those proceeds to near-term and future budget relief and stabilisation funds. But $400 million was placed in a long-term reserve fund to earn the city interest. Linkhart said he’d like Denver to similarly invest and save some of the proceeds from a parking meter deal, which could be worth between $300 million to $400 million, based on preliminary estimates taking into account the meters’ current annual revenues of about $9 million per year.
He cautions, though, that he would not follow Chicago’s example verbatim.
“I wouldn’t copy Chicago in very many ways. I think the basic concept is sound but, I think, here there would be even more controversy if we allowed fare increases and allowed the meters to be changed,” Linkhart said, adding that Mayor Hickenlooper won office six years ago in part by campaigning against higher parking meter rates.
Here there would be even more controversy if we allowed fare increases
Chicago had passed an ordinance allowing the parking meter concessionaire, Morgan Stanley Infrastructure Partners-backed Chicago Parking Meters (CPM), to raise parking meter rates according to a schedule set by the city. CPM was also required to gradually change the meter system to a new technology, electronic payboxes, by certain dates stipulated in the concession and lease agreement.
“We would probably maintain the meters ourselves in terms of repairs or changing hardware,” Linkhart said, adding that a potential role for a private sector partner could include collecting the coins and taking in the revenues from the system.
These measures, he said, would help Denver avoid problems encountered by Chicago in transitioning its meters to a private sector partner. After CPM took over Chicago’s meters, some of them began to malfunction because they could not hold all the change patrons were putting in them to pay the higher rates. Others did not give patrons the correct time after being recalibrated for the new rates. Public anger and vandalism resulted.
Linkhart said these developments have made it more difficult for him politically to propose and argue for a similar transaction in Denver. “There’s initial resistance, certainly,” he said.
We want to do our due diligence
Still he is open to discussing the idea with the Denver Public Works Department and “seeing what kind of deal we could put together”.
Any potential deal would not happen for at least several months. The city’s budget proposal for the next calendar year is due in October and he won’t bring the matter to consideration until November. But there is always the possibility of putting out a request for proposals next year and changing the budget if the city does get some cash for the meters, he said.
Absent a cash infusion from an asset monetisation, the city has few options but to cut existing services. In preparation for doing so, Mayor Hickenlooper recently conducted a poll of Denver citizens asking them which city services they would be most willing to give up in order to shore up the budget. The only item to gain a clear majority from the 3,712 respondents was a reduction in public television programming on Denver 8 TV, yielding a possible decrease in $450,000 to $550,000 in annual expenditures.
Linkhart would like to avoid service reductions, but he’s not prepared to rush into a deal to avoid doing so.
“We want to do our due diligence and maybe put it into operation if it does make sense but first we have to do that investigation,” he said.