Los Angeles approves parking deal

The second-largest city in the US now has the authority to qualify bidders for ten parking garages, which may fetch as much as $300m and help erase the messy image of Chicago’s parking meters deal.

The Los Angeles City Council has unanimously agreed to move ahead with the qualification of bidders for its parking garages, becoming the largest US city yet to auction off its parking garages as a means to raise money.

The move could convince other municipalities that parking garage public-private partnerships are a viable means for easing fiscal pains, and also serve as a badly needed success story following the messy aftermath of a similar process in Chicago.

The vote authorises Los Angeles to begin the process of identifying bidders for ten parking garages and to hire the needed consultants and advisors to help it consummate a potential transaction.

A request for qualifications for the garages could be out as soon as tomorrow, according to a person close to the process.

The selected garages cleared nearly $21 million in operating revenues during the city’s 2009 fiscal year and are expected to bring in between $200 million to $300 million from a 50 year lease, according to city documents on the matter.

Los Angeles isn’t alone in looking to monetise parking assets in an effort to raise cash. Last month, the city of Hartford, Connecticut issued a request for information for potential investors to express their interest in a long-term concession and lease of its public parking system. Pittsburgh, Pennsylvania has also been studying a similar deal for its parking garages and meter system.

Chicago is still the only major US city to monetise its parking asstes, bringing in $563 million in a 2006 lease of its parking garages and $1.16 billion in a 2009 lease of its parking meters. However, the immediate aftermath of Chicago's parking meters deal – higher parking rates and malfunctioning meters – has made other cities re-think their approaches toward similar transactions.

In Los Angeles, for example, Mayor Villaraigosa has asked his team of advisors to look at options for monetising the city’s 41,000 parking meters that would avoid upfront fees like the ones Chicago received for its assets. One option being considered, according to a recent letter from Villaraigosa, is a concession that would give Los Angeles a stream of payments over the life of a lease.

The 41,000 meters are not included in the request for qualifications approved by the City Council. They would be auctioned off under a separate process if the city decides to go-ahead with a PPP for those assets as well.