Pittsburgh Mayor Luke Ravenstahl’s plan to lease his city’s parking assets to a group of investors for $452 million suffered a major setback Wednesday when the Pittsburgh City Council rejected the idea in a series of preliminary votes.
Only one city council member, Ricky Burgess, a prior supporter, voted in the affirmative for a package of four bills authorising the plan. The rest of the nine-member council either abstained or voted against.
The plan could still go forward if council members change their minds during a final vote next week. But Wednesday’s vote gives the plan a “negative recommendation” going into the final vote, said Pittsburgh Deputy City Clerk Mary-Beth Doheny.
Crucial times for Pittsburgh
Ravenstahl had proposed the 50-year lease of the city’s parking assets as a way for the city to raise money for its pension, which has only about 30 cents in assets against every dollar of future liabilities. The pension needs to be at least 50 percent funded by the end of the year or the city will be forced to hand over its management to the state under a 2009 law known as Act 44.
On 20 September, JPMorgan Asset Management and LAZ Parking offered the city $452 million for the lease, ending an auction process that had lasted several months. The $452 million is about $120 million more than the $330 million the city needs to save its pension from a state take-over and to repay outstanding debt on its parking assets.
“By not approving the deal, [city council] left their fiscal problems on the table, so they will have to deal with that tomorrow,” said Richard Little, an infrastructure policy expert at the Keston Institute for Public Finance and Infrastructure Policy at the University of Southern California.
Council is considering an alternative proposal. The alternative plan would amend parking meter zones and rates to conform with a sale of Pittsburgh’s directly owned parking assets to the Pittsburgh Parking Authority. The plan is informally called the “controller and council plan” in reference to its sponsors, three members of the city council and Pittsburgh Controller Michael Lamb.
Lamb first proposed a sale of the city’s parking assets to the parking authority two weeks ago as an alternative to Ravenstahl’s plan. The aim is for the authority to modestly increase parking rates and issue revenue-backed bonds whose proceeds would be used to make a payment of up to $220 million to the city.
“The selling of bonds to cover pension holes, that’s not a prudent approach,” said USC's Little. “And if that’s the alternative, I don’t think they did the right thing,” he added.
Lamb believes the plan is a big plus in that it “keeps our public parking assets public” while giving the city the money it needs to save its pension from the state takeover, according to a previously-issued statement.
A preliminary vote on the “controller and council plan” is scheduled for Wednesday, 20 October, according to Doheny, the deputy city clerk.
By that time, city council will have given its final verdict on the parking meter lease plan. A final vote on Mayor Ravenstahl’s proposed parking lease is scheduled for 19 October, Doheny said.