The board of the Public Parking Authority of Pittsburgh (PPAP) is starting the search for a sell-side advisor on a long-term lease of its parking assets, marking the next step in a potential transaction that is widely seen as a “viable” option for the city to raise cash for its under-funded pension.
Everyone feels it's a viable transaction
“The board authorised us to draft a sell-side advisor RFP [request for proposals], which we’re almost complete with, and it should be out shortly,” said Tom Morsch, a managing director at Scott Balice Strategies, a Chicago-based financial advisory firm that is advising the PPAP on the deal.
Morsch said the RFP would cover sell-side advisory services for up to 13 parking garages and approximately 8,500 metered parking spaces located on-street and in PPAP-run parking lots. Two of the parking garages belong to Pittsburgh’s Sports and Exposition Authority, while the remaining 11 belong to the PPAP, Morsch said. A total of 9,000 parking spaces would be included across all the assets, Morsch said.
Since May, when PPAP hired Scott Balice Strategies as its financial advisor, the firm has been performing preliminary valuation and feasibility for the parking assets. “We’re at the point where we think there’s a feasible transaction and now we’re going to go explore that further in the market,” Morsch said.
Pittsburgh Mayor Luke Ravenstahl has been a strong proponent of leasing out the parking meters as a way to shore-up the city’s under-funded pension. A recent report by the Pew Charitable Trusts showed the city’s public pension to be the least-funded out of 10 large metropolitan US pensions. As of December 2008, it had just 29 percent of the assets it needed to pay its retirees, Pew said in the study.
Mayor Ravenstahl has said he would like any parking deal to net at least $200 million in proceeds for the pension.
We're at the point where we think there's a feasible transaction
“The mayor’s number is a feasible one,” Morsch said. He added that the parking assets currently have about $108 million in debt, indicating the city would have to get gross proceeds of some $300 million from a long-term lease of its parking assets.
“I think people have reached consensus around solving that pension problem and this might be one way to do that,” Morsch said.
“Everyone feels it’s a viable transaction,” he added.