The Pittsburgh City Council will vote next week whether to commission an independent study of various options available for squeezing cash out of its parking meters, garages and lots in an effort to shore-up the city’s woefully under-funded pension.
“Right now, we have several ideas from several parties with no quantitative data to compare the options,” said Darlene Harris, Pittsburgh City Council President. “This study would provide us the data that we need to complete our due diligence on behalf of the taxpayers and stakeholders.”
“Simply put: I need to know what my house is worth before I sell it,” she added.
Simply put: I need to know what my house is worth before I sell it
The move, approved yesterday by the Council’s Finance and Law Committee, highlights an important quandary faced by cities across the US – including Los Angeles, Indianapolis and Hartford – seeking to auction off parking assets in an effort to shore up their finances. On the one hand, the local political leaders who will ultimately be asked to vote on the transactions have a clear desire to maximise the price paid in exchange for the taxpayers’ assets. On the other hand, they need to know what those public assets are worth – even though public disclosure of any valuation estimates could potentially tip the hand in an auction process.
The math behind the inspector general’s number was vigorously disputed by both Chicago Mayor Richard Daley and Chicago’s financial advisor on the deal, William Blair & Company. Still, the whole episode left political leaders in other cities with a clear desire to avoid a similar outcome in their transactions.
“We just want to make sure that we don’t repeat some of the same mistakes that were made,” said Natalia Rudiak, a Pittsburgh City Council member and one of the five board members of the Pittsburgh Parking Authority, which owns the city’s parking garages and parking lots.
We want to make sure that we don't repeat some of the same mistakes
Some of those mistakes were outlined to Pittsburgh City Council members by Chicago Alderman Leslie Hairston. Hairston, one of the 5 dissenting votes on Chicago’s parking meter deal, came to testify in front of Pittsburgh’s Finance and Law Committee as they deliberated on the measure to authorise the independent study.
Hairston was not available for comment by press time, but Rudiak said that “one of the things that she mentioned was that the [Chicago] city council was given 72 hours to make the decision to privatise the assets.”
To do so, Rudiak is co-sponsoring the measure to proceed with the independent study, which would price the various proposals for extracting money from the city’s parking assets.
One proposal is the so-called “public plan”, where the city would transfer enough of the parking assets into the ownership of Pittsburgh’s pension plan to bring it up to an adequate funding status. The city must get the pension, which is only about 30 percent funded, up to the 50 percent mark by 1 January of next year or risk losing the management of the pension to state authorities- the main motivating factor behind a parking deal of any sort.
Another is the long-term lease proposal championed by Pittsburgh Mayor Like Ravenstahl. That proposal has been in the works since early last year, when the city hired Chicago-based advisory firm Scott Balice Strategies to determine whether a long-term lease of the parking assets was a feasible option for a public-private partnership (PPP). The firm recommended that the city proceed with the idea, but Rudiak said Scott Balice’s study left her wondering about options beyond PPPs.
Any proposed lease will be 50 years. At that time, I will be 80 years old, so I would prefer to have any unknowns cleared up now
Other proposals include keeping the parking assets in the hands of Pittsburgh while increasing parking rates and issuing bonds, an outright sale or privatisation of the assets and a privatisation with a revenue-sharing agreement.
The outcome of the study of these options would cost $50,000 and be conducted by the Government Finance Officers Association, a professional organisation for public-sector financial executives. If approved, the assessment would be due to be complete by 15 May.
A long-term lease is still a distinct possibility. Investment bank Morgan Stanley the Pittsburgh Parking Authority’s sell-side advisor for the potential transaction, is currently qualifying bidders. And Rudiak said the council members are not opposed to private investment in the city’s infrastructure; they just want to make sure it is the right choice.
“Any proposed lease will be 50 years. At that time, I will be 80 years old, so I would prefer to have any unknowns cleared up now,” she said.