Tuesday, March 2, 2010

New Pension Plan Fix Floated

A Pittsburgh city councilman and the city’s top financial officer say the city does not have to lease its parking garages to shore up the faltering pension plan. Pittsburgh Mayor Luke Ravenstahl has been pursuing a plan to lease the Parking Authority’s assets for 50 years to a private company. The money would be used to bring the City’s pension program’s funding level up from the current 30% to the state mandated 50%. Councilman Patrick Dowd and City Controller Michael Lamb say they have a better plan. They want the Parking Authority to hand over some of its assets directly to the pension fund. The Authority would only transfer enough of its garages to bring the fund up to the 50% level. The pension board would then hire the Parking Authority to run the garages. Any profits would go into the pension program. Dowd says the pension needs a source of revenue other than taxes. Dowd says the city is loosing too much with the lease. The city would give up the ability to set parking rates, build new garages or capitalize on any new entrepreneurial ideas such as advertising in the garages and leasing commercial space in the garages.
Lamb says parking is key to economic development and he would rather work with the parking authority on future deals than with a private company. He says there would be little incentive for the private company to build new garages when the laws of supply and demand would allow them to set higher rates without the extra capacity. Lamb and Dowd have spoken to the Mayor about their so-called “Public Plan.” He is reportedly open to the idea. The two men have also made initial contact with the city’s financial overseers. Dowd and Lamb hope the Parking Authority would become much more aggressive in looking for new revenue streams after the deal is made. Dowd says the first step is to get a full market valuation of the authority’s assets and then determine which assets would be transferred. The pension fund needs an infusion of about $200 million to get up to the 50% funded level. Dowd thinks the parking authority’s assets will be valued at no less than $240 million and maybe as much as $480 million. Right now the parking authority clears more than $40 million a year and sends about 7 million to the city. The rest is kept in reserve. Lamb says the authority has about $40 million in cash or near cash assets.

No comments: