Mayor Luke Ravenstahl says chartering Pittsburgh’s parking garages and meters to a private firm is the best way to avoid state takeover of the city’s ailing pension fund.
Today, he released documents outlining the terms of a 50-year lease. The mayor says he wants a down payment of at least $200 million with $15 million more coming in each year thereafter.
Unless the city receives a windfall, all of the lease’s revenue would go toward the pension fund, which is only 30% funded. The pension liability has grown to $990 million and covers benefits for all city employees.
Pennsylvania’s legislature has warned city leaders that unless Pittsburgh funds its pension at least 50% ($495 million) by December 31, the state will take it over. Ravenstahl says that would mean yearly payments of $30 million.
“To illustrate what it means: a property tax increase of 24%, a wage tax increase of 44%, or for reference to the reduction of workforce, what would it mean? It would mean reducing our police force by approximately 400 officers,” says Ravenstahl.
A lease would allow for gradual increases of garage and meter rates. Hourly meter rates downtown and in Oakland would increase by 50 cents each year until 2014, while outlying neighborhoods would see a total increase of just 50 cents. Neighborhood meter rates will increase according to their “tier” – until 2014, when rates will only increase according to the Consumer Price Index.
Ravenstahl says the city will still own the assets, and all Parking Authority employees not retained by the lessee will be offered jobs with the city.
The mayor says once bids for the parking assets come in, City Council will have two months to deliberate: he says a vote is needed by September 15 for the city to have enough time to finalize the deal and put the $200 million in the bank before New Year’s Eve.