Tuesday, September 21, 2010

Parking Bid Higher Than Expected

The high bidder to take over operation of Pittsburgh's parking garages and meters is Pittsburgh Parking Partners. It's a consortium of investors advised by J. P. Morgan and P-4 partners, an affiliate of Hartford-based L.A.Z. Parking. L.A.Z. manages mores than 1,300 locations in 99 cities in 21 states. The offer is $451 million for the 5o year lease of the garages and meters.
Mayor Luke Ravenstahl wanted a minimum of $300 million, $100 million of which would go to wipe out Pittsburgh Parking Authority debt, and the other $200 million to bolster the city's sagging pension fund.
The city has until January to get the pension fund's assets up to at least 50% of its nearly $990 million obligations toward retired and current city workers. The pension program is currently about 28% funded. If the city does not reach the 50% level by January, the state has threatened a takeover.
The mayor has said the money left over from lease could be funneled into the pension fund or used for capital improvements. “This number certainly exceeded our expectations and further solidifies my view that this partnership is the best solution to protect our residents from the burden of higher taxes, more debt, or serious service cuts. I look forward to having more productive discussions with council members and I hope that they support this plan. ”

In addition to the upfront payment, the 50-year partnership agreement requires the operator to invest at least $50 million over the next 15 years to overhaul and rebuild three aging Downtown garages. In addition, the agreement lays out requirements for the operator to implement new parking meter technology, such as those allowing meter payments by credit card or mobile phones. This investment is estimated to cost the operator more than $8 million dollars. Ravenstahl wants City Council to give its approval by October 1.

But City Council Finance Chair Bill Peduto called this bid just the "end of the first quarter of the game" and that he's pleased they have a baseline to work from....
"But there are still three other options on the table. First, the Mayor’s proposal to privatize parking. Second, keeping the asset public and doing a bond deal to finance the pension gap. Third, joining with cities from across Pennsylvania in a state pension program. Fourth, a hybrid of the above options....... we still need to know the true value of our parking assets. Friday’s release of City Council’s independent consultant’s analysis will provide the value of the asset, as well as independent economic analysis of the options. This information will provide the framework for a healthy discussion in the coming weeks about what is best for the citizens of Pittsburgh.”

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