Last week the Chicago City Council ratified changes to the Windy City's much maligned lease of its public parking system.
Under the settlement reached, the city has agreed to pay $64 million to compensate the private operator for lost revenue from meters taken out of service for events and to cover losses tied to handicapped parking.
Mayor Rahm Emanuel, in explaining the deal to modify how lost revenue is calculated moving forward, said this relief to the city's bottom line was a way to "make a little lemonade out of a big lemon." Even with these modifications, Mayor Emanuel said the lease remains "a bad deal."
Fortunately, in Pittsburgh, we avoided biting into that big lemon. Faced with a pension liability of nearly $1 billion and the immediate need of more than $200 million, or face a devastatingly expensive state takeover, Pittsburgh looked to the Chicago parking "solution" as a way out.
Leasing most of our public parking system would have brought in more than $450 million immediately rather than a projected $2.4 billion over 50 years but would also have brought many of the same problems now plaguing Chicago, including drastically higher rates and payments to the private operator for lost revenue from meters taken out of service for events.
The lease also would have blocked our parking authority from building new garages and playing a meaningful role in neighborhood development around its numerous surface parking lots.
In Pittsburgh, however, common sense prevailed. If private financiers could make money off of our parking system while generating significant returns for their investors, why couldn't we? Instead of directing revenue to Wall Street, we directed it to our pension fund creating, for the first time, a dedicated source of revenue for our retirees.
By dedicating revenue to the pension fund irrevocably for a term of years, we were able to calculate a present value for that future revenue and include that present value as an asset to the fund, thereby avoiding a costly state takeover.
When I first proposed this idea in 2009, I didn't get much support. But, by working with City Council members Patrick Dowd, Natalia Rudiak and President Darlene Harris, through a number of iterations, we were finally able to bring this plan to the table at the 11th hour with the support of a unanimous and veto-proof city council. Our success saved the pension fund from a costly state takeover while keeping our parking assets for the benefit of the public.
That was 2010, and unfortunately much of our work remains undone. The pension fund, while generating healthy returns over the last two years, is still severely underfunded and our parking authority has yet to address new rates or negotiate a new intergovernmental agreement for payments to the city.
We have a lot of work to do, but our collective decision not to follow Chicago into the lemon grove of a long-term parking lease will provide more opportunity for a brighter future for Pittsburgh.
Michael E. Lamb is the Pittsburgh city controller (firstname.lastname@example.org).