A group led by investment giant J.P. Morgan and LAZ Parking today offered $452 million to operate city of Pittsburgh parking garages and meters for the next 50 years.
That number far exceeds the sum Mayor Luke Ravenstahl said was needed to make any lease viable and bail out a troubled city pension fund.
Mr. Ravenstahl proposed the half-century lease as a mechanism for infusing money into the pension fund and averting a threatened state takeover of the fund at year's end. He warned that the state would require dramatically higher annual pension payments that the city could make only by raising taxes, cutting services or both.
The mayor said the lease plan would be viable only if it generated at least $300 million--$100 million to cover parking authority debt and $200 million for the pension fund.
"I'm really blown away and extremely excited by the [bid] number," he said.
City Councilman Bill Peduto was more restrained. He and his colleagues would have to approve any deal to lease the parking assets. "We now have a baseline which we can use to make an informed decision," he said of the offer, submitted under the name Pittsburgh Parking Partners.
Council would have a better idea of what the city's real options were after Friday, Mr. Peduto said. That is when it is scheduled to get a report from an outside consultant on the value of a parking contract.
Council President Darlene Harris said she planned to wait until Friday before making any comment on the parking bids.
The pension fund is 27.5 percent funded. Mr. Ravenstahl said about $200 million would get the funding level to 50 percent, the threshold needed to avert a takeover.
While he and other officials all along hoped to get more than $300 million for the lease, they had avoided saying how much more to keep the bidders' guessing.
Mr. Ravenstahl said the additional revenue could be used to further boost the pension fund, finance the capital budget or fund other projects. He said deciding what to do with the added money would be a nice problem to have.
Reducing any of the planned increases in parking rates, however, was not an option, he said.
The winning bid was submitted by a group of investors advised by New York-based J.P. Morgan and by an affiliate of Connecticut-based LAZ Parking, which already manages a controversial 75-year lease of Chicago parking meters. That deal has drawn complaints from some Chicago residents and officials, who say it was pushed through without proper review and scrutiny.
The proposed offer would be valid until Nov. 1. The city would receive its funds in a single payment.
More details in tomorrow's Pittsburgh Post-Gazette.
Joe Smydo: firstname.lastname@example.org or 412-263-1548.