New plan: Authority buys lots, meters from city
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Pittsburgh Controller Michael Lamb on Wednesday proposed that the city sell its parking meters, lots and one garage to its parking authority, an 11th-hour pitch he said would raise enough money to avert a state takeover of the pension fund and ward off "privateers" brought to the table by Mayor Luke Ravenstahl.
Mr. Lamb said his plan also would provide more modest parking rate increases than those Mr. Ravenstahl included in his proposal to lease city and parking authority facilities to private investors for 50 years.
Just weeks before a City Council vote on the mayor's plan, Mr. Lamb said a lease of public assets should be a last resort for any city, let alone Pittsburgh.
"Chicago did a deal like this because they couldn't make budget," he said, referring to that city's much criticized, 75-year lease of parking meters to a Morgan Stanley-led consortium in 2008. Though distressed, he said, Pittsburgh is making budget and posting reserves.
On Sept. 20, Mr. Ravenstahl proposed a 50-year lease of 12 parking garages -- all but one owned by the parking authority -- and about 8,000 city-owned metered spaces to a consortium led by J.P. Morgan Asset Management. The highest of three bidders, the consortium offered an upfront payment of $452 million.
Mr. Ravenstahl would infuse at least $200 million of lease proceeds into the pension fund, averting state control that he said would lead to higher annual pension payments, tax increases and service cuts. The pension fund, now 27.5 percent funded, must be at least 50 percent funded by the end of the year to avert a takeover.
Mr. Lamb proposed raising the $200 million or so another way.
He would have the city dip into reserves and make a $60 million payment into the pension fund by year's end. He said it could then skip a similar payment that would be due next year, and replenish the reserves.
Mr. Lamb said the city should sell its parking assets -- including the meters, Mellon Square Garage and some parking lots -- to the parking authority for $150 million and pump those proceeds into the pension fund, too. The authority would float a bond to pay for the city's parking facilities and repay that debt with parking rate increases averaging 3.5 percent annually for the first five years of authority ownership.
He said that plan would satisfy mayoral critics who want to keep public assets in public hands as well as those who fear that the mayor's proposed rate increases would harm neighborhood business districts. To entice bidders, Mr. Ravenstahl proposed garage and meter rate increases that Mr. Lamb said averaged 11.5 percent annually for the first five years of the lease.
"At least this option would avoid the devastating effects that are inherent in the lease proposal," said Councilman Bill Peduto, who doubts that a state takeover of the pension fund would be the calamity that the mayor has portrayed.
Councilman Patrick Dowd, considered one of a handful of council swing votes, said the controller's alternative is "a malleable plan" that he could help mold into legislation that meets his three goals.
"I want to keep public assets public. I want to save the pension fund" from state takeover, he said. "Improving the service of the parking authority is the third goal."
Others on council, though, warned that Mr. Lamb's plan was fraught with problems, such as whether the authority could borrow $150 million without raising rates far more than Mr. Lamb proposed, and whether the authority could front the money for the kinds of technological improvements that a private operator could make.
Mr. Lamb said that the city has to act fast if it wants to pursue his plan, because it would take the parking authority seven or eight weeks to borrow the money. Meanwhile, the mayor has demanded approval of his lease plan by Nov. 1.
After the mayor and Mr. Lamb met Wednesday, Mr. Ravenstahl's office said, "The mayor welcomes the idea and is glad that council has another option to consider."
Council President Darlene Harris said she's not willing to consider a sale of the city's parking assets to the parking authority but would consider leasing them to the authority for the life of the bond. Mrs. Harris said she eventually would want meter revenue to return to the city.
Mr. Lamb acknowledged that his plan wouldn't address the long-term problem of getting the pension fund 100 percent funded. Mr. Ravenstahl has talked to state officials about additional taxing authority to help with that problem.
Besides replenishing the pension fund and retiring the parking authority's existing debt, the J.P. Morgan bid would leave the city with $120 million it could use for other purposes. Mr. Lamb said his proposal offers no such windfall.
Nor would Mr. Lamb's plan enable the city to raise its parking tax from 37.5 percent to 40 percent, as it could do under a lease. Mr. Lamb said he wasn't thrilled about raising the parking tax anyway and noted that collections -- totaling about $44 million this year -- would go up with increases in parking rates. The city would continue to collect fine revenue under his plan and could recoup a portion of lost meter revenue by getting the authority to make a payment in lieu of taxes.
Council will hold public hearings on the mayor's plan and other options at 6 p.m. Tuesday at the West End Senior Center; 6:30 p.m. Wednesday at Pittsburgh Phillips K-5 on the South Side; 6 p.m. Oct. 11 in council chambers, Downtown; and 6:30 p.m. Oct. 12 at King PreK-8 on the North Side.
First Published September 30, 2010 12:00 am