To Lease or Not to Lease...
City may privatize parking structures
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The City Council considers privatizing city-owned parking structures as a way to fix the budget.
As the financial woes of the City of Angels continue, officials are still scrambling to find ways to close the budget gap, estimated at $212-million this year alone.
One controversial plan to eliminate 1,000 city jobs would save $65 million next year, but faces major opposition.
Another plan offers hope that three times that amount can be generated by leasing 10 city-owned parking structures in Hollywood, Sherman Oaks and elsewhere to private investors.
Under the garage plan, city officials would solicit bids for a long-term lease, potentially up to 50 years, allowing all 10 parking garages to be operated and maintained by a private concessionaire that would receive the bulk of parking proceeds. In return, L.A. would receive an immediate lump-sum payment and could retain a small negotiated share of future proceeds.
But that plan, rejected by City Council members before the recession caused a dramatic drop in tax revenue, comes with some risks.
The LA Times reported that in a similar effort, Chicago agreed to a 75-year, $1.15-billion lease for a private group to manage 45,000 parking meters in that city.
That deal provided a one-time windfall for Chicago but also led to parking meter rate hikes and a political backlash, with some upset residents bashing meters with tire irons. The city's inspector general later criticized the meter deal, saying the city leased them in a "hasty" transaction for $974 million less than they were worth.
The plan to lease the city-owned parking structures would replenish the city’s reserve fund with $100 million to $200 million. This scenario would put the cash-strapped city in the position of trying to cut advantageous deals just as it is desperate for money -- not exactly a strong negotiating position for a public agency. The bidding process is also expected to spark an aggressive blitz by the many lobbying firms that are paid to influence Villaraigosa and other elected officials.
Some veterans of City Hall view garages as only the beginning of efforts to leverage city assets. Lobbyist Harvey A. Englander, who represents LAZ Parking, said the privatization of parking meters is too lucrative for the city's elected officials to dismiss, given the scope of the budget crisis.
As Englander said to the Times, "Whether it's parking meters or golf courses or landscape maintenance, I think everything is on the table."
