A plan to sell six city-owned garages and 41,000 parking meters was a step closer to becoming a reality Tuesday as the Los Angeles City Council agreed to spend $500,000 to determine the fiscal feasibility of privatization.
The contract directs JP Morgan Chase, Ramirez & Co. and Loop Capital to assess the benefits and risks of selling garages and meters in Los Angeles. Chicago completed two similar deals over the last three years, netting more than $1.7 billion for the Windy City.
It's unclear how much Los Angeles could net by selling its parking facilities, but the mayor's office assumes at least $80 million of whatever is raised would be used to balance the 2009-10 budget. Most of the proceeds would be put into reserve accounts.
"There are a number of pieces that are part of this puzzle," said interim Chief Administrative Officer Ray Ciranna."We're asking for the authority to enter into some contracts with financial advisers that will help us look at our revenue stream, both today and certainly over the life of the concession."
As proposed, the city would sell off 41,000 parking meters and garages at the Hollywood & Highland complex, Pershing Square, the Cinerama Dome and lots on Robertson Boulevard and Broxton and Cherokee avenues.
The city's parking meters gross about $46 million a year, Ciranna said, but the Department of Transportation will have to spend $25 million to $30 million to upgrade the equipment if the meters continue to be owned by the city.
Los Angeles also has $138 million in outstanding debt on three parking facilities.
Councilman Greig Smith cast the lone dissenting vote. He argued that the city was being shortsighted in selling its assets for an influx of cash when the parking lots and meters provide a constant revenue stream.
"We're selling property at the bottom of the market. What a stupid idea," Smith said. "If we were stockbrokers, we'd be in jail with Bernie Madoff for this kind of scheme. This is foolhardy economics."