Parking Authority Archives - Allegheny Institute for Public Policy

Pittsburgh Taxpayers’ Debt Load Getting Lighter

Posted on April 18, 2013 by Editor

In 2011, the debt per capita in Pittsburgh was $1,901, based on the Census count of 306,000 and $581.8 million in general obligation debt of the City. A decade earlier the average resident carried a much heavier debt load of $2,651. Both the debt and the City’s population were higher in 2001 but debt has fallen faster than population in the intervening years resulting in the per capita debt drop.

It is no small feat what the City has accomplished with regards to its debt. Over that time frame it resisted issuing new obligations and set a target for bringing down the ratio of debt outlays to general spending (which has been running around 20 percent) over the coming decade. When the Act 47 team examined debt service as a percentage of operating expense in 2009, Pittsburgh’s 21 percent was well above Newark (4.6%), Buffalo (7.6%), St. Louis (7.9%), and Cleveland (11%). The City wants to get the level down close to 12 percent.

Beyond the obligations of the City government, Pittsburgh taxpayers are liable for various other debts issued by related governments that perform functions such as owning sports stadiums, land, parking facilities, and schools. City financial data shows that City taxpayers are responsible for all the debt or a portion of debt for some of the other borrowers. A look at the decade from 2001 to 2011 shows that some shares have increased, some debts have disappeared, and some have increased.

2001			2011
Debt (Direct and Overlapping)	Percent Obligation of City Taxpayers	$ Amount (millions)	Debt (Direct and Overlapping)	Percent Obligation of City Taxpayers	$ Amount (millions)
Pittsburgh General Obligation	100	885.7	Pittsburgh General Obligation	100	581.8
Stadium Authority	100	22.7	Stadium Authority	0	0
Auditorium Authority	50	13.5	Auditorium Authority	50	1.4
Urban Redevelopment Authority	29	64	Urban Redevelopment Authority	61	40.2
Parking Authority	100	83.9	Parking Authority	100	93.4
Pittsburgh Schools	100	399.4	Pittsburgh Schools	100	451.7
Allegheny County	25	176.3	Allegheny County	25	192.9
Total		1,645.5			1,361.4

While the City government’s debt was falling, so too was the debt of the authorities related to stadia and the URA. The percentage of URA debt attributable to the City rose while the amount of URA debt fell. It is reasonable to assume the City has agreed to back more of that agency’s debt and, should it incur more obligations, the City would be on the hook for a larger share than in the past. By way of explanation, note that if the City were still responsible for only 29 percent of URA debt in 2011, the dollar amount of the obligation would have been $19 million rather than the actual $40 million it now actually has.

Going in the opposite direction by taking on more debt from 2001-2011 was the Parking Authority ($9.5 million), Allegheny County ($16.6 million), and perhaps most surprisingly, the Pittsburgh Public Schools ($52 million). The School District has been losing enrollment and is currently being advised on what to do with twenty school buildings no longer in use. Some are in the process of being sold. The District is expected to be “insolvent” by 2015 by some observers, so it’s puzzling as to why the debt was issued and why the District has not put itself on a self-imposed “debt diet”.

In total, all the debt obligations City taxpayers are responsible for amounted to $4,926 per capita in 2001, falling by about 10 percent to $4,449 in 2011. Note that much of the property tax in the City is paid by commercial and industrial properties, many of which are owned by non-residents who pay a large share of taxes collected in and by the City.

How does Pittsburgh compare to other cities? As we noted in our recent Benchmark City report, the per capita debt in Pittsburgh was 64 percent higher than the Benchmark City just on general obligation debt, and that the gap between Pittsburgh and the Benchmark shrank since we did our first Benchmark report in 2004 (it was 233% higher then). But how about Pittsburgh compared on the total direct and overlapping debt to another city that is very similar on population and square mileage? The City is Stockton, located in the San Joaquin Valley of central California.

The City has a lot of debt applicable to it in varying shares: school district, community facilities, and its own general fund and pension obligations, and the total comes in at $1.065 billion, just about $300 million less than Pittsburgh’s direct and overlapping total, and with a population of 296,000, the typical Stockton resident’s share of the debt is about $850 less than Pittsburgh’s ($3,601 to $4,449).

It is worth noting that Stockton’s pensions are in better shape than Pittsburgh’s (88% funded combined for police, fire, and non-uniformed employees compared to 62% combined for Pittsburgh) and it has slightly less accumulated in unfunded liabilities for other post-employment benefits like life insurance and retiree health care ($416 million in Stockton vs. $488 million in Pittsburgh). Despite all the foregoing, the City of Stockton has been walloped by the effects of the recession and the housing bubble and it was successful in its Chapter 9 bankruptcy filing with a favorable ruling from a Federal judge in March.

But the Stockton case does point to the absolute necessity of restraining municipal spending and being very prudent in agreeing to overly generous compensation and pension packages. A lesson that Pittsburgh must keep in mind as it works its way out of distressed status and seeks to have the state appointed financial oversight board removed.

Dissolving an Authority

Posted on September 13, 2011 by Editor

Earlier this summer we wrote a Policy Brief describing the state of affairs between Pittsburgh City Council and the Parking Authority. At the time there were some that were calling to get rid of the Authority altogether, bringing the function "in house", thus eliminating one of the tentacles of City government. That talk has largely died down, but in a nearby large suburb the process of shutting down a Parking Authority has commenced.

Mt. Lebanon has had its Parking Authority since the 1950s, established initially for the purpose of financing and constructing two garages in its uptown business district. According to the municipal manager, the sentiment among a majority of municipal commission members was that "the Authority served to ‘fragment’ local government, reducing the ability of elected officials to control operations in a manner that is most responsive to citizen concerns" and thus the decision to dissolve the Authority was made.

So what happens to the parking facilities, debt, operations, and employees under the arrangement? The municipality will own the parking assets and two other buildings owned by the Authority will be sold after the dissolution. As we pointed out in the Brief, the debt question has to be settled whenever there is a move to end the existence of an Authority, and, according to the manager that debt (around $3.8 million) has been refinanced in the name of the municipality.

The parking function will be dispersed between public works, police, and finance and six of the Authority’s nine employees will become municipal employees when the dissolution is finalized.

Obviously Pittsburgh is much larger in scale and its Parking Authority has more employees, more facilities, and more debt. But if Council members are looking for a small scale case study, they have it.

Is Council Serious About Shutting Down the Parking Authority?

Posted on July 20, 2011 by Editor

Members of Pittsburgh City Council have expressed frustration with the operations of the Public Parking Authority. Some have mentioned the possibility of dissolving the Authority. Perhaps that’s because Council members have spent the better part of the past two and a half years debating, deliberating, and discussing how to solve the City’s massive pension problems with the Parking Authority and its assets a major element in those discussions.

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Newbies Beware!

Posted on June 2, 2011 by Editor

Two news stories this morning go a long way to illustrating the heavy-handed public sector union attitude on how seniority trumps all when it comes to job cuts and job assignments.

At the Pittsburgh Public Schools budgetary constraints have led the administration to shutter the new teacher academy. In its application for funding to the Gates Foundation the District heralded the academy as a critical factor in its approach to instruction. "We believe that the Academy, with its emphasis on hands-on, applied learning will make a dramatic difference in the way in which we bring new teachers into the system".

While the Pittsburgh teachers’ union stated the decision to close the academy was a decision by the administration, the handwriting on the wall was clear: "…the collective bargaining agreement…would not allow new teachers to work while more senior teachers were furloughed." The proposal made it clear several times throughout that the union would have the final say on contractual matters. That makes the praise heaped upon the District and the union by a think tank quite misplaced.

Now to the meter readers, represented by another union and under a separate collective bargaining agreement with the Public Parking Authority. Even before higher rates and longer hours of enforcement went into effect the moaning and groaning over the right to select shifts began. The accusation leveled by the union is that newer part-time workers are getting daylight shifts and the more senior employees are getting evening hours. The implication is that Authority management is taking factors like absenteeism and ticket counts into their decision-making criteria.

Grounded PILOT?

Posted on May 3, 2011 by Editor

A major part of the City’s pension bailout plan hinges upon getting more money from the Parking Authority as a payment in lieu of taxes (PILOT). This year "Authority Payments", which count money from authorities in addition to the Parking Authority, total $11.4 million. Next year the amount is forecast at $20.1 million, an amount projected annually from the current five-year forecast.

A letter from a Councilman to the Mayor stated the Parking PILOT agreement "…currently gives the City $1.3 million dollars…This needs to increase to $2.6 million this year and $9.3 million in 2012 and beyond in order to cover the hole in the City’s budget from diverting parking tax revenue to the pension". Movement on that measure has effectively ground to a halt. The latest incident coming last week when a majority of the board voted against forming a panel to study how the Authority could raise revenue and dedicate some of it to the City. The panel idea was put forth by a board member who is also a City Council member and a proponent of the bailout plan. All of this serves as a way to examine what the proper relationship between the City and its authorities really should be.

The Controller’s CAFR notes that the cooperation agreement between the City and the Parking Authority dates back to February of 1995. It was amended five years later to increase the PILOT payment to where it currently is. That increase was 36%; the current proposal for 2011 to 2012 would be for a more than three fold increase. The payment is made, however, "…only upon the Parking Authority successfully meeting its debt service requirements". The Authority has outstanding debt of around $100 million.

Parking and Politics, Part Deux

Posted on November 2, 2010 by Editor

A previous blog entry pointed out the eerie similarities between the cities of Pittsburgh and Harrisburg and their recent struggles with looming legacy cost bills and how the parking authorities in each city were key components in working toward solutions on those costs.

Under the state’s Parking Authority law, board members are appointed by the chief executive and serve at the pleasure of the chief executive. They can be removed by the chief executive at any time.

So when Pittsburgh’s Parking Authority voted 3-2 to oppose a study of an alternative to the recently defeated long-term lease of parking assets, the Mayor appeared at that hearing and stated "I thought it was important for me to let you know personally my position" in opposing the alternative. A Council member who was in support of the alternative stated "the mayor showed up at a public meeting, and he told board members to their faces, ‘I do not support this.’"

In the state’s capital city the Mayor there forced three members off of the Authority board and replaced them with three others when the details of an alternative plan to help the City through a financial tough spot garnered attention before being vetted by the Mayor. The Mayor’s spokesman noted "The mayor feels that its board has an obligation to communicate with the administration about these important matters and wanted to ensure a board that understood the importance of that communication". The City’s financial condition is currently being heard by DCED, who will make a determination as to whether Act 47 distressed status will be granted to Harrisburg.

Tale of Two Cities, Two Parking Authorities

Posted on October 21, 2010 by Editor

Stop us if you have heard this one. A private interest make a cash offer for a parking system, and the Council turns it down. Then there is a new plan hatched whereby the assets of the Parking Authority, the assets that were not sold, are pledged as collateral in order to help the host city through difficult financial times.

It is happening in Pittsburgh, as we have documented in our last three Policy Briefs, but it is also occurring in the capital city of Pennsylvania, Harrisburg. We have written previously about the debt issues plaguing the City of Harrisburg and how bankruptcy and Act 47 have been mentioned as real possibilities.

Now there is a plan for the Harrisburg Parking Authority to issue new bonds and refinance existing debt (there is an uncanny, almost eerie similarity between that Authority and Pittsburgh’s where existing debt is just over $100 million and plans on the table call for issuing $200 million in new debt) to help the City. According to one news report "…up to $60 million in new money to be used for ‘certain qualified purposes.’ The authority could make a payment to the city to help it pay down some $288 million in incinerator debt."

The solicitor from the Harrisburg Parking Authority also said that any parking rate increases would be smaller than those imposed by a private owner and would keep a public asset public, much like the sentiments expressed by Pittsburgh City Council and the Controller with their alternative plan.

Are these two cities and their parking authorities flattering each other through imitation?

Garage Privatization in Pittsburgh Should Remain an Option

Posted on October 20, 2010 by Editor

With City Council’s final vote and the Mayor’s pronouncement that it is “time to move on” to other issues, the stage appears to be set for the troubled pension plans to move from City administration to that of the Pennsylvania Municipal Retirement System (PMRS) under the terms of Act 44. After the vote on the Mayor’s lease plan the Council and Controller rolled out yet another plan to raise the $220 million needed to avoid the state takeover of the pension funds. The Mayor’s office indicated the Council-Controller plan is a non-starter and would not get his approval.

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Can Lease Be Tweaked?

Posted on October 18, 2010 by Editor

Last week’s preliminary vote on the parking lease by City Council was not good news for the winners of said lease. So the officials connected with the winning team took the opportunity in the following days to pay visits to the Council members who voted in opposition to offer modifications to their proposal.

One Council member noted "[the bidders] thought is, OK, we probably see a better way of getting this done. Perhaps we should re-evaluate this lease agreement. Is there a way perhaps to lower the initial payment, decrease the length of the lease, find ways to keep the city more involved?"

The problem with that approach is the ramifications of making an ex post facto series of changes that could open the City, the Parking Authority, and the winning bidder to litigation from at least the two other parties that submitted bids based on the 50 year terms outlined for meters and facilities. Couldn’t the two losing bidders claim that changes to the lease agreement now-one that they were within a reasonable bid range after offers were opened-in an effort to appease those opposed to it is essentially akin to a new bid process?