Mayor’s False Choice Scare Tactics over Pensions

In an effort to promote his plans to lease the Parking Authority facilities, Pittsburgh’s Mayor claims the City will have to take draconian measures if the lease deal is not done. To generate the $30 million the state will require the City to put into pension funds, he says there will 400 police layoffs or massive increases in taxes. On the other hand if the lease is done, parking costs at the Parking Authority facilties will double or more in some cases.

But as we noted in last week’s Brief the Mayor is presenting a false choice. There is a less costly approach but to be sure there will be some pain to the City. There is no free lunch.

Here is a better alternative. Cut the parking tax rate from 40 to 20 percent. That will allow the lease to go forward with parking cost hikes at the lessee’s spaces in the 40 percent range, which would put those parking costs close to privately owned facilities. To make up the lost revenue from the parking tax cut would require a savings of $20 million or less. That could be done with a 5 percent reduction in general fund spending. Outsourcing measures, hiring freezes and productivity enhancements could easily generate 5 percent if Council and the Mayor want to do it and have the will to do it.

An added benefit would be less upward pressure on parking rates due to the tax rate reduction. Private garages might even lower their rates a bit or earn enough profits to warrant building new facilities, something the Downtown area desperately needs.

The Competing Interests in the Parking Lease Plan

Modern urban politics is not at all exempt from the old axiom that "you can’t please all of the people all of the time". This is playing out in the discussion over leasing the garages, lots, and meters owned by the Parking Authority to a successful bidder in return for a lump sum that will then be handed over to the City to shore up pensions.

  • The head of the Downtown Partnership is worried that there will be "a private operator coming in and doing whatever the heck they want" (that would be true if the City and the Authority were just selling the garages and lots and allowing for the buyer to develop the property as they see fit);
  • a Council member wants the Authority to retain the right to lease the garages but then be able to build new ones if it so pleases (since 2001 the Authority has built garages and lots that account for 30% of its total Downtown inventory: close to 50% of spaces were built prior to 1960);
  • the Controller wants meters to not be included in the lease because "we would be better off dealing with a local entity than we would with Goldman Sachs".
  • the finance director has intimated that the more conditions placed on the lessee-"the more that you take up front, you’re going to get less on the back end"-will harm the deal, even though that individual, wearing his hat as chair of the Parking Authority board, said that no one at the Authority would lose their job over a potential lease deal.

Even the Mayor noted in January of 2009 the balancing act when he said "I’ve got to protect pensioners, I’ve got to protect city taxpayers…And of course I’d like to protect parkers, too, but not at the expense of city taxpayers and pensioners."

Which interest will win the day? It remains to be seen.

Authority Garages: How Much Impact?

For some time we have heard that the presence of Parking Authority garages-publicly owned and exempt from taxation-act as a check on the privately-owned garages in the City. The Authority garages (and lots) had lower rates and kept parking affordable for people wanting to come Downtown.

That’s why a consultant for the Downtown Partnership urged that if the Authority owned garages and lots are sold or leased to a private operator that rate controls become a condition of the deal so as to keep Downtown competitive. Citing his familiarity with the lease deal in Chicago (the deal from which Pittsburgh has taken inspiration), he feels that losing public-owned garages and lots would be a detriment to Downtown commerce.

The Mayor’s chief of staff responded that since "the city authority controls only about 25 percent of all parking Downtown" that moving the facilities into private hands will not be a big deal.

But it could have an impact, just not in the direction the Downtown crowd is thinking. A private interest might offer better service and better maintained garages, and possibly could compete with existing garages on parking rates. Sure, they would be keen to the bottom line, an action the consultant may not like, but in so doing the scarce resource of parking is allocated efficiently. The more controls built into the lease the less attractive the up-front offer the City is betting on will be.