Pittsburgh’s Parking Fiasco

Pittsburgh is one of only a handful of cities with a parking authority that owns considerable numbers of parking facilities. Then too, Pittsburgh for years has had one of the highest, if not the highest, parking tax rate in the country. Revenues from parking make up a significant part of the city’s budget. Indeed, a sizable fraction of the parking tax revenue is to be diverted to pension funds in an attempt to stave off a state takeover of the pension plans. The problem: the state agency that must approve the plan might well find the proposal inadequate and the hole created in the city’s budget the diversion requires will need additional revenue from somewhere-spending cuts are anathema in Pittsburgh.

Where to find the revenue? Higher metered parking rates. The City owns the parking meters and can order higher rates be levied. However, the Parking Authority operates the meters and collects the money and is not sending the money to the City. What’s more there will not be enough revenue in the most optimistic scenario to make up for the parking tax diversion to pensions.

In sum, the City Council and the Mayor can reach agreement on virtually nothing but the unwillingness to make the kinds of cuts in spending and employee levels that will be required in any long term effort to right the City’s financial ship. How incomprehensibly irresponsible.

What Will Council’s $250,000 Parking Study Accomplish?

City Council wants to leave no stone unturned and wants to make sure that when it decides to approve or disapprove of any agreement the Mayor reaches with a potential lessee of parking facilities that will provide funds to bolster the City’s ailing pension funds it will base its decision on a thorough examination of facts and options. That’s why, with the blessing of the City’s oversight board, Council will spend $250,000 to engage a consulting group to study the lease-for-pensions deal. 


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Garage Privatization Plans: Stuck in Neutral?

Earlier this year the Mayor of Pittsburgh announced his plan to sell or lease garages and lots, possibly meters as well, in order to get an up front lump sum amount that could both retire the Parking Authority’s debt and make a healthy down payment towards the City’s unfunded pension liability. Soon after, the County Executive likewise floated the possibility of leasing or selling the parking garage at Pittsburgh International Airport as a method to bring down airport debt.

What has happened since then? It is almost November and the gears are grinding slowly. The City’s Parking Authority has heard from a consultant that told them, yes, there would be a lot of interest in a lease or sale of the assets. But there are additional steps to be carried out: an even if an interest is expressed, there is a lot of negotiation to follow. Keep in mind that the City has until 2011 to show a 50% minimum funding ratio for its pensions to avoid a state takeover. One would think there would be more urgency.

The County’s Airport Authority-the entity that would have to sign off on a deal for the County-has yet to publicly discuss the issue at any of its board meetings, according to the Authority’s public records officer. There is no timeline other than a self-imposed one by the County Executive (a May newspaper article said the Executive "…will ask the county airport authority to put Pittsburgh International’s parking garage and surface lots, about 13,200 spaces in all, up for sale this year"); by that measure there is no way a deal gets done this year.

Parking, Pensions, and Paths to Reform

The House could consider legislation that would prescribe a remedy for troubled municipal pensions (the degree of trouble measured by the ratio of assets to liabilities, and being under 50% is troublesome) by folding them under the auspices of the Municipal Retirement System and taking the power of administering benefits away from municipalities grouped under the System in the new set-up. There could be other reform pieces in the mix-defined contribution options, more local control, etc.-but the head of the Retirement Commission does not seem optimistic that asset sales alone, like the one Pittsburgh has proposed for parking garages, could solve the problem.

If we are to believe the published report that an analyst told the City they could "conceivably net $200 million" from leasing parking garages and lots then there could be some validity to the Commission director’s statement. Recall that earlier in the year we examined the Mayor’s proposal to sell or lease parking structures (owned and run by the Parking Authority) and take the proceeds to retire the Parking Authority’s $100 million debt and use the remainder for the pension shortfall. The last official valuation (January 2007) pegged the gap at $524 million; but recent reports show that the gap could have grown to over $630 million. An infusion of $200 million-with a hard line on liability growth-would put the funded ratio at just over 51%, just barely meeting the litmus test for pension health under the new reform model.

But that is if the analyst’s estimates are accurate and if the $200 million means after the Parking Authority’s debt is satisfied. Then too there needs to be a plan for what happens to the Authority if its debt is paid off. At that point, the City’s overall parking function would be limited to enforcement, permitting, revenue collection, and traffic adjudication. It should be wholly out of the business of trying to build and operate parking structures and lots. That could be left to the private sector.