Saturday, September 11, 2010

Ballard's Parking Meter Deal Versus Daniels' Toll Road Deal

Aaron Renn at Urbanophile blog, who did an excellent analysis of why Mayor Greg Ballard gave away the store to the politically-connected ACS in entering into a 50-year lease of the City's parking meters, makes some good points in rebuttal to those who similarly criticize the long-term lease Gov. Mitch Daniels entered into for the Indiana Toll Road. He explains the big difference--namely the toll road never made money because of high maintenance costs unlike Indianapolis' parking meters.

You might think that an almost 90% potential profit margin for the vendor is ludicrously unbelievable. Think again. This isn’t like the Toll Road. The Toll Road had never earned a nickel for Indiana in 50 years. By contrast, the parking meters are very profitable. The city already makes millions in profits every year off them. In fact, even with the existing inefficient system, the city itself is already generating a 77% profit margin. With higher rates, longer hours, penalties galore, and promised efficiencies, it is easy to see how that goes way up. Again, let’s review – Toll Road: a money loser turned into $3.9 billion. The parking meters: a lucrative business of which as much as 3/4 of the value is being given away for $35 million. In effect, ACS is loaning the city $35 million and is getting repaid with potentially a billion in interest. That’s like you or me borrowing $35,000 and paying back a million in interest. Even credit card companies aren’t that greedy. This is like taking out a 50 year payday loan from the worst check cashing store in town.

As for the $400 million revenue share, that money already belongs to the city. Instead of giving away $724M to $1.2B, why not just raise rates yourself and keep it all for the public? Unlike with Chicago where rates went up to something like $8/hr and people were literally carrying around ziplocks full of quarters, these rates are only going up to $1 to $1.50/hr total. That will hardly provoke a riot. Everyone knows rates need to be raised – an action I fully support.
Renn's explanation is a no-brainer and one our City-County Council should easily grasp, but the current Republican-led council hasn't been known for thinking beyond the smoke-and-mirrors presentations that have become a hallmark of the Ballard administration. I also take strong exception to Renn's belief the Ballard administration's utility transfer deal was "a great one and very creative." As I've pointed out relentlessly, the transfer of the utilities from one publicly-owned entity to another was accomplished in a classic shell game fashion. Massive public debt is moved off the City's books to Citizens Energy to allow for the accumulation of more debt on the City's books. The debt transfer will force more double-digit utility rate increases on top of already anticipated double-digit utility rate increases in order to finance a half-billion dollars in street and sidewalk improvements completely unrelated to the operation of the utilities. It is public financing at its absolute worst. The next two generations of Indianapolis residents will be paying for these short-lived infrastructure improvements. It will most assuredly lead to the escalation of urban flight to the suburbs and the further crumbling of our neighborhoods and schools.


Indy Student said...

I uploaded the city's response to Renn's analysis onto a Google account under Google docs. It's in PDF format and is available for download.

City's response links to the document.

Paul K. Ogden said...

I'm stunned Renn said that about the utility deal. Gary, you and I both agree that Citizen's would likely do a good job managing the utilities. But the "sale" was phony...a way of generating up front cash to be spent before the election, money that would be financed with rate increases and a 30 year loan taken out by Citizens to pay the purchase price. This upfront cash based ona 30 year loan, will be go to improvements lasting 7-10 years.

The public pays if it's run by the City or Citizen's. There is no savings. This is just a shell game.

dcrutch said...

Congrats to this forum, Ogden & others for slowing this questionable parking deal down. The Star hasn't exactly been aggressive in illuminating both sides of this issue on behalf of the taxpayer (similar to the CIB, IPS, Wishard, etc.), but do justly point out Sunday that, "...council members on both sides of the aisle - as well as bloggers, businesses, and residents..." waved down this fast-moving train.

Thanks for the work of the local bloggers.

Marycatherine Barton said...

Yes, let us continually show the smart, diligent anti-government corruption bloggers our appreciation.