Thursday, October 07, 2010

Pittsburgh City Council Closely Scrutinizing Parking Meter Deal

The Pittsburgh city council is questioning whether the city's mayor, Luke Ravenstahl, has misrepresented to them the financial circumstances surrounding the city's unfunded pension liability as a way of pushing a 50-year lease of the city's parking meter business and city-owned garages for a one-time upfront payment of $452 million from LAZ Parking, the same company to which Chicago Mayor Richard Daley leased that city's parking meter business for a $1.2 billion, 75-year lease. The Post-Gazette reports on the council's latest action:

Pittsburgh City Council took the unusual step Wednesday of issuing a subpoena to Mayor Luke Ravenstahl for pension fund data, saying the information is needed to determine whether a state takeover of the fund would be as dire as the mayor has suggested it would be.

The subpoena to Mr. Ravenstahl and a handful of his advisers seeks lists of employees and retirees, plus details about their retirement benefits. It demands that the data be turned over to James Allen, secretary of the Pennsylvania Municipal Retirement System, by noon Friday . . .

Mr. Ravenstahl has proposed leasing the city's parking garages and meters to a consortium of investors for 50 years and using some of the proceeds to avert a pension fund takeover. He said the state would increase the city's pension fund obligations by as much as $27 million a year, something that would require tax hikes or service cuts.

However, some council members have questioned whether a takeover would be as dire as Mr. Ravenstahl said. To find out, they want the state to use subpoenaed pension data to perform an actuarial evaluation.

Council is considering alternatives to the mayor's parking lease plan, such as a pension bond backed by parking rate increases, or simply acquiescing to a takeover.

"We have to have the Pennsylvania Municipal Retirement System run the numbers before we can make a decision," council President Darlene Harris said.
Pittsburgh's City Controller had already severely criticized the deal and proposed an alternative plan where the city would maintain control of the assets without raising rates nearly as high. The Post-Gazette reported earlier on the Controller's alternative plan:

Saying a mayoral plan to lease parking garages and meters would raise rates too high and cede too much control, Pittsburgh Controller Michael Lamb today outlined an alternative means of avoiding state takeover of the city's pension fund.

Mr. Lamb suggested that the Pittsburgh Parking Authority could buy, from the city, the parking meters, Mellon Square Garage, and several surface lots the city owns. His proposed purchase price, $150 million, would go into the city's ailing pension fund.

The authority would have to borrow the money to make that payment, but could pay off the debt by raising rates around 3.5 percent a year for five years. Mr. Lamb characterized that increase as around one-third of the rate hikes that would result from Mayor Luke Ravenstahl's plan to lease the garages and meters to a private consortium.

"This is a system that is far less expensive to future ratepayers than the mayor's lease," said Mr. Lamb. It also alleviates concerns about transferring control over so much property to a private company for 50 years, as the mayor's plan would do.
As we've learned in recent weeks, the City of Indianapolis has quite a bit of surplus TIF revenues floating around that could be used to finance an electronic metered parking system, coupled with modest rate increases, without giving up ownership of our parking meters for the next 50 years. Instead of diverting those property tax revenues to fund the CIB, build skywalks or finance private development deals downtown, the City could be using those funds to modernize our parking meters and increasing revenues to the city. Of course, that would cut out all the benefits that attend these pinstripe patronage deals cooked up by political insiders to line their pockets and, in turn, fill the campaign re-election coffers of Mayor Ballard.

The Post-Gazette noted in its story how Mayor Ravenstahl had headed out of town on a 10-day trip to Asia just as the council issued the subpoena for the pension fund data. It looks like Pittsburgh's mayor likes taking overseas trips as much as Mayor Ballard.

3 comments:

Had Enough Indy? said...

Very interesting twists and turns in Pittsburgh. Thanks for relaying the info.

I especially like the part where they propose a 5-year loan for assets that have a 10-year life. That's kind of refreshing.

Advance Indiana said...

Great work, Pat, on disclosing the slush funds known as TIFs. There is absolutely no reason the city could not undertake the parking meter modernization without selling off this asset by simply using those TIF revenues to float a short-term bond to cover the cost. You've caught the Ballard administration with its pants down on this one. Now if the mainstream media would simply do their jobs and get the word out.

Had Enough Indy? said...

Thanks, Gary. But,lots of folks began asking questions when they raided the downtown TIF for the Pacers.

I just hope the community gets real input before the TIFs are totally cannibalized.

Yes, the Council can stop the money from flowing to the Pacers and discuss using that money for updating the parking meters. Maybe think of actually leaving one asset for the benefit of the next generation. Instead of picking their pockets for our impatience today.