Wednesday, October 20, 2010

It's Still The Same Bad Parking Meter Lease Deal With ACS

The Indianapolis news media was quick to buy into the Ballard administration's latest attempt to turn its sow's ear of a parking meter lease deal with ACS into a silk purse. An Indianapolis Star online headline, "Parking Meter Plan Now Worth $620 Million" was emblematic of a nondiscerning, skeptical news media following Mayor Greg Ballard's press conference today claiming he had listened to the concerned public and made changes to improve upon the 50-year lease agreement. The Star's Jon Murray wrote:

Indianapolis Mayor Greg Ballard this morning announced changes to a parking meter lease proposal that would drastically increase the city's share of revenue to $620 million over 50 years, but would reduce the upfront payment to $20 million.

Ballard's initial proposed contract with a team led by Dallas-based Affiliated Computer Services, a Xerox company, set out a $35 million upfront payment. ACS had estimated the city's share of ongoing revenue over 50 years at $400 million.

A press release from Ballard's office hailed early termination provisions of the lease, an option that will allow the city to review the lease every ten years and terminate if it so chooses, but not without paying a hefty termination fee to ACS. Even though the city will get $15 million less up front from ACS, Ballard says the deal is better for the city because it will earn $220 million more than the original $400 million estimate if it keeps the lease agreement in tact for the full 50 years. City-County Councilor Barb Malone, who didn't have a clue what the original agreement meant when she endorsed it without reviewing it, stood by Ballard's side again today saying she still wholeheartedly embraced the new plan. "With the revised proposal announced today, I continue to be proud to be a part of the plan to modernize our City’s parking meter system," Malone said. "With a highly-competitive selection process and an active public outreach program that truly listens to the people of Indianapolis, this proposal continues to do what’s best for our city – both now and for the long-term."

The key change in the agreement is the early termination provision; however, the penalties the city faces if it cancels before the end of the 50-year term makes it unlikely the city would undo the agreement. At the end of the first ten years, for example, the city would have to give back nearly all of the money it received up front from ACS, $19.8 million. After 20 years, that early termination fee would still be $16.25 million, falling to $12 million after 30 years and $8 million after 40 years. The information the Mayor's office released today isn't clear on this point but presumably the intellectual property associated with the electronic parking meters would remain the property of ACS unless the city purchased them in the event of termination, which would mean the break-up fee could actually be considerably higher than what is presented. ACS has suggested it will spend at least $7 million initially to install electronic parking meters if the lease agreement is approved by the council. While it is true in inflation-adjusted dollars the break-up fee may not seem as bad as it appears, the replacement cost of electronic parking meter system could be substantially more in the future, and certainly the cost of maintaining those systems will likely increase significantly.

Under the original deal, ACS was allowed to keep 80% of the first $8.4 million ACS collected annually from parking meter fees and 45% of the revenues over that amount. Under the revised deal, ACS will keep 70% of the first $8.4 million and 40% of the revenues over $7 million. That percentage difference is what largely accounts for the city's estimate that it will capture $220 million more. The city's nearly 3,500 metered spaces generate a little over $4 million currently. The plan will double rates and extend the hours of metered times to 9:00 p.m. in both downtown and Broad Ripple; originally, the plan would have extended the metered times to 11:00 p.m. in Broad Ripple and to 9:00 p.m. in downtown. The higher .50 cent fee for each hour over 2 hours has been eliminated in the revised agreement. A pilot program using electronic parking meters that allowed consumers to use credit cards for transactions indicated revenues jumped 12% to 16% simply by allowing the electronic payment option rather than a coin only option as the current system provides

The Ballard administration plans to enter into separate agreements with ACS to run other city-owned parking garages and lots, and the Health and Hospital Corporation says it plans to use ACS to run its new parking garage at the new hospital. The terms and value of those deals have not been made available to the public. Further, the Ballard adminstration says it plans to build a new city-owned parking garage in Broad Ripple. Presumably, ACS will also get to run this garage but the terms of that deal remain unknown. A residential permit program in Broad Ripple that was to be administered by ACS under the original agreement, which got to keep all of the revenues, will only be administered by ACS if the city asks and the revenue will be shared. Residential permit programs elsewhere in the city will still be run by ACS but the revenues will be shared. The financial impact to the city for removed meters will also be lessened under the revised deal. The city had to bear all of the costs for removed meters under the original deal; the city will be allowed to remove as many as 200 metered spaces without impacting its revenue share under the revised deal. As to the advertising component the city relinquished entirely to ACS, the revenues will now be shared unless the city initiates its own advertising program for the new meters.

I return to the argument I've made from day one. Why doesn't the city simply maintain ownership of the parking meter assets and invest in the newer technology, coupled with higher rates, and realize all of the revenues? It's not rocket science to do the math and figure out that would return a lot more money to the city than what is being proposed either under the original or revised 50-year lease agreement with ACS. There are plenty of technology vendors out there which would gladly assist the city in implementing a new system without demanding ownership of it. The excuse the city doesn't have the money available to invest in newer technology also doesn't hold water. We've learned recently just how much money the city is holding back in excess property tax revenues derived from the various TIF districts. The city could easily spare enough money to make the necessary investment without giving up control of this important asset. The only reason, and I repeat the only reason, the Ballard administration wants this deal with ACS is to reward political cronies of the administration. I would hope our city-county council would have the good sense to figure that out, but the events of the past few years leave me to have no confidence in the intellectual capacity or integrity of our elected councilors to figure out what is in the public's best interest.


Marycatherine Barton said...

Isn't it still the same bad deal; and isn't the STAR still not locally owned.

Anonymous said...

City-County Council, Ballard, Daniels, Hubard, Roob, Vaughn, Barnes & Thornburg, and the other 20 or so I didn't mention need to READ Title 18, Chapter 11, Section 211 of the United States Code.
Memorize the definition of RECUSE is "Those with a conflict of interest are expected to recuse themselves from (i.e., abstain from) decisions where such a conflict exists."
REMEMBER Sworn in for the People, Elected by the People, to Serve the People. Oath? What Oath? 'I think the Real Housewives of Orange County was on during my swearing in ceremony.'
Obama promised to “tell the corporate lobbyists that their days of setting the agenda are over.” Someone needs to tell Obama that ACS buys up companies, chops them up in little pieces, lays off a bunch of people, and sells off the body parts for profit. How's that for being "over?"

MacDre said...

More Crap - - -
Ind. agency paying law firm $5.25M to sue IBM
"Three pages of the 9 1/2-page contract detail Barnes & Thornburg's conflicts of interest from having represented ACS Human Services, a division of Dallas-based Affiliated Computer Services Inc.; Arbor Education and Training; and other subcontractors involved in the IBM deal. Arbor and ACS have new eight-year contracts with the state totaling $853.2 million."
Read entire article

Downtown Indy said...

Having to pay ACS $20M is not much of an 'out' for us after 10 years.

I agree that we should just do the upgrades and collect ALL the revenue. The way the mayor can magically conjur up millions on demand for the Cause du Jour means he ought to be able to do the same for a paltry $7M for new meters.

I think they could retain the existing meter hours, raise the rates (gradually, I hope) and make out far better than any deal involving ACS.

Cato said...

What is with this deal? Why is the Mayor so eager to sell off the parking meters? What's being personally offered to Ballard that isn't making it into the contract pages?

Gary R. Welsh said...

It tells me he has some downtown deals he badly wants to pump money into before next year's election and the 2012 Super Bowl, as if there hasn't already been a huge investment of public dollars into that effort.

IndyDem said...

Also, the new "out" for the city is really just giving back the up front money. But the big problem there is, after the first 10 years.. long after the 20M has been spent by this administration, another administration will have to find the 19.8M to pay ACS to get out of a bad deal.

Anonymous said...

Xerox profit doubles, but company to cut 2,500 jobs
Published Thursday October 21st, 2010