Pittsburgh’s proposed parking privatization deal is getting national ink. First, there was mention of it in Matt Taibbi’s new book, Griftopia: Bubble Machines, Vampire Squids, and the Long Con That is Breaking America.
Now, Alana Miller at The Huffington Post looks at the privatization of city parking in Chicago and Mayor Ravenstahl’s plans for Pittsburgh and she doesn’t like what she sees either:
An independent report released recently by the Finance Scholars Group (FSG) showed the financial pitfalls associated with privatization deals like the one considered by the City of Pittsburgh. “While leasing the Assets would provide a short-term relief,” the report states, “there would be considerable costs associated with exercising this option, potentially much greater than the costs of borrowing.”
The proposed Pittsburgh contract with LAZ contains many other hidden costs, as did the Chicago deal. Both contain non-compete clauses restricting the city from creating or improving additional parking facilities in the future. Both put the city on the hook to pay LAZ phantom meter revenues in the cases of “compensation events.” The company in these cases would demand compensation if the city closes streets for repairs, reconfigures roads in ways that reduce meter use, hold a street festival, or otherwise infringed on meter revenues.
In both cities, the process has not adequately protected the public. Pittsburgh’s earliest mistake was to pay Morgan Stanley as its adviser. The company is one of the primary investors in the Chicago deal and stands to gain from the deals they advise on. That is a clear conflict of interest. The financial arrangements and assumptions set out between LAZ and its financiers in both cities could provide vital information about their expected costs, profits, and respective legal obligations. The information, however, remains off limits under the guise of “propriety” business secrets.
After reviewing the myriad of problems with the Chicago deal, she ends her post with some sage advice for Pittsburgh, “As the saying goes, unless we learn from history’s mistakes, we are bound to repeat them.”
You can read the entire article here.
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