The plan to balance Cincinnati’s budget and its $34 million deficit seems to hinge on one thing — the controversial plan to lease city parking facilities to a private company.
The plan involves leasing 6,000 parking spaces, five garages and three surface lots for a minimum $40 million upfront payment and a share of the profits over the life of the lease. City Manager Milton Dohoney said without the upfront revenue from the sale — $21 million of which would go to plugging the budget deficit — 344 city workers would lose their jobs.
Dohoney has been met with pushback from skeptical City Council members, businesses and community groups worried that the city would lose money in the long term and a private operator would jack up rates and hinder business by making parking more difficult for customers. The city administration counters that the private operator would have better resources to maintain and upgrade infrastructure and the sale would provide a secure source of revenue for the next 30 years.
Privatized parking has been pulled off in cities such as Chicago, Indianapolis, Pittsburgh and Sacramento, Calif., but observers are mixed on the success of the endeavors.
Chicago is probably the most famous — or infamous — example of a municipality privatizing management of its parking facilities. The plan was approved in 2008 under the tenure of Mayor Richard M. Daley. Parking meters were leased to a private company, a consortium run by Wall Street giant Morgan Stanley (which has also made a bid at running Cincinnati’s parking), for 75 years in exchange for a one-time payment of $1.16 billion. That money was quickly used up to fill up budget holes or pay for daily government operations.
Meanwhile, residents in neighborhoods where metered parking had cost a quarter saw prices jump to $1 an hour, according to The Chicago Tribune. Those are scheduled to bump to $2 an hour next year. Desirable parking spaces in the business- and tourist-heavy Loop district of downtown Chicago climbed from $3 to $3.50 an hour, but will leap to $6.50 in 2013.
A 2009 report from Chicago’s inspector general concludes that if the city had kept control of its meters and run them the way the private company did, the system would be worth $2.13 billion — which is $974 million more than the city made off the deal.
Then-Inspector General David Hoffman called the deal “dubious” and criticized the lack of independent analysis.
Like in Chicago, some have criticized the lack of public input into Cincinnati’s plan.
In a letter to Mayor Mark Mallory and members of city council, Clifton Town Meeting President Peter Schneider called it “unconscionable” that the plan was moving along without public input.
In contrast to Chicago, Indianapolis’ privatization of its parking meters and spaces has been lauded as more of a success story. Indianapolis in 2010 leased its meters to a Xerox-led consortium (another group including Xerox has submitted a proposal to run Cincinnati’s parking) for 50 years. Unlike Chicago’s one-time upfront payment, Indianapolis got $20 million at the deal’s signing and opted to share in parking profits.
In the first year after the deal, parking profits were estimated at $1.4 million. Before the lease, the city had made an average of about $600,000 on its own. And unlike Chicago, which is stuck with privatized parking for the next 70 years, Indianapolis’ contract includes an opt-out clause, allowing the city to reconsider the agreement every 10 years.
The private agreement has even brought some technical innovations to Indianapolis’ parking system. The company operating parking has upgraded meters to accept credit and debit cards — something Cincinnati has already started to roll out downtown.
Additionally, the company has installed sensors around nearly 1,400 meters that detect whether a vehicle is in the parking space. Motorists can install a smartphone app that will direct them to the nearest empty space and offer them help finding their way back to the space, if needed. People can also pay for parking with their phones.
But the technological advances — and revenue increases — came with higher costs for citizens. Indianapolis parking rates, which had not changed in 75 years, doubled under private ownership. The most congested areas of town saw rates jump from 75 cents an hour to $1.50 between 2010 and 2012. The company also expanded meter operating hours, making downtown meters effective form 7 a.m. to 9 p.m. and meters in Indianapolis’ cultural district from 7 a.m. to 11 p.m.
So what’s Cincinnati’s plan?
The city has released a request for proposals painting a broad picture of what it wants from a parking partner, but details are scarce.
Nine companies responded to the request for proposals, but Cincinnati spokeswoman Meg Olberding said she can’t discuss details while they’re in negotiations.
What is known is that the lease would net the private company would be 6,000 on-street parking spaces and 2,528 off-street spaces in four garages and three surface lots.
The city hopes the parking operator would make Indianapolis-style technological improvements to parking.
The company would be able to make adjustments to the current operating hours — most meters are active between 9 a.m. and 5 p.m. Monday through Saturday — and encouraged to create different rates for special events. The company would also be allowed to increase rates from 50 cents an hour to $1 on the 3,800 meters in Over-the-Rhine and other neighborhoods. It will also have the option to install 200 meters at The Banks and 100 in currently un-metered spaces.
The company would also be allowed to increase rates for meters and off-street parking by 4.5 percent or the Consumer Price Index annually, whichever is higher. That means meters that will charge $1 after privatization begins could charge $3.74 or more per hour after 30 years, and downtown meters currently at $2 an hour could charge $7.48 or more.
However, Olberding says some of these things are fluid and up for negotiation.
“This is a balancing act, so what we lay out in the RFP is the expectations at the beginning of discussion, but … that might change based on who the partner is.”
Cincinnati City Council has scheduled a session Dec. 14 to vote on the budget — including the privatized parking provision. ©