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Who should run L.A.'s parking meters?

February 24, 2009 |  3:07 pm

Meter2 In a bid to potentially raise hundreds of millions of dollars or more for ailing city coffers, Mayor Antonio Villaraigosa is exploring whether to lease the city’s parking structures and meters to a private party to operate.

The mayor in recent weeks has quietly begun building a team of financial experts and attorneys who could advise him in structuring a deal. In December, Chicago Mayor Richard Daley -- whose city is also grappling with a big budget hole --  signed a deal that gave his city $1.15 billion in up-front cash in exchange for leasing the city’s roughly 36,000 meters for 75 years to infrastructure funds overseen by Morgan Stanley. (Here's a link to Daley's news release on the deal, and here's a link to a Chicago City Council agenda from December with more details of the deal).

How does the deal work? Morgan Stanley gets to keep all revenue from the meters for the 75 years. That's a nice stream of cash that currently amounts to about $20 million annually but will probably be more after significant rate hikes that were part of the deal go into effect.

And what's in it for Chicago's citizens? First and foremost, a big shot of cash that the city otherwise wouldn't have. More than $600 million is going into balancing the city's budget through 2012, and another $400 million is being set aside to generate interest to replace the meter revenue lost.

But it is the deal's fine print that raised eyebrows. As part of the deal, the city significantly raised meter rates for the first time in years, in some cases quadrupling them. The city also required Morgan Stanley to install better meters and retained the right to both write parking tickets and keep parking ticket revenue. However, Morgan Stanley won the right to do "supplemental enforcement" -- meaning the parking concessionaire they hire can also write tickets to help teach people what happens if they forget to plug meters.

"The mayor intends to move forward with a parking structure deal that makes the most sense for the long-term fiscal health of the city," said Matt Szabo, a Villaraigosa press secretary. "We are also aggressively exploring the possibility of a private partnership for the operation of the city's parking meters.

"While it's cliche to say the devil is in the details, in this case it really is," he added. "The final proposals will be fully vetted before the council, and will receive a thorough hearing before the public.  But the mayor is confident that, even in this tough economy, we can implement a much smarter, more efficient way to provide parking services in this city while generating the revenue to preserve other critical city services at the same time."

The city of Los Angeles has managed about 43,000 parking meters for decades, and the results are there for everyone to see: Until a recent meter replacement project got underway, about 10% to 15% of the meters were broken at any given time, either because of vandalism or mechanical failure. Unlucky motorists who legally park at failed meters have also found they have a habit of resetting to healthy mode, often resulting in a ticket when a meter officer wandered past.

The obvious policy question is this: Are the city's meters better off in the hands of the public or private sector? Another question: Would such a deal prevent the L.A. City Council from sometimes funneling excess parking meter revenue to their pet projects?

The other significant aspect of the deal is what it says about the economy. With stock markets tumbling and world markets in chaos, it's clear that some investors see the curbside parking meter as their safest bet.

I'll have more about such deals in tomorrow's online and print editions.

-- Steve Hymon

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