L.A. financial crisis deepens as bidders shun proposed parking garage deal

Dealing a fresh setback on the city budget, Los Angeles Mayor Antonio Villaraigosa’s plan for leasing out nine parking garages is on the brink of collapse, with an array of private companies showing no interest in the deal, a city official said Friday.

Firms that have been in talks with the city for the last year were unwilling to bid on the proposed concession agreement, which was supposed to generate $53 million for the city’s general fund budget in the middle of a deep financial crisis.

City Administrative Officer Miguel Santana, the top budget official at City Hall, had no comment Friday. But another high-level official, who requested anonymity because he was not authorized to speak, confirmed that the city was unable to lure bidders to its parking deal.

The City Council redesigned the parking concession agreement last month after its members received a barrage of complaints from business leaders in Hollywood, Westwood and elsewhere. Those changes, which were designed to keep parking rates from spiking dramatically, may also have made the deal unpalatable to potential bidders.

The news eliminates the last flicker of hope that the city will secure an influx of parking revenue in time to erase a $49-million shortfall. And it leaves Villaraigosa and the City Council with a diminishing number of strategies for closing the budget hole eight months into the fiscal year.

City officials had hoped the deal would generate between $200 million and $300 million, enough to wipe out the debt on the various garages and still provide some money for basic services, such as public safety and parks.

Santana warned last month that the parking plan was in jeopardy -– and said any changes to keep parking rates low would potentially kill the deal. He recommended that the council pursue other strategies for addressing the financial crisis, including the addition of 10 furlough days for certain employees.

The council killed that idea. Santana then came back and proposed five furlough days. The council took a pass on that idea as well. Although council members did approve $33.7 million in other cuts, they rejected key proposals, including a 50% cut in graffiti removal and furlough days for the security force that protects municipal buildings.

Villaraigosa is expected to propose a fresh round of cuts next month, one that begins to address a $350-million shortfall in the fiscal year that starts July 1.

The parking deal had been expected to cover 50 years. Opponents of the concept had argued that it amounted to a sale of the city’s assets in a down economy. Critics also argued that the proceeds would only buy the city’s elected officials a few months of budget relief before more cuts would be needed.
Santana, in turn, said that taxpayers are subsidizing parking garages for customers at Hollywood & Highland, Westwood Village and other locations. He said the city’s practice of leasing public parking spaces is “broken.”

-- David Zahniser at Los Angeles City Hall

Photo: Credit: L.A. Times

Comments

[johathan pire]

public safety and parks AND LIBRARIES!

[Commentator]

This is not good news to all civilian city workers, it may lead to lay offs! I hope Mayor Villa (raigosa ex-wife surname) will not lay off hard working civilians! More furloughs but no layoffs please.

[Commentator]

This is not good news to all civilian city workers, it may lead to lay offs! I hope Mayor Villa (raigosa ex-wife surname) will not lay off hard working civilians! More furloughs but no layoffs please.

[Borchy]

ALL of tonys ideas are bad..... is it any wonder?

[August]

GIVE THE CITIZENS OF LOS ANGELES THEIR PARKING STRUCTURE BACK!

IT'S THEIR!

[Digital Compadre]

Who in their right mind would propose getting rid of real estate assets in a down economy? Has anyone on the city council yet figured out that Mayor Tony Vilar is no financial wizard? What a mess…

[Scam City]

This is the same thing Arnold wanted to do with the State buildings. Nothing more than a quick shot in the arm to kick the can down the road. All the new owners would do is raise the price to park in them.

[Greg Maragos]

Nobody wants to do business with a city that isn't business friendly.

Shocking.

[Astonished]

I know how they can diminish that budget hole. The Mayor, his staff, the Council, AND their staff can all share in the same sacrifices the City's workers are involved in. After all what good does it do to reduce the work force to the point of collapse when the Elected Elite just continue to operate as usual? Spending, spending, spending, then blaming everyone else for their stupidity!

[JPR]

How about cut pay for city workers?

Anyone thought of this idea?

[JPR]

How about cut pay for city workers?

Anyone thought of this idea?

[thecanimalsHusband]

The bloated city budget needs to be cut unless they want more taxpayers and businesses to leave the city.

[Brady Westwater]

Now that this give away of city resources is dead - the city can study how to make more efficient use of the garages by bringing in the private management that is needed, but to keep control of the income. And the city can still raise short term cash - if need be - by refinancing the debt free garages.

[Harris Laskey]

DISBAND THE CITY REDEVELOPMENT AGENCY (WHICH HANDS MONEY TO DEVELOPERS) FOR 3 YEARS AND THROW ALL THAT MONEY, INCLUDING CHRIS ESSELS $230K SALARY, AND THE CITY WILL START TO TURN AROUND QUICK. SHE MAKES MORE THAN HAD SHE WON A COUNCIL SEAT AND ALL SHE DOES IS HOB-KNOB WITH DEVELOPERS AND HER ELECTED FRIENDS, INCLUDING CONTROLLER GREUEL WHO SHOULD BE THE FIRST TO TELL HER WE NEED YOU OUTTA HERE, SORRY.

[Jagexxx]

And how much free stuff do we give away to non-citizens, non-residents and just plain fraudsters each and every month?

[uncle_charlie]

LA just needs to invest in the stock market. It is going to the moon.

[derek]

All a private company would do is charge market rate for the parking. The city now offers subsidized parking and has a higher expense cost than a private company.

Let the private company charge the rates the market will bear. If they are too high, they won't get any customers and lose money. They will price it to maximize the number of paying customers.

Price controls never work, something our dumb city council won't realize.

[contraryjim]

Keep the city out of business and out of the way of business. It needs to re access the reasons for establishing a government.

[Jack Humphreville]

It is time for the City Council to flush this ill conceived fire sale of our parking garages. It is poor fiscal policy to sell revenue producing capital assets to pay every day operating expenses. And at the same time, we would losing out on $3.5 BILLION of operating profits over the next 50 years as the profits would be sucked out of our economy by foreign investors. No wonder the City Council was meeting behind closed doors. And it is astounding that the City Council approved this deal with a unanimous vote.

[b]

I long for the days when we had a real mayor,Tom Bradley.He knew how to promote the city to business. He also knew how to forge productive public private partnership-the Olympics.

You think Villar would ask Riordan for some advice?

[Louweegie272]

I guess there will be another water shortage coming up so the DWP can send more money to the city's general fund. How about raising the parking rates yourselves so the garages pay for themselves? How about actually laying off workers instead of transferring them where they are not needed, if they really were necessary they would have already been filled.

[save the deserts!]

why not just keep the $50 million you are planning on handing to eli broad for HIS new parking garage in that awful downtown boondoggle he's building on taxpayer land with taxpayer money? problem solved and we can all still patronize our local businesses...

[Milo]

@JPR
Of course thats been thought of and proposed on several occasions. However, the Unions representing City Workers are very powerful and cutting pay would require that they "concede" to a pay cut and throw out current contracts entitling City Employees to a certain amount of pay.

As a City worker myself, I am sitting back and watching my union remain pigheaded to the staunch realities of the deficit, the need to address unsustainable salary increases, pensions and benefits, and by not making any REASONABLE concessions like 1) having me paying more than $40 a month for my PPO healthcare, 2) delaying "Cost of Living" pay increases during a major recession and 3) reforming pension to a sustainable point where it probably wont be as sweet as it is now, but still sweeter than my private industry counterparts - meanwhile, my relevance as a City Worker is dwindling as I see more and more functions outsourced (often at no savings!), and I'm on my heels looking at LA Times to determine how much longer I'll be employed. Meanwhile, there is more work to do and more work NOT being done because of major shortages caused by 2400 sweet-deal retirements, hundreds of layoffs, and hundreds of employees who have managed to abandon ship to "special funded" positions.

[James Andrews]

Playing games while the spending continues. This council and mayor are a joke.

[DavidinLA]

If employee furlough days amount to a 10% pay cut than just cut the salaries by 10% but have them continue to work as usual.