City’s Plan to “Privatize” Publicly Owned Parking Garages Leaves Some Experts Scratching Their Heads

2_4_10_garage.jpgPrevious parking privatization schemes haven’t been successes. Photo: Eazylanish/Flickr

LAist and the Times both report that the Los Angeles City Council Budget and Finance Committee approved a plan to partially privatize city-owned parking garages, but not meters, for the next fifty years to help fill a massive budget hole in the short term.  The city is hoping to raise $189 million from the transaction which would basically be a 50-year outsourcing of the garages’ management and
profits. Some of the management and profits would remain with the city, and some experts are pointing to other aspects of the plan which could lower the city’s $189 million asking price and hamper efforts to bring major reform to our city’s already wasteful parking strategies.

At the news website Market Urbanism, Stephen Smith, who is of no relation to the Fox News commetator with the same name, writes:

Whereas pure privatization would mean selling the buildings and
underlying land to anyone for any use, this scheme is actually a
50-year outsourcing of the garages’ management (mostly, at least) and
profits (again, mostly). The new “owners” could only use the structures
to park cars, and using them to house people and businesses that would
increase the walkability of the areas where the garages are located is
out of the question.

True privatization would also bring in more money for the city,
which is the stated goal of the privatization. The garages would be
worth more if they were being sold with complete development rights,
and the tax revenues from whatever’s built on them (not to mention
possible increases in adjacent properties’ values) would probably
exceed the “small negotiated share of future proceeds” that the city
“could retain.”

The only possible benefit I can see to this plan is that parking
rates will move upwards towards the true market price. But even that
would be too much for the city to stomach, as the city would “retain
authority over parking rates at the garages” – and who wants to guess
which way they’ll be pressured to push prices?

One of the main complaints about the privatization plan in Chicago is that the investors are reaping windfall benefits from raising meter and garage rates to their actual market value, a move the city was loathe to make.  Under the city’s plan, there is no potential for this backlash, because our City Council people who always seem to lack the will to charge people what they should for parking, if they did there would be no reason to sell of this revenue stream for such a long period of time that anyone reading this today will be retired, so it’s even more unlikely that they will be interested in raising the rates to benefit someone else.

The Times reports that the garages that will be leased include ones in Westwood, Sherman Oaks, Van
Nuys, Hancock Park, the Westside and Studio City. Combined, the garages
have 8,398 spaces.

  • Why not just raise parking fees in these lots and take the cash into our coffers?

  • Funny, I was wondering the same thing.

  • MT

    The obvious solution is not one that City Council is capable of making.

    The biggest and ugliest garage (revenue-wise) is the Hollywood and Highland, which I believe the City still owes $200 million on.

    They had higher rates and no one was using it. They lowered the rates and they are losing money on it enormously.

    Parking garages are NOT cheap, and I don’t know what the solution is for this stinker.

    The idea that their parking space costs and is worth a lot more than their car is still a foreign concept to Angelenos.

  • Chewie

    They’re trying to plug a short-term budget hole by leasing off a long-term asset for a lump sum. Like paying rent by selling a kidney. It avoids the politically more difficult choices of raising more revenue or slashing more spending.

    Problem is, eventually you run out of kidneys to sell.

  • The best part about the Chicago plan was how the bank raised the rates. If LA keeps that clause, there’s no benefit to this.

    Yes, Chicago is not getting as much money, BUT we all know rates would have remained the same if they hadn’t privatized the meters.

    Parking is a councilman’s favorite topic, because it’s so easy to pander to votes. “of course we’ll keep the rates low!”

  • I hate weak kneed politicians. How hard would it be to raise the rates and spend some money on posters above the parking space showing a breakdown of how much a particular parking space cost to build and maintain. Make it clear in every lot what each space cost, how much maintenance of the building is, and at what point the parking fees will allow the City to re-coup it’s losses.

    They could do stupid pamphlets and posters, to on-street parking stalls as well.

    If the fiscal analysis is sound, and there is a projected end point to high rates (for example, “These rates are high until we pay off the bonds that we sold to pay for the lot. The rates will drop in 2040 to a price not greater than $xx in 2010 dollars”), then what would be the fallout?

    Or raise the rates and send a portion of the money generated into a local fund to improve the business (or whatever) climate around the parking lot.

    What would make this sort of thing harder than a stupid sell-out of both the parking lot and the public’s best interest? Feckless, spineless, wimps looking for a quick cash-out to cover the duration of their brief terms in office consider stuff like this parking lot fire sale.

  • Wait until they tear down the LA Convention Center to build a big NFL stadium with no extra parking spaces.

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