Bad News for the Mayor: Money to Privatize Infrastructure Drying up in Recession
It’s been six months, to the day, since we last checked in on the Mayor’s desire to privatize the city’s parking meters and publicly owned parking garages. Under the Mayor’s draft plan, the city would get an as of yet undisclosed amount of money to turn over the money generated by its parking assets.
While half a year hasn’t been enough time for J.P. Morgan Chase to finish the study which would tell the city how much to expect for the sale of its meters. While we wait for the investment firm to encourage the city to its cash cow for a handful of magic beans, there have been some changes in the privatization front from around the United States.
First, in Chicago, where meters were privatized under a deal with Morgan Stanley, it looks as though the city was more than fleeced. Writing for Streetsblog back in June, John Kaehny writes that while the city received $1.3 billion for a seventy five year lease, it will cost those parking nearly $975 million in income that could have gone towards nearly anything. While Chicago pols made a short-term political calculation, the city handed over a staggering 146% rate of return for the investors. In other words, let the seller beware when taking advice from investment firms when it comes to pricing their meters.
Of course, there are also smart growth and urban planning reasons not to hand over street parking to investors. Most importantly, it effectively kills efforts of communities to remove street parking and better opening the street to all users. Chicago communities are already complaining that they’ve lost control of their streets that are now in the hands of private investors.
Of course, the Mayor’s office isn’t pushing privatization because it’s good urban policy. It’s pushing it because it’s looking for a quick fiscal fix during the recession and decreasing tax receipts. Bad news on that front too.
USA Today reports that the money to purchase public infrastructure is drying up as the recession continues.
A rush by state and local governments to sell
roads, bridges and airports to private operators in return for
eye-popping upfront sums has all but collapsed in the recession.
That could leave taxpayers on the hook for more
of the $200 billion a year needed to maintain the nation’s
transportation system, according to federal estimates.
An era of privately operated infrastructure
seemed near when Chicago leased its 7-mile Skyway for $1.8 billion in
2003 and Indiana leased a 157-mile toll road for $3.8 billion in 2006,
deals that had other governments rushing to cash in, too.
USA Today’s story takes their story in the opposite direction as Kaehny’s, but that’s because they are only examining highway projects. Highway investors are losing their shirts, because people are driving less, but metered parking, which still undercuts parking in private lots, isn’t seeing the same decreases.
All of this points to a need for the city to advance very slowly. We know from a Livable Streets standpoint that privatization is a bad idea because it limits the public’s ability to control their own streets. What we don’t know is fiscally how to evaluate whether or not the deals are good ideas in either the short or long term. Let’s hope the city treads carefully and that there are plenty of chances for the public to weigh in before the city sells our cash cow for good.