Previous 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 andunderlying land to anyone for any use, this scheme is actually a50-year outsourcing of the garages’ management (mostly, at least) andprofits (again, mostly). The new “owners” could only use the structuresto park cars, and using them to house people and businesses that wouldincrease the walkability of the areas where the garages are located isout 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 beworth more if they were being sold with complete development rights,and the tax revenues from whatever’s built on them (not to mentionpossible increases in adjacent properties’ values) would probablyexceed the “small negotiated share of future proceeds” that the city“could retain.”
The only possible benefit I can see to this plan is that parkingrates will move upwards towards the true market price. But even thatwould be too much for the city to stomach, as the city would “retainauthority over parking rates at the garages” – and who wants to guesswhich 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.