Mayor’s Pensions / Parking Draft Agreement Released. Serious Consideration May Begin.

Who is this prodigy and what did he do with Our Mayor?

Mr. Ravenstahl said his planning team has learned from the mistakes Chicago officials made in leasing their parking meters. One criticism was a lack of scrutiny by city legislators.

“Here in Pittsburgh, they have 2 1/2 months,” he said of city council members. (P-G, Joe Smydo)

That’s two and a half hardcore months now after almost two years of extremely public and straightforward conceptual debate. (For our conceptual take see here and here.)

By now I’m sure you’ve all read — really read — the critical three-part Chicago Reader series on the Daley administration’s parking lease deal (1, 2, 3) which has served as the oft-circulated attack piece on the proposal by Pittsburgh Mayor Luke Ravenstahl. Its own complaints over what went down in Chicago are as follows:

  • HASTE: The authors were outraged that the process was rammed through too quickly and with too little information made available.
  • SECRECY: The authors were outraged that certain financial consultants were chosen without even the pantomime of a public process.
  • STICKER SHOCK: Citizens were outraged and unprepared for rates to increase as they did.
  • CLUMSY: Citizens were outraged that the City and the vendors botched the initial roll-out by trying to move too quickly with parking meter transition.

Thanks in part to Chicago, this Pittsburgh deal is being publicized and scrutinized to death, the Mayor has given Council a 2 1/2 month window with a fleshed-out draft agreement, and Council gave itself $250,000 in the form of its very own financial consultant.

That should really take care of “HASTE” — and at least the “SHOCK” part of “STICKER SHOCK”.

What about secrecy and game playing? Check this out from Part 3 from the Mayor’s skeptics’ own hit piece. After relating an umpteenth story of Mayor Daley imperiously brushing off concerns about transparency in hiring consultant contractors:

But other cities have found other ways to do business.

For instance, in January Pittsburgh mayor Luke Ravenstahl announced that he wanted to explore leasing his city’s public parking garages and meters in return for cash he could pour into the city’s pension fund. A few weeks later the authority that oversees Pittsburgh’s parking system invited firms to submit proposals for an analysis of the idea. It received nine responses and determined four were qualified. Next a committee made up of city officials, an authority attorney, an authority board member, and a union representative interviewed the firms before recommending a winner at a public meeting of the authority’s board. Board members then approved up to $100,000 for the study.

The winner was Scott Balice Strategies, a woman-owned financial advisory firm based in Chicago. (Chicago Reader, Joravsky & Dumke)

Woman-owned. Ha! How can you beat that?

Balice Strategies went on to advise the Ravenstahl administration through its undertaking of a similar public process (very un-Chicago) which selected investment bank Morgan Stanley to further advise and construct the concessionaire’s agreement and to put it on the market. So especially considering City Council’s new additional study, this really has been a heck of a lot more transparent and by-the-book.


It bears mentioning that this Chicago Reader piece seems to be the most critical piece on the web about the Chicago lease deal. Although some critics remain, other people are now going around with their heads held high and lauding what happened in Chicago as a model, given it had some unfortunate problems.

One part had to do with faulty equipment, ascribed to a too-speedy and aggressive roll out of new parking meters. Let’s not do that.

The other part was pricing:

Even without this information, the city council voted 40-5 to approve the deal, and within weeks Chicago Parking Meters as much as quadrupled hourly rates at meters all over town, igniting outrage among motorists. (Joravsky & Dumke Part II)

Ah! Outrage! We don’t want quadrupling!

Some neighborhood parking meter rates will quadruple next month. Neighborhood spots that used to cost a quarter an hour will cost $1 an hour—and jump to $2 an hour in 2013. (Chicago Tribune, Mihalopoulos and Dardick)

Wait a minute. Parking meter rates quadrupled to a dollar an hour? It used to cost a quarter in Chicago to park at a meter for an hour? Those citizens were clearly spoiled. It seems reasonable that they should have experienced a sizable increase.

The cost of an hour’s metered parking Downtown would increase from $2 to $2.50 next year and go up another 50 cents annually in each of the following four years. (Post-Gazette, Joe Smydo)

So in 2015, an hour of parking Downtown on the street will cost you $4.50. A shade more than a doubling.

Are we spoiled also? It bears reminding ourselves at this point that we are an old city with a lot of aging infrastructure, increasing responsibilities and many more obligations. If market forces can be part of the solution, why not take these into account? Is it that necessary, or that effective, to specially value casual business traffic Downtown in this way? Lots of people already are Downtown for their office jobs (all day lot / garage parkers) and there is an especially alluring Cultural District and other amenities (evening lot / garage parkers).

And what about Pittsburgh’s garages?

The deal also would bring rates at parking authority garages in line with rates charged at privately owned facilities, Mr. Ravenstahl said.

Rates at some authority-owned garages would go up $1 to $2.25 per day next year. Right now, rates at the authority’s Downtown garages are $9.75 to $13.75 per day. (P-G, Joe Smydo)

I’ve been to other cities. That statement alone is not a scientific survey, though we will be provided with those — but I’m telling you, our garage parking is on the cheap side. It costs a lot to lug your car around, especially where there is great congestion. Fact of life.


By all accounts Chicago has calmed down, and as a city is doing pretty well for itself. But given the above, what does that leave from the outrages that consumed Chicago for a time, and that we are being instructed to fear here?

Precious little.

What are our alternatives?

There is a proposal to Borrow All the Money Now, only to pay it back with interest later, and to raise parking rates to pay for it to the extent that we can anyway — all the while maintaining local politics’ inefficient present political control over a non-core accessory function.

There is a Nonsense proposal about giving our garages and parking meters directly to our pensioners, somehow, and hoping that’s a good idea.

There is allegedly a Double-Super-Secret Mystery proposal being circulated among some crafty officials, which now is starting to seem like the one relying on conspiracy, timing and manipulation — assuming it exists and is not a personal-positioning ruse.

Then there is the real idea that after all this time — virtually at the denouement of Pittsburgh’s experiment in Act 47 Financially Distressed status — we will tell our fiscal watchdogs and the state Legislature (which actually acted to change their Municipal Pension laws on our behalf) to go sit and spin, dare them to seize control over our pension fund, and more than likely wind up in court and lose.

All of this has got me to thinking. It would be a tragically Pittsburghese, fishbowl-politics move, if we crucified a perfectly satisfactory and even surreptitiously beneficial solution, one which would get us through our pensions crisis until our debt service payment levels drop off dramatically in 2017 and until we can begin renegotiating the underlying employment anachronisms — an uncommonly innovative and absolutely progressive initiative — just because some of us can’t seem to tolerate the person enunciating it.

32 thoughts on “Mayor’s Pensions / Parking Draft Agreement Released. Serious Consideration May Begin.

  1. TheTruth

    Uh Bram, I'm not sure it was by design, but you seem to have left out the most important argument against the lease:

    When Daley administration officials announced in December that they were leasing out the city's parking meters for nearly $1.16 billion over 75 years to a consortium of investors headed by Morgan Stanley, they assured the media and anyone else who asked that this was a great deal for taxpayers in economic hard times.

    Yet not three months later administration officials inadvertently revealed to an alderman that the potential revenue from the meters was as much as FOUR times more than what the city got for them.

    Luke may be enunciating this deal, but it is all Morgan Stanley. Don't get it twisted. They are advising Ravenstahl. And they stand to make their $3 million+ if and only if the deal goes down. Do you really think they are going to tell us not to do it or that we should explore other, more responsible, long-term solutions?

  2. Bram Reichbaum

    TheTruth – Not an intentional omission and I wouldn't say that was definitely among the most important or harped upon complaints in that article. But I think what you highlight has been addressed in comments made already that we can't recapitalize our pension funds, upgrade antique city equipment or invest in infrastructure systems with money that trickles in a few million dollars at a time over the next 50 years. I think also that a broker would be entitled to compensation for designing a complex transaction that matches an extraordinarily demanding seller to an optimal group of investors; and that those investors would be entitled to a shot at a healthy profit for taking over the maintenance, management, liabilities and responsibilities of those operations. But of course that is something we'll all have to watch going forward. We wouldn't want to sell out for chump change.

    Also that “FOUR times” valuation cited by whomever is in significant dispute.

  3. MH

    Anybody giving money now for revenue over a 75 year period is going to pay much less than the expected revenue. (But, I'd still rather the city keep the parking garages as those are harder to piss away in the stock market.)

  4. BrianTH

    My understanding of the financial issues is that it is all a matter of term. Private firm discount rates past a couple decades are too high by a city's standards, so private firms aren't willing to pay cities enough for those farther-future revenues. The obvious solution is to limit the term of the deal to a couple decades (give or take), then rebid at that future point.

  5. Anonymous

    Great piece of writing but you forgot to mention one important thing. I know of at least four garages downtown that look like they're ready to fall down at any moment. The one at 9th & Penn looks like a stack of soggy waffles. With the parking authority already 100 million in debt how are they going to rebuild these without borrowing huge amounts of money?

  6. MH

    The one at 9th & Penn looks like a stack of soggy waffles.

    I know that one and it is pretty scary if you see the cross-sectional view.

  7. n'at

    Any way you slice it, raising parking rates through this dead cat bounce will shock business owners and their employees. However, commercial development will not keep up with any reflexive need for out migration of business from the downtown core. I would contend that long term migration would be into the city, as there is greater opportunity and fewer impediments in the housing market for movement, than in the commercial market; and the vurp in today's P-G by the Downtown Partnership is right about the facts of mass transit in the urban core, but wrong on the effects of PAT service cuts.

  8. BrianTH

    I gather the deal includes mandatory capital investments, so I take it that is supposed to help address the condition of some of the garages (of course that is money not going to the pension, but you have to draw a line somewhere).

  9. InsideAgitator

    Thanks for all the Windy City stuff – lots to consume over the long weekend. We still don't know how much the guys at K+L Gates (and Mayer Brown, too?) are gonna rake us for in this sweet P3 deal? And that's even if the thing dies on the vine!

  10. TheTruth

    we can't recapitalize our pension funds, upgrade antique city equipment or invest in infrastructure systems with money that trickles in a few million dollars at a time over the next 50 years.

    Two points:

    #1 – It is much more than a few million a year that “trickles in”.

    When you factor in Luke's proposed increase in parking rates the revenue stream begins to take on Youghiogheny-like qualities. Ask yourself, Would potential investors be interested in a revenue stream that trickles?

    #2. How will the city manage to “upgrade antique city equipment or invest in infrastructure systems” if Pittsburgh decides to lease the parking garages and eliminate one of our significant revenue streams? (Keep in mind that the predicted $200 million is going directly into the pension fund.)

  11. Anonymous


    If we get our pension taken over by Harrisburg, our MMO (minimum municipal obligation) will increase substantially, leaving the City, already structurally upside-down financially with the option to raise property taxes AND wage taxes in some combination. Local politicians are tax-hike-averse, so the easier thing to do will be to further defer necessary maintenance.

  12. Bram Reichbaum

    TheTruth – Anon 8:34 beats me to one part of my response. That's what I meant by referencing equipment and infrastructure; our steep payments under the terms of a state pensions takeover will severely impact those.

    I believe the Parking Authority has been paying the city about $14 million per year, so yes I'll admit that's more than “a few million”, but that's already been factored in to our annual budget; continuing this wouldn't do anything to achieve liberation from, or to defray, increased pension payments.

    Th leap I hope people make is, if we consider that $14 million to be the “profit” the Authority is currently achieving, imagine what that could be possible if it was run more like the business THAT IT RIGHTFULLY IS, rather than a political plantation. I'm not extremely well-versed but I don't think we need to look deeper than the masthead to notice that patronage is probably pretty rife. Part of what I think scares some politicians is, what happens to the “deals” that have been settled if everybody's brothers, nephews, committee supporters and enemies no longer can be satisfied with guaranteed positions and pensions? I'm not saying private industry is perfect either in the efficiency department, but I am saying the parking industry is a fine and advantageous choice for political divestment.

  13. BrianTH

    I thought the deal was supposed to be $200 million for the pension fund, $100 million for debt cancellation, and some (undetermined) amount for capital investments. Any future revenues the City would anticipate if it continued to operate the spaces itself would first have to go to those capital investments and debt cancellation.

    Anyway, I think it helps to put this the other way around. Suppose the City had $300+ million to invest (the + is for the capital investments). Would it seem like a good idea to invest all $300+ million in leasing a parking system in the City for 50 years, which the City would then also have to operate to get a return on its investment?

    I don't think I would suggest such an investment to the City. I might suggest it to other investors, if the investment group included an experienced parking operator, plus passive investors with a diverse portfolio of other holdings. But not the City.

  14. Bram Reichbaum

    BrianTH – I hadn't heard we're seeking greater than the required sum to pursue cap investments, but you may be correct. I noticed Councilman Dowd attempted to move the goalposts by volunteering helpfully, “If we get $500 million, that'd be hard for me to pass up.” That may be a bit unrealistic but if we view it as $100 million = Grossly insufficient, $300 million = Sufficient, $500 million = Let's all retire! that's probably fair.

  15. BrianTH

    I haven't seen the actual draft agreement so I really don't know the details. But this article . . .

    . . . contained this line:

    “Among other provisions, the lease proposal:
    . . .
    Requires the leaseholder to make capital upgrades the city and authority couldn't afford.”

    I'm interpreting that as an additional amount above and beyond the cash that would go to debt cancellation and then the pension fund. It probably is a smaller sum than those, but it may be more than a rounding error nonetheless.

  16. Bram Reichbaum

    Anon 10:04 – Haven't seen the lease agreement yet, but I doubt it will be described as very “let do” or “leave it be”. Things are tied to the rate of inflation for example, and to more arbitrary things.

    BTW I wouldn't recommend privatization for our water, or for mass transit (entirely). But c'mon man, this is park-king, this is a business. Just ask Pat Ford.

  17. TheTruth

    I have to agree with Anon 10:04 on this issue.

    Bram said:

    I believe the Parking Authority has been paying the city about $14 million per year, so yes I'll admit that's more than “a few million”, but that's already been factored in to our annual budget; continuing this wouldn't do anything to achieve liberation from, or to defray, increased pension payments.

    You know what hasn't been factored into our budget? -> The projected revenue that would result if the city maintains control of the parking assets and increases the rates to Ravenstahl's proposed levels.

    This lease proposal is a giveaway that will only benefit private interests. (see: “selling out for chump change”) 50% funded is only 50% there. The state is going to end up with control of the pensions now or five years from now. Ownership of the parking garages will at least give the city a way to meet the increased contributions that are going to be required once the state takes over.

  18. Bram Reichbaum

    Careful, there's another commenter that goes by “TT”.

    TheTruth – It's questionable whether “the state is going to wind up in control of our pensions now or 5 years from now”, and it's also debatable whether that's desirable.

    Next, even if we say for the sake of argument that the City is willing to raise rates AND retain them at those levels without cutting breaks, years moving forward … what is to say they could run the operation efficiently enough to make margins high enough to meet the state takeover obligations? Compared to … NOT a government, who has to make sure everyone is “happy”? Five and six years down the line, the required payments to the state (our hopeful “profits”) really start to look ridiculous. Was it like $50 million over and above present, please don't quote me…

  19. MH

    Next, even if we say for the sake of argument that the City is willing to raise rates AND retain them at those levels without cutting breaks, years moving forward…

    See, that's the part that really bothers me. I don't think, anymore than you, the city can or will raise those rates themselves. They are doing the sale to evade responsibility for collecting needed revenue. This is a bigger problem than whether or not the state takes control of our pension system.

    What the parking deal amounts to is the government selling a monopoly or subcontracting out the right to collect taxes. This is also known as tax farming. It is a sign of ineffective government so old (and so despised) that it comes up in the Gospels more than once. Having owned this right to collect taxes was sufficient to get the guillotine during the French Revolution.

  20. Bram Reichbaum

    MH – Mark well it's not just what you underline; it's also the parking authority's capacity to use that same hike to output a sufficient net yield. The efficiency advantages accrue on the front end AND on the back end.

    It'd be interesting, however, if we attempted to resolve to that exact same fee schedule, whether Morgan Stanley could go after us for theft of services or intellectual property. That is if they had anything to do with concocting it.

  21. MH

    Mark well it's not just what you underline; it's also the parking authority's capacity to use that same hike to output a sufficient net yield.

    What I was underlining was trying to go back to TT's point:

    The state is going to end up with control of the pensions now or five years from now.

    Because basically a government that needs that much help is just going to go broke over something else in a few years anyway. I suppose there are a few cases where the difference in efficiency could matter, but if running a parking garage is such a case, then you need to fix the government before you hock the jewels.

  22. Anonymous

    I see that little Lukie is having community meeting regarding the parking sale. Can anyone explain why he chose Brookline, North Side & Greenfield? Better choices would have been Oakland, Shadyside, Sq. Hill… Places that actually deal with meters, lots and garages as a way of life! Shops that depend on business turn around, social visits, residents quality of life. I could go on and on but his choice of locations is just another example of the lame ass snow job he's always pulling. He's a jack ass!

  23. Bram Reichbaum

    They don't do social visits on the North Side?

    If there aren't any meters in Greenfield, the folks from Sq. Hill should have an easy time parking to make it to the meeting.

  24. MH

    There are some meters in Greenfield, but not by the meeting site. The only ones of which I'm aware are by the Giant Eagle on Murray and nearby side streets. As for an easy time parking, if there is a ball game or if the pool is full, parking might be hard. The 56E and 56U go by the center. If anybody does drive from Shadyside, they can go see the mythical other end of Beechwood Blvd.

    I may go, depending on schedule.

  25. Anonymous


    Been waiting for Pension Issue for a long time.

    Broke out all the old paperwork and have at least 3 different views on what could happen…

    Sipping Bud Light w Lime from recliner…



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