Roughly speaking and apropos of nothing, this came about due to an unwillingness to delegate sacrifices, a compulsion to cave under political pressure, and a special love of putting off ’til tomorrow what might be done today.
As a consequence of this growing absurdity, last year the Commonwealth of Pennsylvania was roused to assume the management of this city’s public pension funds as part of statewide legislation that assumes control over all municipal funds that are urgently distressed at levels below 50% funding.
50% is still critical mind you, but not quite ROTFLMAO-worthy.
However, we the Pittsburghers, loathe to surrender local control (despite having ceded a great deal of it already under sharp duress in 2004) begged, pleaded and cajoled the Legislature into carving out an extension for us — for Pittsburgh, the biggest basket-case of them all — on the logic that we have a Plan, that we are closer than they all realize, and that we are about to monetize some cherished assets in an innovative fashion.
The taxation aspect of this Plan never materialized (we couldn’t identify a single constituency capable of shouldering that burden, fancy that) but that measly $15 million line item was small-potatoes, operating-budget style money anyway. The parking space monetization was our main pitch. The legislators agreed it looked very promising, granted our special extension, and continued eagerly to look forward to it.
And so we spent our extension hiring consultants, working with brokers, and informing the public. And here we are.
1) Monetize the Parking Spaces.
PRO’S: Should net us over $320 million, thus avoiding a state pensions takeover, and retiring Parking Authority debt to boot. Does not relinquish control over a “core” city function essential to the people’s health and welfare. Likely to generate additional future revenue through collateral monetization (advertising) when this is permissible under our zoning code. Allocates a significant portion of our financial burden to out-of-city commuters, a goal many have long sought. Should satisfy our partners, the Legislature and the oversight boards, thus enhancing our chances of petitioning these successfully in the future and very likely expediting our liberation from these bodies.
CON’S: The rates at garages and meters will increase, as the parking market allows. Local business communities, both Downtown and in several neighborhoods, will envision the destruction of their world and be sorely displeased with their representatives. In the neighborhoods, more people will feel coerced into parking two blocks or more off the main drag onto side streets, where there are no meters. Other people, particularly those headed Downtown, will feel compelled to take public transportation, requiring cash payments to the Port Authority. Somebody, somewhere is likely to make a profit. Luke Ravenstahl will have succeeded at something.
2) Take Out a Bond Issue.
PRO’S: Will generate at least $220 million, thus avoiding a state pensions takeover. Will not upset or in any way discomfort a single person. Does not relinquish political control over a non-core but nonetheless cherished public asset. Parking rates will not rise quite as much as the market will allow.
CON’S: Approximately $450 million will need to be repaid, over the course of 20 years. Parking rates will still rise greater than half as much as under a lease, in order to cope with this debt. In so budgeting, Pittsburgh incurs risk in the event that anything negatively impacts the parking market: rises in gas prices, a double-dip recession or worse, continued population loss, natural or man-made disasters.
Back to certainties: this new debt will significantly hinder our ability to issue other bonded debt for the purposes of repairing our already threadbare infrastructure — which absolutely must happen soon — or for other capital projects. Future residents of the City and region will regard us much as we do our own forebears, for having made the same decisions to pay-it-backward. Parallels with a certain refinancing scheme under Mayor Murphy which we now all employ as a cautionary tale will be too exact to ignore.
3) Make the State Delay Once Again.
Yes, as previously divined at the Comet, this argument is likely to make a concerted and exciting appearance!
PRO’S: To those who believe deep down inside that it is unavoidably time to pay the piper and monetize our parking spaces — very possibly a majority — this will enable them to be reelected first, which is awesome. Those who are less fundamentally exercised over Pittsburgh’s hysterical 29.6% pensions funding level get to avoid being encumbered by it. Those who resent past state decision making, and the existence of the ICA in particular, get to rattle their legal sabers for a time in populist fervor. And all of the above, together with still others, get to enjoy the fruits of a noteworthy temporal victory over an at-times arrogant mayoral administration.
CON’S: The present lease deal, which has taken almost a full year to arrange, may wind up being scrapped before the outcome of the appeal-to-slash-showdown-with the Commonwealth becomes apparent. To the extent that it will be a legalistic showdown, these rarely go well for us; and to the extent that it will be a plaintive appeal, state officers will remember that we already begged and pleaded with them once precisely in order to arrange this lease deal. Meanwhile, the 29.6% funding level could slip even further, deepening the hole.
In addition, those resigned to executing a lease eventually — only not before an election, and/or not one known as “Mayor Ravenstahl’s plan” — may encounter a different environment. In addition to a deeper hole to fill, infrastructure investors may not have the same confidence in a flaky city which took them down this selfsame road only to cop out at the precipice for a host of idiosyncratic reasons. On top of this, although it appears the economy and the credit markets have recovered from what might have been a true Depression, talk of a double-dip recession has become commonplace thanks to fundamentally insufficient Congressional stimulus and stubbornly weak job numbers. This double-dip would equally impair our ability either to monetize assets or issue debt.
In short: we know we now have a window to make gains against our fiscal difficulties one way or the other — and we also have a lease deal already developed, the terms of which have been widely trumpeted over months, should we opt to go that route. We know relatively little about the future, and there are sound reasons not to play dice. Yet dice are always tempting when there is much — politically — to be gained.