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I am still not so sure it would have been great to hand over the parking to a single company, forming a city-wide monopoly on parking.
Just to be precise, there are competing private garages and lots, and of course plenty of unmetered street spaces. The only "monopoly" would be specifically in metered street spaces, and that is a "monopoly" the City already has.
Edit: By the way, in theory it would be possible to have competing metered street space companies, but I strongly suspect this is a case of a "natural monopoly", which means something along the utility/PPP model is likely to make the most sense (assuming any sort of private operator at all).
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Despite other benefits it may have had, it also would have annoyed me to be to hand over a profit to park somewhere that I have already paid to pave.
Of course this same sort of thing happens all the time--lots of for-profit companies are partnering with public authorities to provide all sorts of goods and services to the public for a fee. In fact to some extent that is true every time a fee-collecting authority uses private vendors for any sort of relevant good or service.
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If the parking "market" was grown as a private enterprise, without having to compete against subsidized garages and meters, we probably would have had more places to park and more competition among investors to keep prices reasonable...
Maybe, maybe not--people might have found other, more valuable, ways to use some of the land the City is currently using for garages, lots, and street parking.
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but that wouldn't be the case here, where the government-created mess is just turned over to a private company. This might be the rare occasion where I think political motivation (to maintain reasonable parking prices) is better than the alternative, which is no motivation at all.
I'm not sure what you mean by "no motivation at all". The purpose of the deal would be to:
(A) Pay down a substantial chunk of the City's existing financial liabilities;
(B) Shift parking revenue risk to the private operator;
(C) Increase tax revenues from the parking assets;
(D) Secure outside capital for maintenance and improvement of the parking assets; and
(E) Move much closer to an optimal parking rate system from a public policy perspective.
Of course (E) in particular is a direct contradiction of the idea that allowing politicians to continue to set rates according to their political calculations is the best way to get "reasonable parking prices". And in fact most parking policy wonks will tell you that the optimal parking rate is likely to be much closer to the market rate than to a politically-determined subsidized rate.
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Also, it's not like this was even permanently fixing the pension problem. A few years out, we would be back in the same spot, yet with the higher parking rates.
Personally, I think this was a good idea whether or not it addressed any particular pension issue--none of (A) through (E) actually depend on that claim.
it seems idiotic to have voted the mayor's plan down BEFORE the city got the payment schedule from the state.
Not idiotic so much as naked political maneuvering. This is a perfect moment in time from a political perspective to try to vote down the lease plan: the lease details are available to bash, whereas the details of the alternatives are unavailable, and so there is nothing in particular people can say to criticize those plans.
This, of course, is part of why it is so hard to get a lot of good ideas through the political process: it is politically easy to oppose change when the public isn't demanding that those opposing change provide detailed, workable alternatives to address the relevant issues.
Of course this same sort of thing happens all the time--lots of for-profit companies are partnering with public authorities to provide all sorts of goods and services to the public for a fee. In fact to some extent that is true every time a fee-collecting authority uses private vendors for any sort of relevant good or service.
I am not sure I agree that a service is being provided, given that taxpayers are already paying for ownership and paving of the parking space. The meter isn't really a service to me at all. You may say that it provides discretion over who has access to the parking spot, but this isn't really the precedent set with public assets (as in the aforementioned parks example).
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I'm not sure what you mean by "no motivation at all". The purpose of the deal would be to:
I wasn't talking about motivation to get the deal done, I was talking about motivation of the private company to maintain reasonable pricing.
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(A) Pay down a substantial chunk of the City's existing financial liabilities;
(B) Shift parking revenue risk to the private operator;
(C) Increase tax revenues from the parking assets;
(D) Secure outside capital for maintenance and improvement of the parking assets; and
This all comes in the form of higher parking payments. We could accomplish this without a private entity having to make a profit at the same time.
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(E) Move much closer to an optimal parking rate system from a public policy perspective.
From a public policy perspective, the only thing that will move people is a lower rate. How many people do you think will say "Oh, well higher rates means those most interested in parking will have access to the spot?". Not many. The public response will be "I can't afford to go to work".
that's not necessarily true. it would have gotten funding up to 60%.
..but the pension demands continue to increase..
If my income and budget cause me to fall short on the mortgage, and I sell my guitar to cover the difference this month, next month, I will be in the same boat but with no guitar. The cause of the problem is not being addressed.
Had the parking lease gone through, we would have been back here in __ years getting ripped off at the meters and still have an underfunded pension issue.
..but the pension demands continue to increase..
If my income and budget cause me to fall short on the mortgage, and I sell my guitar to cover the difference this month, next month, I will be in the same boat but with no guitar. The cause of the problem is not being addressed. Had the parking lease gone through, we would have been back here in __ years getting ripped off at the meters and still have an underfunded pension issue.
while I don't share your belief that a private company is magically going to charge more than the space is worth, I can understand this. It would be nice to see a plan to address the shortfall go hand in hand with one to move to a defined contribution plan.
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Originally Posted by trencefusion
This all comes in the form of higher parking payments. We could accomplish this without a private entity having to make a profit at the same time.
yet somehow municipalities often spend more while not making a profit. it seems you have more a personal bias against profit than one against the actual amounts. why shouldn't someone make a profit on parking? what JP Morganis offering is basically borrowed cash. I'd argue that a sale would make sense to pay down debt as well. what I don't understand is that you don't trust the government to manage the pension but you do trust them to manage parking.
I am not sure I agree that a service is being provided, given that taxpayers are already paying for ownership and paving of the parking space. The meter isn't really a service to me at all. You may say that it provides discretion over who has access to the parking spot, but this isn't really the precedent set with public assets (as in the aforementioned parks example).
All sort of fees are charged to use publicly-funded services, goods, and places, including for that matter some parks.
Anyway, the service is indeed providing you with a place to park. Eventually, the service may include helping you locate that place to park, and even reserving it in advance. But in any event, it is definitely a service even as is, and the mere fact that the public in general has helped pay to provide that service doesn't change that fact. Indeed, the public could be allocating that parking lane to instead another mixed-traffic lane, or a dedicated bus lane, or as a sidewalk, or so on. So when you use it for parking instead, you as an individual are definitely making use of a service.
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I wasn't talking about motivation to get the deal done, I was talking about motivation of the private company to maintain reasonable pricing.
So obviously the motive of the company is to maximize net revenues. But it turns out that is going to get you to just about the same rates as optimal policy would dictate anyway. Basically, the company doesn't benefit from empty spaces, and it will want to price the spots such that most of them are filled whenever possible, with just enough spots open to make it convenient for the pool of potential parkers at the given rate to find spots. And that is pretty much what optimal parking policy would want too.
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This all comes in the form of higher parking payments. We could accomplish this without a private entity having to make a profit at the same time.
Actually, (B) and (D) are impossible without bringing in an outside entity. And your ability to do (C) is more limited without an outside entity due to a provision of state law. And you can't actually do (A) without an outside entity--you can only shift your liabilities around (e.g., convert unfunded pension obligations to debt).
So in fact you can do virtually none of the things on this list without bringing in an outside entity. That's how they got on the list in the first place.
And in general there is an odd double-standard here. Somehow it is bad to bring in a for-profit entity as a partner in operating the parking assets, but it is fine to borrow money from a for-profit entity, and plan to pay them back out of parking revenues. I fail to see the crucial distinction. Either way, some of your increases parking revenues are going to turn into profits for some private entities.
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From a public policy perspective, the only thing that will move people is a lower rate. How many people do you think will say "Oh, well higher rates means those most interested in parking will have access to the spot?". Not many. The public response will be "I can't afford to go to work".
You are conflating politics and policy. Of course it is often hard to explain good policies to people, and in general people don't like change, so arguing against change is typically easier. So politics often kills good policies. But that doesn't make the politically expedient position the better policy.
If my income and budget cause me to fall short on the mortgage, and I sell my guitar to cover the difference this month, next month, I will be in the same boat but with no guitar. The cause of the problem is not being addressed.
That's not a very good analogy. The proceeds from the lease would be used not just to make payments, but to actually reduce the City's total financial liabilities (through a combination of retiring parking debt and increasing the pension fund). If you were going to use a mortgage analogy, it would be like selling a second home to retire the mortgage you are paying on that home, and also paying down a bunch of principal on the mortgage on your first home. And when you have way too much mortgage debt, maybe selling your second home isn't such a bad idea.
In any event, it is true that doing all this won't completely fix the pension problem, because that problem is fundamentally caused by a bunch of state laws. Nonetheless, the deal makes good financial sense on its own merits, even if it leaves these other issues unaddressed.
yet somehow municipalities often spend more while not making a profit. it seems you have more a personal bias against profit than one against the actual amounts. why shouldn't someone make a profit on parking? what JP Morganis offering is basically borrowed cash. I'd argue that a sale would make sense to pay down debt as well. what I don't understand is that you don't trust the government to manage the pension but you do trust them to manage parking.
I have no bias against profit. I have a bias against earning a profit by charging for access to public land.
Don't get me wrong, I don't think the city should have ever owned these garages to begin with, and whatever decision made that happen certainly pre-dated my living here. I just think the market has been built up around the assumption of subsidized garages and now to turn that over for a single entity to control as they please is unwise.
I have no bias against profit. I have a bias against earning a profit by charging for access to public land.
Do you have a problem if a for-profit entity operates something like a restaurant or hotel or boat rental or so on in a government-owned park? Serious question--that's really the same thing.
Generally, public or private, when parking is scarce enough, use of that parking has to be rationed some way, and often the best way will be through price. Meanwhile, even if the parking operator is nominally non-profit or governmental, if it has to borrow from for-profit entities to pay for capital investments, then some of the fees it will charge will be going to for-profit companies. So, right now, people are already paying something to private, for-profit companies in order to park in metered spaces and City garages/lots.
Basically, my point is that this principle is impossible to enact in the real world. I really think this is a case of status quo bias: if we already had a private operator for the parking assets on a long-term lease, no one would think twice about whether that was an improper way to operate a service on public land. It would just be business as usual, as it is in so many other circumstances.
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I just think the market has been built up around the assumption of subsidized garages and now to turn that over for a single entity to control as they please is unwise.
Again, we need to be precise here. There are lots of private garage and lot operators already--only the metered spaces on streets would be a "monopoly", as they are already.
As for needing to preserve parking subsidies because people have built up expectations around them: I can see that being an argument for a somewhat gradual transition to market rates. I can even see that being an argument for using some of the proceeds in deliberately compensatory ways, such as investing in better public transit options. But I can't see that being an argument for continuing a bad parking policy forever--at some point you have to be able to work out of mistakes made in the past.
Do you have a problem if a for-profit entity operates something like a restaurant or hotel or boat rental or so on in a government-owned park? Serious question--that's really the same thing.
No, it is not the same thing. I haven't paid for the food with my tax dollars already, as I have in the land and pavement of the metered property. They aren't charging me to access something I have already paid for.
It is much more similar to road tolls, which I generally disagree with as well. It would be fairest for the person using the road to pay for it. The reality though is that, in most cases, the road has already been previously funded and the toll is there to make up for some other goverment misstep/shortfall - this is what I disagree with.
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Again, we need to be precise here. There are lots of private garage and lot operators already--only the metered spaces on streets would be a "monopoly", as they are already.
As I said before, the monopoly we have now is motivated to keep the prices low for the consumer. Private investors will not have that political motivation.
If you remember back to economics class, the first 10 minutes of the first class period covers the basic theories of supply and demand, pricing, and equilibrium. It's when government intervention comes into play that the complex exceptions to these theories are created. I believe we would have a lot larger variety of private parking options had the subsidized parking not existed already.
The correct thing to do would be to sell, not lease, the public parking areas, individually, and use the capital for long-term investments or return it to the taxpayers.
As I have said before, I have no sympathy for those that continue to increase our pension obligations. In the private sector, employees have had to deal with layoffs, loss of benefits, mandatory furloughs, decreased wages, etc. To think government employees should be exempt from this pain on the backs of the private workers who have already suffered is ridiculous.
Last edited by tranceFusion; 10-15-2010 at 09:16 AM..
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