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[Op-Ed] Privatize Parking, But Not for the Kings

Harris Kenny and Leonard Gilroy
March 3, 2012, 3:38pm

Sacramento is on the verge of becoming the third U.S. city to privatize its parking assets. As my colleague Leonard Gilroy and I explain in our recent op-ed in The Sacramento Bee entitled "Privatize Parking, But Not for the Kings":

Sacramento's burning desire to keep the Kings in town has the city considering privatizing its parking meters and garages. By itself, the plan to bring the private sector in to modernize and operate the city's parking assets would be a good one. But taking the proceeds from a privatization deal to help build an arena and subsidize an NBA team is not.

The City Council recently voted unanimously to see which companies might be interested in operating the nearly 13,000 city-owned metered parking and garage spaces. Privatizing city parking assets makes a lot of sense. Cash-strapped governments do a poor job of maintaining and modernizing parking meters and facilities. And urban parking rates are rarely what they should be because few politicians want to be blamed for raising parking costs.

The piece goes on to detail successful public-private partnerships for surface transportation projects, such as parking assets in Indianapolis and the Indiana Toll Road. Next we debunk arguments for using parking proceeds to finance the arena:

First, taxpayer subsidies to the arena are likely to be higher than advertised. In a 2005 study of major U.S. professional sports stadiums and arenas, Harvard University's Judith Grant Long found each NBA arena costs taxpayers $53 million more than advertised due to unexpected operating costs, capital improvements, municipal services and forgone property taxes that weren't accounted for in initial projections. Grant Long found that, across all major professional sports, taxpayers end up paying an average of 40 percent over initial facility cost projections.

Perhaps worse than the hidden costs, a large body of academic research suggests that sports arenas are economic losers for cities. A study by researchers from Vanderbilt University and Smith College found "there is no correlation between sports facility construction and economic development." Arenas tend to simply reallocate what's already there, as opposed to drawing new jobs and money into the local economy.

Finally, we conclude:

Sacramento could invest the parking lease revenue to build infrastructure and transportation projects, pay down city debt or even shore up underfunded public employee pensions. Any of these steps would put the city on significantly better fiscal footing and deliver greater long-term benefits to taxpayers than the arena.

Government should focus on what is essential. It shouldn't be in the business of building NBA arenas. And it shouldn't run parking meters and garages, either. The current arena plan to do both is a steal for the Kings and an air ball for taxpayers.

Read the full piece available online here. For more on leveraging parking assets through public-private partnerships, see here, here and here.


Harris Kenny is Policy Analyst

Leonard Gilroy is Director of Government Reform


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