Getting Government Out of the Parking Business

My latest Bacon’s Rebellion column is upâ??here’s an excerpt:

Just a few short years ago, few would have predicted that parking assets would be the next hot trend in municipal privatization. Then Chicago offered a game-changer by tapping nearly $1.7 billion through two long-term leases of municipal parking assets in recent years, allowing the city to close a massive budget deficit, retire debt and invest for a rainy day. Virginia and D.C. policymakers should take note, because their peers are already racing to follow in Chicago’s footsteps.

Parking is a natural privatization opportunity. Few public officials would argue that providing municipal parking facilitiesâ??garages, surface lots and parking meter systemsâ??is a core function of government. Rather, parking is essentially a commercial venture, and governments aren’t particularly adept at running business enterprises, presenting opportunities for private providers to improve operations. Privatization in parking can take on different forms, from long-term leases of city facilities to multiple leases for competition between garages or parking areas.

Though parking privatization is commonplace in Europe and elsewhere, Chicago has been the U.S. pioneer in demonstrating the power of leveraging municipal parking assets. In 2006, the city announced a 99-year, $563 million lease of four underground parking garages (over 9,100 spaces) located downtown, beneath Grant and Millennium parks. In return for the $563 million upfront paymentâ??primarily used for debt reduction and the establishment of reserve fundsâ??winning bidder Morgan Stanley Infrastructure Partners (MSIP) took over operations and agreed to rebuild garage infrastructure over the life of the contract, allowing the city to avoid taking on tens of millions in long-term capital costs.

Read the whole thing here.