Innovators in Action: Indianapolis’ Parking Meter Lease, One Year Later

In case you missed it, last week we published the latest installment of Reason Foundation’s Innovators in Action series, my interview with Indianapolis Deputy Mayor for Economic Development Michael Huber on the first year results from the modernization of the city’s metered parking system, the product of a long-term lease of the system to a private concessionaire.

In August 2010, Indianapolis Mayor Greg Ballard announced the winning bidder for a 50-year concession (lease) of nearly 3,700 city parking meters in the downtown and Broad Ripple areas. Under the concession, ParkIndy-a team composed of Xerox and its local partners Denison Global Parking and Evens Time-have taken over responsibility for meter system operations, maintenance and capital investment, in exchange paying the city $20 million up front and an estimated $300-600 million share of ongoing revenues over the 50-year lease term. The city council approved the deal in November 2010, and the concessionaire took over parking meter operations in March 2011.

City revenues generated from the parking meter concession will be dedicated to street, sidewalk and other infrastructure improvements in the metered portions of the downtown and Broad Ripple areas, effectively allowing the Ballard administration to stretch its existing $500 million infrastructure repair program even further.

Based on the interview, the city appears pleased with the early results. Here’s a short excerpt:

Gilroy: Overall, how are Indianapolis taxpayers and drivers benefitting from the parking lease? Could the city have committed to the same level of operation, same level of investment without turning to the private sector?

Huber: One of the key goals of this program was to increase the convenience for citizens and visitors. In the upgraded system, motorists have the choice to pay with coin, credit card, debit card or even with a phone or online application. Initial trend data shows that in the busiest section of the metered parking area, over half of the monthly transactions are now credit card payments. In just the first full month of having pay-by-phone functionality, thousands of pay-by-phone transactions were made. Leading to a better experience because motorists now know when there meters is about to expire and can add additional time from a meeting or if they are having dinner without worrying that they may get a ticket.

In addition to this flexibility in how to pay, motorists will benefit from having a higher level of meter reliability. Newer meters break less often than the older legacy meters did, and the new meters utilize a wireless network to provide operational data to a centralized maintenance department that can dispatch repair crews much faster than the City was able to in the older system. Often when the city was in charge of repairing meters they would be broke for days or weeks leading to lost revenues and poor customer experiences.

The concessionaire’s new Parker mobile application also allows motorists to find available parking spaces using sensors and support equipment that ParkIndy has installed.

It is difficult to imagine how the city could have made all of the technical upgrades and process improvements in the metered parking system given the state of municipal budgets, not just in Indianapolis but everywhere. In addition, the concession agreement provided an initial $20 million upfront payment that has allowed the city to fund projects that would otherwise have been delayed, or would not have happened at all.

Read the whole interview for Huber’s thoughts on the first year revenue picture, the transition to privatization, operational efficiency and a look forward to the second year of the lease.

As I wrote here last week, Indianapolis’ parking meter lease has been a model example of privatization done well, a public-private partnership that continues to bring dividends for the city and taxpayers. Mayor Ballard’s administration and the ParkIndy team deserve a ton of credit and should serve as an example to other governments seeking similar transformative partnerships.

For more on the subject, recent Reason Foundation articles on parking privatization include:

[Note to readers: In previous years, we have published Innovators in Action in an annual report format, the last edition having been released in early 2010. The publication has been on a temporary hiatus since then, but we have resumed publication in a slightly different format. In order to deliver timely content to our readers on a more frequent schedule, we’re publishing one Innovators article per month on Other articles featured in the Innovators in Action 2012 series are available here.]