Commentary

L.A. City Council Unanimously Approves 50-Year Concession for Parking Garages

The Los Angeles Times reports that the L.A. City Council has unanimously voted to proceed with a procurement for a 50-year concession for the operation of nine city-owned parking garages. The terms of the concession agreement will be released next week, with a winning bidder expected to be announced by March. I’ll review the details of the concession once they’re released, but a notable twist thus far is the surficially counterintuitive situation where the public employee unions are supporting privatization while businesses are opposing it:

After a three-hour closed-door meeting on the topic, City Administrative Officer Miguel Santana said the council had voted unanimously to submit a parking garage concession agreement to potential private operators. That vote paves the way for an agreement to be released next week and a company to be selected in March, he said.

Santana said the garage plan had been revised during the closed-door meeting but would not say how. But Council President Eric Garcetti said after the meeting that he had “listened” to complaints of Hollywood business owners and “would not have voted” for an agreement that did not protect its business district. […]

Wednesday’s vote came after Villaraigosa, budget officials and scores of city workers warned that the council would have to lay off more employees if it failed to select a private company to run the garages for the next 50 years. The lease is supposed to generate $53 million for the fiscal year that ends June 30.

Union leaders said they were especially upset that council members were weighing more furloughs, or unpaid days off, at the same time that they were thinking of dropping the garage plan. […] While public employee unions demanded that council members lease out the garages, business leaders have urged them to drop, or dramatically rework, the plan in a way that keeps rates low. […]

Council members voted in May to put the garage plan in this year’s budget. But they also stated that if the deal did not move forward by October they would need to lay off an additional 1,000 workers.

When that deadline passed, council members gave themselves four more months to put the agreement together. Since then, more than a dozen companies — including investment firms Starwood Capital, Bainbridge ZKS and Kohlberg Kravis Roberts — have expressed interest.

Los Angeles’ decision comes on the heels of major parking concession procurements in Indianapolis and New Jersey. Back in August, Indianapolis Mayor Greg Ballard announced the winning bidder for a 50-year lease of nearly 3,700 city parking meters in the downtown and Broad Ripple areas. Under the lease, Xerox-subsidiary Affiliated Computer Services (ACS) and its local partners Denison Global Parking and Evens Time will take over responsibility for meter system operations, maintenance and capital investment, in exchange paying the city $20 million up front and a $600 million share of ongoing revenues over the 50-year lease term. The city-county council approved the deal in November.

All revenues generated from Indy’s parking meter lease will be dedicated to street, sidewalk and other infrastructure improvements, effectively allowing the Ballard administration to stretch its existing $500 million infrastructure repair program even further.

In October 2010, the New Jersey Transit Corporation (NJ Transit) issued a request for qualifications (RFQ) for a 30- to 50- year concession for some or all of its commuter parking facilities throughout the state. The proposed concession program—known as System Parking Amenity and Capacity Enhancement Strategy (SPACES)—aims to expand parking capacity and enhance services at some or all of the approximately 48,000 spaces controlled by NJ Transit statewide. The RFQ specifically lists approximately 80 parking lots as part of the bid, a mix of revenue-generating and unpriced lots (that would likely to be converted to paid spots as part of the concession).

NJ Transit received statements of qualification from 10 bidder teams in mid-November, and the following month the agency narrowed the list down to seven qualified concessionaires eligible to bid when the agency issues a formal request for proposals, expected in March 2011. The teams include KKR/ECI Investment Advisors/Ampco Parking Systems; Morgan Stanley/Central Parking System; Carlyle Infrastructure Partners/Nexus Parking Systems; Macquarie Capital/Standard Parking/TimHaahs; JP Morgan/LAZ Parking; Cintra; and Edison.

More to come next week on L.A.’s concession details, but in the meantime check out my recent analysis of Indy’s parking meter lease and additional pieces on parking asset privatization here, here and here.

Leonard Gilroy is Senior Managing Director of the Pension Integrity Project at Reason Foundation, a nonprofit think tank advancing free minds and free markets. The Pension Integrity Project assists policymakers and other stakeholders in designing, analyzing and implementing public sector pension reforms.

The project aims to promote solvent, sustainable retirement systems that provide retirement security for government workers while reducing taxpayer and pension system exposure to financial risk and reducing long-term costs for employers/taxpayers and employees. The project team provides education, reform policy options, and actuarial analysis for policymakers and stakeholders to help them design reform proposals that are practical and viable.

In 2016 and 2017, Reason's Pension Integrity Project helped design, negotiate and draft pension reforms for the state of Arizona's Public Safety Personnel Retirement System and Corrections Officer Retirement Plan, which both passed with overwhelming bipartisan support in the state legislature and were signed into law by Gov. Doug Ducey.

Gilroy is also the Director of Government Reform at Reason Foundation, researching privatization, public-private partnerships, infrastructure and urban policy issues.

Gilroy has a diversified background in policy research and implementation, with particular emphases on competition, government efficiency, transparency, accountability, and government performance. Gilroy has worked closely with legislators and elected officials in Texas, Arizona, Louisiana, New Jersey, Utah, Virginia, California and several other states and local governments in efforts to design and implement market-based policy approaches, improve government performance, enhance accountability in government programs, and reduce government spending.

In 2010 and 2011, Gilroy served as a gubernatorial appointee to the Arizona Commission on Privatization and Efficiency, and in 2010 he served as an advisor to the New Jersey Privatization Task Force, created by Gov. Chris Christie.

Gilroy is the editor of the widely-read Annual Privatization Report, which examines trends and chronicles the experiences of local, state, and federal governments in bringing competition to public services. Gilroy also edits Reason's Innovators in Action interview series, which profiles public sector innovators in their own words, including former U.S. Transportation Secretary Mary Peters, former Florida Gov. Jeb Bush, former Indiana Gov. Mitch Daniels, former New York City Mayor Rudy Guiliani and more.

Gilroy's articles have been featured in such leading publications as The Wall Street Journal, Los Angeles Times, New York Post, The Weekly Standard, Washington Times, Houston Chronicle, Atlanta Journal-Constitution, Arizona Republic, San Francisco Examiner, San Diego Union-Tribune, Philadelphia Inquirer, Sacramento Bee and The Salt Lake Tribune. He has also appeared on CNN, Fox News Channel, Fox Business, CNBC, National Public Radio and other media outlets.

Prior to joining Reason, Gilroy was a senior planner at a Louisiana-based urban planning consulting firm. He also worked as a research assistant at the Virginia Center for Coal and Energy Research at Virginia Tech. Gilroy earned a B.A. and M.A. in Urban and Regional Planning from Virginia Tech.