Tuesday, September 7th, 2010

Indy’s “Son of Chicago” Parking Meter Lease to Be a Disaster for City

The next couple of generations will pay the price…It’s despicable, the way it went down…I don’t think the aldermen understood the long-term consequences of what they did. – Chicago Ald. Scott Waguespack

These deals are rarely done under the bright light of public scrutiny. Often the facts come out long after the deal is done. – Richard Little, Director of the Keston Institute for Public Finance and Infrastructure Policy at the University of Southern California

Note: If anyone wants to republish this, feel free to do so.

I previously explained why signing a long term lease on parking meters was a bad public policy idea. Today I’ll show the practical dangers, using the Indianapolis example as a cautionary tale of how a parking meter lease can go wrong and turn into a civic fiasco. Even if you don’t live in Indy, this is relevant to you as your city is likely looking at privatizing parking or other services where these are things to look out for.

I’m not in Indy anymore, so perhaps this should be of no concern to me. But when I see something so terrible about to befall a place I care about, I have to say something. The deal Indy is signing with its vendor (ACS) is so bad and so one-sided, it almost defies comprehension.

Parking Meters Will Be a Cash Register That Never Stops Ringing for the Vendor

The first and most fundamental question is why the city needs to pay a third party vendor so much for something as basic as running a parking meter system. The city says it will get $400 million under this contract. The Indianapolis Business Journal estimated that the vendor would get between $724 million and $1.2 billion. How much of that is profit to the vendor? No one will ever know since according to the contract, the city is specifically barred from learning anything about the cost or profitability of the system, and any information it does get from the vendor has to be treated as confidential with the city’s people signing non-disclosure agreements, unless the law compels otherwise. The city has said the vendor’s profits are no concern of theirs.

But let’s do the math for ourselves to take a quick look. According to Schedule 9 of the concession contract, the operations of the parking system only costs the city $844K/year right now. That’s not very much, and shows that whatever efficiencies might be gained, they won’t be big dollars in the grand scheme of things. Let’s assume this remains constant in real dollars, and inflates at the same 2.5% rate used in the contract. According to this presentation from the city (slide 50), it will cost $7 million to upgrade the system to pay and display and such. So let’s also assume the vendor has to pay that $7 million in capital every ten years, also adjusted for inflation. That adds up to about $82M in operating expenses and $61M in capital expenses for a total cash outlay of $143M.

On a pre-tax basis, this deal is almost pure profit for the vendor, adding up to between ~$600 million and ~$1.1 billion, or a potential profit margin of almost 90% in the high scenario.

The totals would need to be discounted back to find the present value of the profits, but it is very clear that the city is giving away a huge chunk of the system profit. And for what? Collecting quarters out of meters? Doing basic maintenance? Writing tickets? These could easily be obtained on the open market on a simple service contract basis. Denison Parking does the job today in fact, and I haven’t heard complaints. The vendor is assuming Denison’s contract, so why is the city forking over all this money again?

The Timing and Approach Is Flawed

Indy is signing a 50 year deal in a terrible market. We are in the middle of the worst recession since the Great Depression. Are asset values likely to be high or low now? It’s obvious. Is now a good time to be selling a house? Clearly not, so why would be it a good time to do a 50 year sale of parking meters? The Toll Road lease was masterfully done at the peak of the bubble. The city is under no pressure to do a deal, but is selling at a time when it will only get fire sale prices.

Also, it does not appear the city engaged an independent financial advisor to look at the deal from the public’s perspective, repeating a key failure in the Chicago lease process. The Chicago Reader noted a Chicago Inspector General’s report critical of that city’s deal: “In its damning report on the agreement, the inspector general’s office concluded that the city may have leased the meters for $974 million less than they were worth. The reason, the report concluded, was that William Blair’s calculations of the system’s value were all done from the perspective of an investor—they were based on what that investor might be willing and able to pay for the meters, not what their value was to the city.”

No financial advisor other than Morgan Stanley (which is in William Blair’s role on the Indy deal) was listed on the city’s parking web site or in a presentation (slide 58) listing the city’s team members. By contrast, Pittsburgh not only hired Morgan Stanley as an investment bank, they hired Scott Balice Strategies as an independent advisor to represent the city’s interests.

Incidentally, Morgan Stanley is the concession holder on the Chicago lease deal. They appear to have fleeced that city. Don’t take my word for it, read the independent financial press, such as this Bloomberg piece, “Morgan Stanley’s $11 Billion Makes Chicago Taxpayers Cry” or in the New York Times: “Company [Morgan Stanley] Piles Up Profits from City’s Parking Meter Deal.” This should be raising major questions about their role in the Indy deal.

The Contract Is Unconscionably Awful for the City

I also read the entire concession agreement. While I’m not a lawyer, I’ve negotiated multi-million contracts on both sides of the table and actually used to work in the outsourcing business, so I’m extremely familiar with the issues from a corporate perspective. I would certainly encourage anyone to do their own due diligence and study this for themselves, but even if I’m wrong on a few of these, the overall thrust is almost surely accurate.

Among my findings:

1. This is the Chicago parking meter lease.The city has said this deal is very different from Chicago’s notorious parking meter lease. But what they didn’t tell you is that not only is this very much like Chicago’s, it’s literally the exact same contract. That’s right, Indy took the Chicago contract, did a Save As, and tweaked it. Check for yourself. Indy’s deal is here and Chicago’s is here. Given that Chicago’s deal is famously one-sided, this is mind-boggling. I estimate that the majority of the two contracts are word for word identical. This tidbit – “the foregoing sentence shall be interpreted and applied in a manner most favorable to the Concessionaire” – gives you a flavor of how the thing goes. And where Indy’s differs, it is often even worse. I never would have believed that possible.

2. The city has no right to terminate the agreement. The contract for this 50 year deal explicitly states: “The City hereby acknowledges and agrees that it may only terminate this Agreement in accordance with the express terms hereof and shall not, in any event, have the right to terminate this Agreement for convenience.” (Section 16.1). The city can only terminate the deal if the vendor defaults, which is virtually impossible. In a deal like Chicago’s meter lease or the Toll Road, where the only payment the government gets is a lump sum up front fee, perhaps there’s some logic in not allowing the deal to be terminated. But with a very modest $35 million up front fee (compared to a deal value of over $1 billion) and with a needed up front investment of only $7 million (according to the city), it’s unconscionable to not have the right to terminate. The citizens of Indianapolis with be irrevocably locked into a terrible deal for more than a generation – and for very little upfront cash.

3. Penalties are often higher than the actual meter value. One aspect of the Chicago deal that was heavily criticized is that when the city shuts down meters, it has to pay a penalty that assumes the meters were fully occupied at all times, regardless of how much they are normally occupied. Believe it or not, Indy even upped the game here. In two out of the four zones, the penalty for closing the meter is more than if the meter is 100% occupied. The closure fee is $15 for Zone 2 & 3, increasing with inflation. But fully increased rate for Zone 2 is $1 an hour for 13 hours a day – you do the math. It’s only $1 an hour for 11 hours a day in Zone 3. Those meters are literally worth more to the vendor bagged than they could ever be operational. These penalties have to be paid regardless of the actual average utilization of those meters. The penalty for the other two zones ($20) is just shy of the theoretical maximum, but still way too high. (See Definitions, “Temporary Closure Fee” and Schedule 5).

4. The vendor gets the rights to collect parking ticket revenue and sell advertising and naming rights. In the Chicago deal, the city gets all of the money for tickets, and retains all the rights and money for advertising and naming rights for itself. In the Indy deal, the vendor gets these rights, though the city has to approve the specifics of advertising. What is an advertising concession for thousands of locations downtown worth? It could easily be more than the meters themselves. This should have been bid to major outdoor advertising firms in an open process to maximize city revenue, not thrown into the parking meter deal, assuming festooning downtown with ads is something you want to do in the first place.

5. Residential permit parking is coming to Broad Ripple. The city says it plans to use the meter proceeds to build a new garage in Broad Ripple. Broad Ripple is Zone 4, and the contract says, “In the event the City builds a public parking garage in Zone 4 during the Term, the City will agree to institute a Residential Permit program for non-metered parking spaces in and around Zone 4 to be administered by the Concessionaire on terms mutually agreeable to the Parties.” Did you know that? The city is contractually obligating itself to specific permit parking policies in that neighborhood. Now perhaps permit parking’s not a terrible idea, but isn’t it something that should be vetted through the normal political process? And be subject to change over time, not locked in for 50 years?

Outside of Broad Ripple, the city has actually limited its ability to establish residential permit parking zones. Per the contract: “The City reserves the right to designate certain on-street parking that are not Metered Parking Spaces as residential parking requiring a Residential Permit, provided that such designation does not materially effect the Metered Parking System in the surrounding area.” How nice of the vendor to agree to this. If it does affect the vendor, they are entitled to compensation. Also, if the city does establish permit parking, the vendor gets to run that too – including getting the revenue from parking tickets.

6. The vendor even gets revenue from tickets written by IPD or other city agents. The vendor has the right to write tickets on the system, but the city also has the rights. And even if the city writes the tickets, the vendor still gets the money: “The Concessionaire shall have the exclusive right to collect and retain all Parking Violation Revenue during the Term in accordance with Enforcement Policies and Procedures, regardless of whether such Parking Violation Revenue resulted from Parking Enforcement conducted by the Enforcement Operator or the City’s designated law enforcement officers.”

The city retains the cost of adjudicating parking tickets, however. It does get to judge the validity of tickets, but disturbingly, the contract actually specifies the judicial outcomes it expects: “The City shall remain responsible for the adjudication related to the Parking Enforcement; provided that such adjudication shall be consistent with the historical practices of the City, including a consistent level of parking tickets that are dismissed or appealed.”

Incredibly, the city even owes money to the vendor if the public starts appealing tickets at a rate more than 30% more than currently, regardless of whether the appeals have merit or not (Section 7.8). It’s considered a “Compensation Event.”

Add this up and what it means is the vendor can write tickets, gets to have the revenue counted to it (minus the revenue share), and if the vendor just starts writing bogus tickets to inflate its own revenues, and the public protests them, the vendor gets even more money. That’s right, the vendor can literally print money for itself simply by writing as many tickets as it feels like.

Another hugely risky item. One other change from the Chicago deal is that the city is agreeing to indemnify the vendor against any court ruling that the vendor can’t write tickets or collect parking ticket revenue (Section 12.2). Someone is challenging the Chicago lease by saying that since the city transferred the meters by bill of sale (just like Indy), it’s a private business now and the city’s police powers can’t be used to enforce parking rules for the benefit of a private company. I believe this is still being litigated. I’m not sure what the law would be in Indiana, but if similar claims were raised and ended up being successful, the city could be on the hook for possibly hundreds of millions of dollars.

7. The vendor automatically gets the right to any new meters, but the city has to pay to remove any meters. In the Chicago deal, the city has to negotiate with the existing vendor for new meters outside the existing concession area, but is free to take its business elsewhere if the vendor won’t match what a competitor would offer. In Indy, any new meters are automatically enrolled in the new deal. (Section 7.7) I didn’t see where this was limited to the four specified zones, so it might in fact apply to any meter in the city.

However, if the city removes a meter, they have to pay a meter removal fee. In the first year, this is $15,400 per meter in Zone 1. I didn’t see any provision for offsetting adds and removes, meaning if the city adds three meters and removes one, the vendor gets the three new ones automatically and the city is still on the hook to pay for the one they removed. What’s more, the city is also on the hook for any lost parking ticket revenue the vendor would have gotten off that space too.

To show how one-sided this deal is, if the city adds more than 10% new meters, the vendor actually has the right to reject them. That doesn’t mean that the city can take its business elsewhere though. Rather, it puts them into a special category where the vendor runs them, but the city is responsible for the costs of setting them up (Section 7.7). That hardly sounds like what we’ve been told that all the risk is outsourced. By the way, Chicago has these types of meters too, but the vendor is only entitled to a 15% management fee for them, whereas in the Indy deal, they get a full revenue share. [ Correction 9/13: The vendor is only entitled to 25% of the revenue from these meters. ]

8. Temporary closure policies are worse than Chicago’s. There’s a cost associated with closing meters for more than a very small temporary closure allowance. The Indianapolis closure allowance is worse than Chicago’s. In Chicago’s system, closures of six hours or more are treated as an entire day while those less than six hours are ignored. In Indy, anything greater than four hours is treated as a full day closure. In Chicago, Central Business District meters can be closed under the contract for up to 8% of the days without penalty. In Indy it is only 6% (see Definitions, “Temporary Closure Allowance”).

9. Will festival and events organizers see new fees? Section 7.6 says, “the Concessionaire shall charge, collect and retain the applicable Temporary Closure Fee from any Person (other than the City), in advance, in respect of any Temporary Closure requested by such Person.” What this sounds like to me is that if anyone other than the city wants to shut down meters, they’ve got to pay the vendor, and pay in advance. Does this mean anyone who wants to hold a festival or event downtown – even on a Saturday, since meters need to be fed then under the new contract – will have to pay this parking fee? And since the city has a revenue share, is this a stealth tax on those events? It’s not clear to me, but the contract explicitly says valet parking operators have to pay up.

10. Even the city has to pay to use the spots. As part of this program, all city issued parking placards are cancelled (Section 3.19). Now clearly this program has been abused in the past, but it seems legitimate that city vehicles on official business should be able to park on the city’s own streets for free. But I couldn’t find any provision of the deal that allows city owned vehicles to be parked in these spots for free even on city business, other than emergency response vehicles during an actual emergency. The contract does talk about an “employee parking program”, but the city or the employees will be paying for it. This is even more revenue for the vendor.

I could go on and on, but these are the highlights and should establish pretty clearly how bad this contract is for the city. It’s one of the worst I’ve ever seen. Even the Force Majeure clause is one way and only provides an out for the vendor, not the city.

An All Around Bad Deal

I’ll again reiterate that this deal is simply bad public policy. Because none of the parameters of parking policy can be changed unless they make the vendor even richer, the city has de facto frozen its parking policy for 50 years. This even applies to areas people probably have no idea of, like requiring permit parking in Broad Ripple.

An example. Imagine the city wanted to take 20% of its metered spots and replace them with electric car charging stations, making them free and reserved for electric vehicles in order to encourage that transition? Can’t do it. (If the city did that, it might fall afoul of the even worse Adverse Action clause I didn’t get around to).

Another example: Maybe the city decides it wants to close Monument Circle (or any other street) to traffic after all. It can’t do it without paying a big fee, both for the directly impaired meters, and for obstructing access to other meters, which the contract forbids the city to do.

The list goes on and on. We have no idea what the world will be like in 10 years, much less 50. This isn’t something like a water system where all it is really useful for is delivering water and it is pretty reasonable to assume we’ll still want plenty of safe, clean water tomorrow. This is general purpose real estate. This is one of the most precious assets of any city – its public space – a policy area that is experiencing rapid innovation. In fact, Indy is on the forefront of that with the Cultural Trail – but perhaps no longer. No matter what the contract might say, this is a de facto ground lease on the streets of downtown and Broad Ripple.

But beyond bad policy, again, it would appear given even a casual analysis to be a terrible financial deal for the city. And the market timing couldn’t be worse in the teeth of the Great Recession. And the contract is an unmitigated disaster.

If the City County County votes to approve this deal, the city will regret it for decades to come, just like Chicago. I hope city leaders see this and change course before it’s too late.

Chicago vs. Indianapolis

Here is a summary of various aspects of the two cities’ deals, showing how Indy’s is actually worse than Chicago’s in many respects:

Item Chicago Indianapolis
Naming Rights Retained by the City Given to Vendor
Advertising Rights Retained by the City Given to Vendor
Parking Ticket Revenue Vendor Can Write Tickets, City Gets 100% Vendor Can Write Tickets, Vendor Gets 45-80%
Annual Closure Allowance (CBD) 8% 6%
Threshold for Considering a Day Closed 6 hours 4 hours
New Meters Outside concession area, city can bid to others Automatically given to concessionaire
Indemnity for Vendor Being Declared Ineligible for Parking Ticket Protection None Unlimited
Fee for Reserved Meters (ones the vendor didn’t want to install) 15% Management Fee to Vendor Full 45-80% revenue share split [Correction: The correct value is 25% ]
Penalty Rate for Closures Maximum Possible Meter Utilization for Day Greater than the Maximum Possible Meter Utilization for Day in two zones

Recommended Reading

IBJ: City Vendor May Get $1.2 Billion from Parking Privatization Deal
Bloomberg: Morgan Stanley’s $11 Billion Makes Chicago Taxpayers Cry
NY Times: Company Piles Up Profits from Chicago’s Parking Meter Deal
Chicago Reader: FAIL: The Chicago Parking Meter Investigation
Chicago Inspector General: An Analysis of the Lease of the City’s Parking Meters

28 Comments
Topics: Public Policy, Transportation
Cities: Chicago, Indianapolis

28 Responses to “Indy’s “Son of Chicago” Parking Meter Lease to Be a Disaster for City”

  1. Thanks for your analysis. I happily got rid of my wheels back in 2007, so I haven’t paid much attention to the meter situation. However, it seems like my city is preparing to hand over a huge profit unnecessarily. Seeing just how bad and one-sided the contract is, I now have no doubt the Indy City Council will vote it through. So it goes.

  2. Jackie Nytes says:

    I really appreciate this information, it is immensely helpful for Councillors who are asked to weigh in on things that require more research then we are able to get done. I would not assume that this will fly through the Council easily, there are significant concerns about it for many of us.

  3. PJ says:

    Is this a contract that is signed? Or one that is being negotiated?

    There is a big difference and it looks like this is a work in progress. Let’s hope so anyway!

    Because citizens of Indianapolis and Broad Ripple deserve a more thorough examination of the points you have made. Broad Ripple needs more imaginative solutions that bring revenue back to the core of the city so we can revitalize.

  4. Thank you for the comments.

    PJ, I believe the contract is signed, but it needs to be approved by the City-County Council before it can take effect.

    Also, for those who do not know, Jackie Nytes is a member of the Indianapolis City-County Council.

  5. Nathanael says:

    Jesus.

    Is there any provision in state law for voiding contracts between municipalities and private looters based on unconscionability, or based on clear incapacity and inability to understand what the contract said — or perhaps based on violation of fiduciary responsibility by the city council?

    This so-called contract is plainly unconscionably, and if the city council approves it, it either doesn’t know what it says, or it’s violating its fiduciary responsbility.

  6. Chris Barnett says:

    Thank you for the careful analysis, Aaron. I’ll be letting my councilor know that I’m opposed to this contract as written.

    Other readers in the Irvington area of Indianapolis might also contact Councilor Ben Hunter. (Councilors’ email addresses can be found on the “City County Council” tab of the City website.)

  7. Indy Sider says:

    The answer to the question of “why?” is simple. Cities outsource because they simply can’t do the job themselves efficiently enough. Often they have 50 years of trying before they finally work it out, which is the case in all of the recent parking outsourcing deals. Meters are out of order and the last 50 years of politicians haven’t had the guts to raise parking meters by a nickel every few years. Every year citizens complain about the broken meters and every year it gets harder to raise the rates, so the City lines up a private company to take the blame for raising rates. They also hold that company to standards many times higher than the City ever adhered to, which makes the cost of running the system significantly higher than the City ever showed on its books. Then they go to public bid and inevitably the market provides what the price and terms are. So we need to either deal with a broken, inefficient public system, or we need to pay market rate for one that works, but we can’t have it both ways and complain about it.

  8. Rod Stevens says:

    The interesting question is why both Chicago and Indianapolis appear to have been so lenient in their negotiations? It appears that the Indy deal was sole source. If so, why wasn’t it put up for auction?

    There is a bigger issue here, somewhere, of why these deals appear to be so lopsided. Don’t know what the reason is, just that there is a good question there of why this is happening.

  9. Curt says:

    Indy Sider, the bigger issue is what Aaron has wrote about before, and it is shear political unwillingness to raise what is needed to do it at the city level. As you pointed out, a private vendor can screw it up, and they are liable. Whereas a city official does it, and next term they are out of office. The problem essentially, are citizens with short sighted visions and either the lack of will to research or just flat dont care either way as long as their basic needs are met.

  10. west town ed says:

    I can’t speak for Indianapolis residents but as a Chicago resident I feel safe saying that no Chicago alderman would ever vote to increase the parking meter fees from a quarter an hour to a dollar an hour and then a short time later add 25 cents more — and more 25 cent increases to come… And then spend millions to modernize the metering system?

    My point is that there is no correlation between what the city might earn from a politically-impossible scenario and what private companies are now earning and will earn in the future.

  11. Abdul says:

    I’m reading through both agreements. Unrbanophile is not totally accurate. To say they are essentially the same agreement is not correct. Read them for yourself Second, Chicago took all its money up front and put into operating expenses, Indy is creating a revenue stream. Third, so what if they make a profit, that’s what private business does. I’m sure there’s more, but I have 30 minutes left before bedtime. I’ll check back in soon.

  12. Abdul says:

    Sorry, “Urbanophile”. I hit send to quickly.

  13. Abdul says:

    Now I hit “to” too quickly. Maybe I should go to bed now. :-)

  14. Chris Worden says:

    Abdul:

    I know you want to defend the Mayor, but you’re killing your credibility with platitudes. Yes, businesses make money. But if a profit margin for a service is 50%, that tells that pretty clearly that you’ve done a crappy job of allocating the risks and rewards of a contract. If you don’t see that, well, partner, I think you’re have rose-colored pitcher-shaped goggles because you’re clearly drinking the Mayor’s Kool-Aid. There are many things the Mayor has done upon which you and I may disagree, but nothing is close to this for pure idiotic giveaway.

    Sorry, dude. Your man’s dead wrong on this one.

  15. Chris Worden says:

    Obviously, I shouldn’t e-mail late at night either. I apologize to all for a preponderance of “that” among many other grammatical snafus.

  16. “So what if they make a profit?” you ask.

    You call it profit, and I call it local public revenue diverted out of our city. If there’s so much profit to be made – enough at least to make it an asset attractive enough to be “leased” – then create a publicly owned co-op or NFP to run the operations. Pay the administrators a reasonable salary and keep a few hundred million dollars in the local economy.

  17. Cato says:

    While we’re asking all the ‘whys’ here:

    Why is Broad Ripple the ONLY Cultural District with parking meters?

    Why is it when Broad Ripple asked for some of money from those meters to stay in Broad Ripple, they were told ‘other people need it more’? That argument doesn’t work when someone takes your wallet, why is perfectly okay here?

    Why is it, when Broad Ripple contributes millions per month to downtown revenues it’s people have to pay privately for street lights at night, clean their own streets, and rely on a part-time Bike Squadron of police working FOR FREE to maintain social order?

    If we’re going to run some sort of bilko scheme now with ACS, can they at least kick back some of the money to help with canal improvements and infrastructure projects in Broad Ripple? If not, isn’t this just more of the same ‘taxation without representation’ Broad Ripple has become inured to over these past few decades?

    To say the City gets the dirty end of the stick in this contract is NEWS, the fact that Broad Ripple has seen NO BENEFIT from the presence of meters on its streets for years, that’s HISTORY.

  18. IndyJrob says:

    I come at this from the perspective of hospitality to visitors and groups. I’ve heard from numerous event/convention/group planners how hard it is to close streets in other cities and how impressed they are that we routinely shut down Monument Circle or Meridian Street to stage grand events in the city. It is a major benefit of holding such things in Indy versus Chicago or another major market. We can easily customize the city in way that few others can. Putting a third party, and their fees, into the mix will be a big hit and an added layer of red tape that will slow down or kill efforts to shut down streets in the future.

    There is very little about this deal that sounds remotely beneficial and 50 years is a ridiculously long time to lock yourself in. Lets hope we can put an end to this before it makes its way through the Council.

  19. Jake says:

    I grew up in Broad Ripple and now live two blocks from Wrigley Field. I can tell you that this is an absolute disaster. Since signing the lease in Chicago, Meter rates have already been raised at least three times due to loopholes.

    Points 5 and 6 sound eerily familiar as well. Get ready for a “Wheel Tax City Sticker” and temporary passes that you can only get a set amount of each month to prevent skating on the sticker i the Broad Ripple area.

    Point 6 is what worries me the most. The city of Chicago still has to pay the overhead of the Department of Revenue fleet and employees, but they get the money from the tickets. If Indy has no similar recourse, they still have the overhead of ticketing, with fewer profits. Was that factored into the profitability comparison you did?

    Indy City Council reading this, PLEASE don’t do it. Start with raising the rates and implementing electronic meters. According to the presentation, parking rates have not changed since 1975, it’s time. Also there is a definite efficiency gain in the number of cars/block of road with electronic meters, just make sure to get the weather protection for the card and receipt slots.

  20. bartlies says:

    Would you find it helpful to see the two side-by-side with differences highlighted?

    http://bartlies.com/acs/Report-v.htm

    Admittedly there are deficiencies in this technique because the lines ‘break’ in different places, but it makes the differences plainly visible.

  21. Indy Sider says:

    Curt – you are right, the public sector is not accountable, which is why they often do a poor job in the first place. Politicians can be voted out, but the new ones voted in can’t come in and fire people who are doing a bad job. Unfortunately, unions and we the voters continue to ensure that the public sector is a safe haven for the kind of non-performers that cause cities to outsource in the first place.

    west town ed, jake etc. – Unfortunately you have it backwards. Meter rates should go up a little every year. wages generally do and so does milk and bread. In a market enivronment, this would happen, but we the voters fail to understand that and it makes politicians too scared to raise the rates a little at a time. So, as in Chicago and Indy, when a large correction to the rates has to happen to bring it back to reality, cities are being forced to hire private companies to do the dirty work. In Chicago, the City decide rates needed to increase, then dictated those rates to the private company that took over the parking, NOT the other way around. And that private company and the one in Indy will NEVER have any say in what rates are charged. If we could all take this medicine a nickel at a time over years, we would never notice it. We unfortunately have brought this upon ourselves.

  22. jrmoreau says:

    When these things get privatized, nothing good happens. Talk of the MBTA or Massachusetts Turpike being privatized makes me nauseous.

  23. Curt,

    How in the world is the private company held accountable when the company gets a 50 year contract? Monopolies have never been efficient…that’s why we have anti-trust laws.

    If you think government is not accountable, you’ve seen nothing until you hand a company a 50 year no bid contract in which we cannot even ask for financial information verifying our share of the cut.

  24. Curt says:

    Paul, I was only suggesting that politicians push it that way. Not that commercial companies are NOT held accountable. People tend to forget quickly that a private company did a bad job as opposed to a politician though. Sure, years later we remember huge debacles like Exxon, Enron, etc… but when was the last time we held a smaller private company over the fire for something like this? Aside from columns like this one examining these deals, most people could care less. In the grand scheme, people are going to park whether its $0.50 or $1.50 an hour. Most don’t care about the policy behind it.

    There is a propensity for “progress” or change (if you can call it that) in the private sector versus the political. So it often gets shoved that way

  25. Jason Mann says:

    Thank you Aaron for your reporting on this. And that’s what this is: reporting. As a Chicagoan this whole things has been very frustrating. Not the higher rates–I’m okay with that*, but with the money thrown away, either as profit handed over to the company and then the way the Mayor just burned right through his share. And then all then public/transport policies implications that you mentioned elsewhere in another post.

    I think the shadiest, sketchiest part of this in Indianapolis is that the City there hired Morgan Stanley to be the FA. That’s like hiring the fox to guard the hen-house when the fox still has hen feathers falling from his mouth and the farmer says, “He’s an expert–he really knows hens well.”

    * Jake from Wrigleyville says they’ve gone up via loopholes–not at all. It was the explicit intent of this policy to use increase rates. Which, as I said above, I’m okay with. Ald. Waguespack’s criticism is exactly that point: the City could have voted to increase rates and gotten the money themselves. Many others, including Indy Sider above, point out that politics usually dictates rates staying low and hence the public misses out on a much needed revenue stream.

  26. Jason Mann says:

    [Sorry. I need to proof-read before I submit.]

  27. Chris says:

    Cato, I’m not sure what you are talking about that Broad Ripple gets no benefit from the meters located in the neighborhood. Per STATE LAW, parking meter revenue may only be used to pay for installing and operating parking meters (citywide), traffic lights (citywide), municipally owned or leased parking lots (citywide), AND on street and sidewalk improvement, but ONLY ON STREETS AND SIDEWALKS LOCATED IN THE AREA THE PARKING METERS SERVE–in other words, any street or sidewalk improvements paid for by parking meters must be in the area where the meters are located. So, unless you can provide documents showing that the city has violated the above state law spending provisions for generations, I think it is simply a case of you not knowing what you are posting about.

  28. Capt Tony says:

    Chris: can you show me where the city defines “the area the parking meters serve?” The “area” is a very subjective term. The other problem with the current parking system is that Denison can’t calculate how much revenue the Broad Ripple meters generate, so there’s no way to even tell how much should/would/could be coming back to our “area.”

    In my opinion this all stems from local politicians seeking re-election and looking to gain favor with voters by keeping meter rates low. If rates had been raised years ago, we might now have the funds to replace existing meters with the newer technology ACS is looking to install.

    I think an immediate cash infusion is needed. However: a 50-year contract in which the city has very little “wiggle room” seems like a bad way to generate an immediate cash infusion. Couldn’t the city renegotiate a deal with a lower up-front payment and a shorter term? This way we could still upgrade our technology but aren’t committed to a long-term (at least not AS long) contract.

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