The LA Times reports that Los Angeles is considering “privatizing” ten public parking garages to fill a budget shortfall. The story is, unfortunately, a reminder of how infrastructure “privatization” is often little better than the status quo, and how media reporting of the issue can doom real reform.
Whereas pure privatization would mean selling the buildings and underlying land to anyone for any use, this scheme is actually a 50-year outsourcing of the garages’ management (mostly, at least) and profits (again, mostly). The new “owners” could only use the structures to park cars, and using them to house people and businesses that would increase the walkability of the areas where the garages are located is out of the question.
True privatization would also bring in more money for the city, which is the stated goal of the privatization. The garages would be worth more if they were being sold with complete development rights, and the tax revenues from whatever’s built on them (not to mention possible increases in adjacent properties’ values) would probably exceed the “small negotiated share of future proceeds” that the city “could retain.”
The only possible benefit I can see to this plan is that parking rates will move upwards towards the true market price. But even that would be too much for the city to stomach, as the city would “retain authority over parking rates at the garages” – and who wants to guess which way they’ll be pressured to push prices?
The potential downfall of this plan, however, is that the public may forever associate privatization with this pseudo-corporatism, as happened in Russia in the early 1990’s and Chicago’s parking meter privatization scheme last year, which could impede future, more truly libertarian urban reforms.
Originally posted on my blog.
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True privatization would also bring in more money for the city.