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by Stephen Smith 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.
Of course, Chicago is just privatizing the revenue from meters, not the actual parking spaces. Plus, the city will regulate rate increases, but it’s a step in the right direction. (right?) For today’s politicians, this is a great way to get windfalls of money today for revenues of future generations in order to mask their fiscal irresponsibility. I think we’ll see more of this during the current mess as other municipalities catch on. Ideally, cities should auction off the spaces (including the land), with no regulations on rates or use of the land. Let market mechanisms determine the highest-and-best use of the spaces and land. Chicago Tribune: Most city parking meters to cost $1 an hour [Hat Tip: reader, Dan M] City Hall officials said that after the first five years of the 75-year parking meter lease, rate hikes will be subject to approval by alderman and are expected to be at the rate of inflation. The $1.1 billion to city coffers will come from Chicago Parking Meter LLC, which is made up of two Morgan Stanley infrastructure funds. The Daley administration said $400 million will go into a long-term reserve, $325 million will be spent in city budgets through 2012 and $100 million is earmarked for programs helping low-income people. An additional $324 million is headed toward a fund city officials said “may be used to help bridge the period until the nation’s economy begins to grow again.” and a video:
Matthew Yglesias: Parking How much will they pay? Well, it’s hard to know in advance which is why you need markets. But that’s what you should have — as much parking as the market will bear. Not government-mandated parking, and not government-provided free or discount parking. Let people build garages and if it’s more economical to provide less parking, let there be less parking. SFGate: SFpark would micromanage city’s scarce spaces As SFpark is envisioned, parking rates would be adjusted based on time of day, day of week and duration of stay. People would be able to pay not just with coins, but with credit cards, prepaid debit cards and even by cell phone. If a meter is set to expire, a text message could be sent to the driver. More time could be purchased remotely. It’s a step in the market direction for public parking spaces, but why not privatize all those spots? chicagobusiness.com: City links CTA improvements, higher parking fees While proceeding with these plans, the city also is privatizing operation of its thousands of parking meters. That could provide the city with a substantial cash infusion.