Back in 2011, Indianapolis (under then-Mayor Ballard) entered into a fifty-year agreement with a consortium called Park Indy to upgrade and manage the city’s parking meters. At the time, I was among those who argued strenuously against that agreement.
I had two major objections and two never-answered questions.
The first objection was to the fifty-year length of the contract. Even if the deal had been less one-sided fiscally, decisions about where to place meters, how to price them, what lengths of time to allow and so on have an enormous impact on local businesses and residential neighborhoods. As I said at the time, these are decisions requiring flexibility in the face of changing circumstances; they are most definitely not decisions that should be held hostage to contracting provisions aimed at protecting a vendor’s profits.
My second objection was that, under the terms of the contract, downtown developments and civic events would become more costly. More often than not, new construction interrupts adjacent parking. If the city is managing its own meters, it can choose to ignore that loss of parking revenue, or decide to charge the developer, based upon the City’s best interests. Street festivals and other civic celebrations also require that meters be bagged, and usually there are good reasons not to charge the not-for-profit or civic organization running the event. The ParkIndy contract required the City to pay ACS whenever interruptions require bagging the meters and disrupting projected revenues from those meters.
No one could have foreseen a pandemic, of course. That’s the point. When you contract away your flexibility, your authority to make decisions that are responsive to unforeseen events, you end up owing a lot of money to the private vendor. Indianapolis closed certain streets to traffic, in order to allow restaurants to serve customers outdoors, a move that probably kept some of them afloat during a very difficult time. That required bagging the meters on those streets. WISH reports that the city has already had to pay Park Indy 450,000 under the contract–at a time when the pandemic is wreaking havoc with city and state finances.
File that payment under “adding insult to injury,” since, according to periodic reports, the city has never come close to receiving the income it projected when this ill-conceived privatization agreement was negotiated. In May of 2016, the Indianapolis Star reported that the city was reaping only about a quarter of the dollars ParkIndy projected when it paid $20 million for the right to operate the meters until 2061.
Then there are my two questions.
As I wrote at the time, why privatize at all? Parking isn’t rocket science. There was never a satisfactory response to the obvious question “why can’t we do this ourselves, and keep all the money?” Why couldn’t Indianapolis retain control of its infrastructure, and issue revenue bonds to cover the costs of the necessary improvements? Interest rates were at a historic low at the time, making it even more advantageous to do so. If the Ballard administration was too inept to manage parking, it could have created a Municipal Parking Authority, as Councilor Jackie Nytes suggested at the time.
What was the compelling reason to enrich private contractors and reduce (desperately needed) City revenues.
And finally, why ACS –the company that is the primary partner of ParkIndy. There had already been extensive publicity about ACS’ performance problems in Chicago; there was also troubling information about the company’s track record in Washington, D.C., where an audit documented mismanagement, overcharging, over-counting of meters, and the issuance of bogus tickets (ACS got all the revenue for tickets). The audit found that Washington had lost $8,823,447 in revenue and experienced a twenty-fold increase in complaints from the public.
The only answer I could come up with was that the Ballard Administration got an up-front infusion of cash which helped it hold the line on taxes while Ballard was in office–and who cares about the future?
This was actually something of a modus operandi for Ballard. An academic paper I co-authored with a colleague shared the results of our investigation into the convoluted structure of the city’s sale of its water and sewer utilities. The highly sophisticated financing scheme for the sale had the effect of shifting costs to utility rate-payers that should properly have been assumed by taxpayers.
There’s a saying among politicians: to elected officials, “long-term” means “until the next election.”
And I used to think that “fiscally responsible” meant “pay as you go.” I was so naive…