Pandemics And Parking Meters

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…

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I Told You So

There’s nothing more annoying than people who say “I told you so”–especially when they told you so.

But, dammit, I told you so. Not that I was the only naysayer–not even close–but I posted several arguments against the privatization of Indianapolis’ parking meters.

So I’m going to be obnoxious, and share the lede of a recent report from the Indianapolis Star

In the five years since Indianapolis leased its parking meter operations to a private company, rates have skyrocketed, hours have expanded and the number of paid spaces has increased.

But the city is reaping only about a quarter of the dollars ParkIndy projected when it paid $20 million to the city to operate the meters until 2061.

Those of us who opposed this “deal” (a word that is beginning to take on Trumpian implications for me) raised several issues:

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. They 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.

Added costs to downtown development and civic events. 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 requires the City to pay ACS whenever such interruptions disrupt its projected revenue from those meters.

Why privatize at all? This 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.

There really was no compelling reason to enrich private contractors and reduce (desperately needed) City revenues.

Why ACS? ACS is the primary partner of ParkIndy. There was 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). Washington lost $8,823,447 in revenue and experienced a twenty-fold increase in complaints from the public.

As I noted at the time, one of the problems with privatization in general is that it leads to speculation about cronyism and political back-scratching. In this case, the Mayor’s “personal advisor” was a registered lobbyist for ACS through the same law firm that employed the then-President of the City-County Council (who did not recuse himself, and whose affirmative vote was what allowed the contract to be approved by a narrow 15-14 margin.)

All of these criticisms were brushed aside as mean-spirited and uninformed. We were told that ACS/ParkIndy’s “expertise” would generate more revenue than would be realized under city management.

So, according to the Star, how’s that working out?

ParkIndy has collected $40.5 million in parking fees and fines since converting the first meter March 3, 2011. Projected over 50 years that amounts to about $426 million. The city’s take in a profit-sharing agreement has been $15 million, which would total about $158 million in 50 years.

ParkIndy estimated the city would earn $620 million over the 50-year life of the contract. To achieve that, ParkIndy would need receipts of about $1.5 billion, or more than three times its current pace.

Told you so.

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