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…


Don’t Say You Weren’t Warned

Yesterday’s IBJ had an article about an all-electric car sharing program being promoted by Mayor Ballard.

I like the car-sharing idea a lot. However, as the article noted, the biggest expense of launching it will be what the city will have to pay ParkIndy–the private consortium that manages the city’s parking meters.

Our “deal” with the vendor, if you will recall, requires the city to pay the contractor every time we take a parking meter out of service, either permanently or temporarily. The city has already had to fork over a considerable amount to compensate the vendor for temporary blocking of curb lanes due to construction projects.

The vehicles and charging stations for the car-sharing program will take space currently occupied by parking meters. When the car-sharing program is fully implemented, the IBJ reports that the city will have paid ParkIndy 16.9 million dollars in order to use our own curb lanes.

That hurdle may doom the project.

There were two major objections to outsourcing the city’s parking infrastructure: 1) the private operator’s profit significantly reduces the amount the city could have realized had it managed its own meters; and 2) there would be unanticipated costs and problems associated with giving up control of the city’s curb lanes.

I see chickens coming home to roost.


I Told You So

There’s nothing as annoying as someone who tells you “I told you so.” It’s a taunt that’s anything but gracious. So I’ll try to throttle my desire to do just that, but it won’t be easy.

When the Ballard Administration entered into a fifty-year contract to manage the city’s parking meters with a consortium headed by ACS,  a lot of us were highly critical. The length of the contract was excessive. ACS had a horrible reputation nationally. There was really no good reason we couldn’t manage our own parking meters (other cities seem capable of doing so) and keep all the profit, rather than giving the bulk of it to ACS. The terms of the contract favored ACS over Indianapolis taxpayers.

Many City-County Councilors shared those criticisms. Even after the administration engaged in considerable reported arm-twisting, the contract was only approved by one vote–and the deciding vote was cast by then-Council President Ryan Vaughn, a lawyer employed by the law firm that represented ACS.

After the new meters were installed, we were treated to a series of press releases–uncritically accepted by the local media–telling us how well everything was going. Revenues were up! (As a cynical friend noted about one of these glowing reports, of course revenues were up; hours had been extended and rates had been raised. For this you need a contractor??)

This week, the Star (finally) examined the numbers, rather than repeating the Administration’s hype. And guess what?

The first year of Indianapolis’ 50-year parking meter lease brought doubled rates in some areas as a tradeoff for a wholesale upgrade of equipment and the convenience of paying by credit card or smartphone.

Was it worth it?

New financial data provided by the city shows its share of revenue from the vendor in 2011 — nearly $1.4 million, or 30 percent — fell well short of the city’s own projection of $2.1 million.

And the city didn’t end up seeing the full amount: After the vendor subtracted $286,000 in charges to compensate for the city closing metered spaces, often for RebuildIndy road construction work, the city pocketed $1.1 million.

The contractor, by contrast, made 3.5 million.

And we’re stuck with this bit of crony capitalism for the next 49 years. Forty-nine years of foregoing 3.5 million plus–money that could be used to pay for paving streets, improving parks or plugging budget shortfalls at IMPD.

This was a very bad deal. And I did tell you so.


Parking Meter Delusions

According to media reports, in last night’s debate between Melina Kennedy (no relation!) and Greg Ballard, the Mayor strongly defended his record. He cited crime reduction (a claim that can be considered true if you count only certain crimes, and ignore those annoying statistics about aggravated assaults and the like) and the privatization of parking meters.

Excuse me? Let’s deconstruct that. We are supposed to re-elect Ballard in gratitude for his decision to give away control of our parking infrastructure and some 60% of the fees we would otherwise earn for the next fifty years?

The ability to control meters may seem inconsequential, but it isn’t. Decisions about parking are a significant element in all sorts of development decisions; the ability to “bag” meters without penalty during downtown construction is a cost-control measure important to developers and others. It has been estimated that the city’s deal–which requires compensating ACS when more than a certain number of meters are bagged–added over a million dollars to the construction costs of the Cultural Trail.

When many of us protested the decision to contract away the lion’s share of parking revenues that would otherwise flow to the city, we were told that we needed the “expertise” of ACS–that the city couldn’t finance and manage its meters without the help of a sophisticated mega-corporation. (Evidently, the disastrous experiences of cities like Chicago that had entered into similar deals was considered irrelevant by Mayor Leadership.)

The bottom line, according to the Ballard Administration, was that it was necessary to trade a lot of city control and money for competent, experienced management.I thought that was a bad deal, but I assumed we would at least get the competent management. Evidently, I was naive.

Yesterday, in my Media and Policy class, a student raised the issue of how poorly local media had covered the administration’s privatization of the water company and parking meters. That led another student to complain that she had received a ticket despite having paid the fee–and was helpless to prove her payment since the meters don’t dispense receipts.

Her complaint opened a floodgate. Out of the 23 students in class, no fewer than 8 of them reported similar problems. Several had attempted to complain–complaints that, as one put it, were “blown off.” One student who had paid with a credit card was told the only way she could get a refund was to bring in her Visa bill. Another reported that her credit card was charged twice; when she tried to get the improper extra charge removed, the response was “how do we know you didn’t park twice?”

So, Mayor Ballard, let me understand this: I am supposed to vote to re-elect you, not despite the fact that you gave control of our parking and millions of our dollars to a company that is doing a crappy job, but because you did so?

Whatever it is you’re smoking, I’d like some.


Ballard Administration, Part 2

After my post yesterday, I got an email from a former Republican who is evidently no fan of our Accidental Mayor.

He had read the recent IBJ article–which he characterized as a “puff piece”–in which the reporter uncritically repeated the administration’s claim that the parking meters are “netting” additional revenues since they were privatized in a 50-year deal  with ACS.  As he wrote, the claim doesn’t hold up under even cursory scrutiny.

The IBJ wrote, in part:  “Total revenue from meter operations grew to $1.7 million in the quarter ended June 30 from $1.3 million in the same time frame a year ago. The city’s share of that revenue totaled $498,273, compared with $108,265 it made from meter operations from March through June a year ago—a whopping 360-percent increase.”

As my friend pointed out in his email, the IBJ simply ignored a number of issues, most significantly that these numbers were “apples and oranges” and accepted the 360% “increase” at face value, without noting the following: (1) Hours were increased from 7:00 PM to 9:00 PM every night  and ACS added a day to the week (it used to be Mon.-Fri., now it is Mon-Sat.); (2)  the rate increase by $0.25/hour in Broad Ripple and most of downtown.  Clearly, these increases would yield substantially more revenue whether ACS or the City had increased hours and raised rates–and if we hadn’t privatized the meters, the City would keep all of the increased revenues after the relatively modest investment in new meter technology.

The final point made in the email was that the math makes no sense: As he wrote, “According to the IBJ, the administration claims that revenues increased a total of $400,000 (from $1.3MM to $1.7MM) – which is a total increase in revenues of 30% ($400K over $1.3 million) TOTAL; however, the IBJ reports that the City’s revenues went from $108K to $498K – something doesn’t add up here… I think the IBJ is comparing apples and oranges (i.e., comparing (A) the City’s old “net-of-all-expenses” revenues after all costs and before increases in rates and hours, against (B) the City’s gross revenues under the ACS deal after increases in rates and hours that they could have instituted without sharing revenue with ACS), and even more significantly, (B) not asking what in my mind is the most pertinent question: HOW MUCH HAS THE CITY HAD TO CREDIT OR GIVE BACK TO ACS DUE TO BAGGED METERS?   Do the “totals” reported exclude the amounts the city is contractually obligated to remit to ACS as compensation for bagging meters under the terms of the contract?. ”

The email raises some pretty important questions, to which I’d add another. There is a rumor floating around that in addition to control of our parking meters, the City also handed over to ACS the collection of past years’ parking fines that remain uncollected. Does anyone know whether this is true, and–if it is–whether receipts from those collections are part of the reported numbers?

I do wish Indianapolis still had real reporters covering government……