Facing the worst city budget crisis in decades, Mayor Antonio Villaraigosa is gambling on parking meters -- and the bet could prove expensive for Southern California drivers.
Villaraigosa hopes to auction off meters as well as six city-owned garages and use the money to save his effort to expand the Los Angeles Police Department and preserve other city services.
The mayor points to Chicago, the only other major city to follow that privatization path. That city’s mayor, Richard M. Daley, has turned four parking garages, 36,000 parking meter spaces and the Chicago Skyway toll road over to private companies, receiving $3.5 billion for the long-term leases.
But to make their investment profitable, those companies raised meter rates to $3.50 an hour in choice spots earlier this year, triggering a driver uprising that left meters mangled by tire irons and coin slots filled with Super Glue.
Some Los Angeles City Council members, who will begin considering the mayor’s plan Monday, are skeptical of the Chicago experiment. A year ago, the council approved a rate increase for L.A.'s 41,000 meters -- the first in two decades. Auctioning the meters off now would be foolish, some members say.
“We’re selling property at the bottom of the market; what a stupid idea. If we were stockbrokers, we’d be in jail with Bernie Madoff,” said Councilman Greig Smith. “This is fool’s gold.”
Some members are also reluctant to part with $28 million in annual meter revenue that helps pays for parking projects in their districts
So far, the council’s budget committee has proposed closing the city’s $530-million shortfall by laying off 800 city workers, mandating 26 furlough days and eliminating further police hiring. Because of normal attrition, a freeze on hiring would lead to roughly 500 fewer police officers within a year.
Villaraigosa calls that unacceptable and has pushed the lease idea as an alternative. How much it could bring in remains uncertain. Villaraigosa plugged an $80-million figure into his 2009-10 budget, but administration officials expect the gain to be substantially larger, depending on how much property is auctioned and how the deal is structured.
Along with the meters, Villaraigosa’s lease proposal includes city garages in West Los Angeles, downtown and Hollywood, as well as structures at Pershing Square and Hollywood & Highland.
Auctioning the property would be far better than reducing the size of the police force, the mayor says. “That’s why I want the council to think outside the box and follow the lead of other major cities like Chicago,” he said this week.
That lead could be messy. Caught in a soaking rain earlier this month, a steamed Carolyn Calhoun pumped eight quarters into a parking meter near Chicago’s downtown Central Hearing Facility. The fistful of change bought her just enough time to walk inside and pay $200 in parking tickets -- for expired meters, she muttered through clenched teeth.
“That’s the city -- just nickel-and-diming us to death,” said Calhoun, who is 51, is on disability and owns a car that won’t start on cold Chicago mornings.
Nearby, Rohan Dhimar, 23, had choice words for city officials who had approved the lease plan. He got nailed with a $50 ticket for an expired meter while interviewing for a job downtown.
“They’re . . . idiots. All this money and the city is still falling apart. Have you seen the number of potholes in Chicago?” he said.
Anger crested in recent months when meters across Chicago starting jamming and cars were being blanketed with tickets. Because of the higher rates, the meters were filling faster than they could be emptied by the servicing contractor, LAZ Parking.
Not only are more parking tickets being dished out, but the city also started booting cars for having two outstanding tickets, according to the “Parking Ticket Geek,” a Chicago blogger who has been chronicling the meter outrage. He spoke on condition of anonymity for fear of retribution from city officials.
“It’s really turned mean in the last four months. . . . It’s all about revenue,” the Geek said.
Chicago politicians still remember that a generation ago, a voter revolt over lousy snow removal led to a mayor’s downfall. When the parking backlash hit, aldermen worked fast to cover their political backsides. They blamed Daley for ramming the lease agreement through, saying they had just two days to deliberate.
“They were selling it as ‘This is the only way to plug the budget gap created over the last year,’ ” said Alderman Scott Waguespack, one of only five officials to vote against the proposal. “The mayor’s office refused to release any financial documents or analysis, and here you’re giving it away for 75 years.”
Despite such problems, Daley’s wheeling and dealing has intrigued politicians from California to Pennsylvania. By “privatizing” government infrastructure, elected officials have found a way to generate hundreds of millions of dollars without raising taxes.
Supporters of the idea describe it as simple good management. “The question for Los Angeles is, should the city be in the parking garage business?” said Dana Levenson, Chicago’s former chief financial officer who oversaw the city’s parking garage and toll road leases. “A city should be in the school business, the police business, the fire business and the sanitation business. Not parking garages and toll roads.”
Levenson, now head of North American infrastructure banking for the Royal Bank of Scotland, said that by shedding parking meters and garages, Chicago officials were able to improve city’s finances, pay off debt and spend tens of millions of dollars on social programs and parks. The city also socked away hundreds of millions of dollars in reserves, which generate interest to help replace the revenue from meters and garages.
If L.A. chooses to privatize garages and meters, the biggest challenge for the mayor and council will be to resist the temptation to spend it all to adjust the current year’s budget, pay salaries or fund special projects, said Steve Steckler, chairman of Infrastructure Management Group Inc. in Bethesda, Md. A good chunk should be squirreled away in an interest-bearing reserve account, he said.
“We like to tell cities to take a little up front and take a little more over time,” Steckler said. “They’re not very good at that. We’re typically asked, ‘What’s the point, my term ends in three years?’ ”