Experts to N.Y. City: Tread Carefully in Parking Meter P3

New York City, with an eye toward boosting parking revenues and catching up with technology, expects to issue requests for qualifications by the end of the month to privatize the operation of its parking meters.

“We’ve talked about it for a while. More than a year, really. We’re working to evaluate our options and see if it’s worthwhile,” said Julie Wood, a spokeswoman for Mayor Michael Bloomberg.

Although the concept is still preliminary, the city could then follow with requests for proposals within a couple of months. Last year it hired investment bank Greenhill & Co. to advise the city on public-private partnerships.

New York officials, though, expect to tread carefully on a parking meter P3 project, to avoid the kind of fallout Chicago experienced over a similar venture, and stinging memories, both immediate and distant, of fiascos in their own city.

Many Chicagoans believe that former Mayor Richard Daley’s 75-year P3 deal for parking meters sold taxpayers short. The City Council rubber-stamped a one-shot revenue deal, giving Chicago $1.15 billion to cover deficits over three years. Although the city got what seemed to be fair-market value under competitive bidding at the time, Chicago Parking Meters LLC, an investment group that includes Morgan Stanley, won the right to keep all meter revenues until 2084, and the public now is incensed over skyrocketing rates.

Under little-known provisions in the agreement, Chicago Parking Meters is claiming reimbursement for lost revenue from events such as street festivals and the North Atlantic Treaty Organization summit.

Turnaround professional Bill Brandt, chief executive of Development Specialists Inc. and chairman of the Illinois Finance Authority, said New York is determined not to repeat such mistakes.

“Say what you want about Bloomberg. He’s a savvy businessman. He’s not dumb. He gets it,” said Brandt. “He saw the fallout in Chicago and clearly that’s not happening in New York.”

Brandt, who calls himself “a great believer in P3,” still warns communities to think twice before selling assets such as parking garages. For instance, the financial recovery plan proposed for Pennsylvania’s distressed capital, Harrisburg, includes the sale of parking garages, among that city’s few money-making assets.

“P3 must not be a substitute for political will,” Brandt said. “Look, you could triple or quadruple the rates, secure them in a revenue bond stream and secure your assets. But you need politicians with the cajones to do it.”

New York City public advocate Bill DeBlasio opposes privatizing the parking meters.

“I am particularly concerned by your administration’s refusal to come clean about potential rate hikes accompanying privatization,” DeBlasio wrote Bloomberg. “Our streets are not assets to be sold, nor are parking spaces simply a revenue tool.”

The city is just digging out from the CityTime fiasco, which featured huge cost overruns to implement a computerized timekeeping system.

In March, Science Applications International Corp. of McLean, Va., paid more than $500 million to the U.S. government to settle charges that it committed a fraud that resulted in the cost overruns. The federal government must forward $466 million to the city to compensate for losses, and SAIC will waive more than $40 million the city owes.

New Yorkers with longer memories will recall the Parking Violations Bureau scandal of the mid-1980s that rocked the city and resulted in Bronx Democratic leader Stanley Friedman, one of the city’s most powerful political figures at the time, serving four years in a federal prison. The case was central to the most extensive city corruption scandal in decades.

A jury in 1986 convicted Friedman and three associates of racketeering, conspiracy and mail fraud for their roles in obtaining a contract from the PVB for Citisource Inc., a company in which Friedman was a major stockholder.

The company was to manufacture hand-held computers — breakthrough technology at the time — that would write parking summonses and help traffic agents spot scofflaws.

“When we older New Yorkers think of parking meters, we think of the scandal associated with the 1980s,” said St. John’s University law professor Anthony Sabino. “This administration has to tread carefully or history will repeat itself. Any municipal venture is fraught with the risk of corruption and double-dealing. If it becomes a fiasco, you have egg on your face.”

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