CHICAGO - Cincinnati officials said this week they will be forced to lay off hundreds of employees to offset a budget shortfall after legal challenges have delayed a controversial plan to lease the city's parking system.
City attorneys made the argument Monday at a federal appeals court hearing during oral arguments over the parking plan. The case landed in the First District Court of Appeals after Cincinnati appealed a lower court's injunction that blocked implementation of the lease. Opponents are asking for a voter referendum on the deal.
If the city wins, it could call the laid-off employees back to work, city solicitor John Curp told the court, according to local reports. But meanwhile, the administration needs to submit a balanced budget by June 1, and even if the court rules quickly in favor of the city, the bond deal needed to finance the lease would not be completed in time, Curp said.
Cincinnati Mayor Mark Mallory has been pushing for the lease deal for months to plug deficits in the 2014 and 2015 budgets. The plan calls for the city to lease its meters, lots and garages for 30 to 50 years to the Port of Greater Cincinnati Development Authority. The city would use the up-front cash payment of $92 million to eliminate a deficit. Without the money, officials warned that the city would be forced to lay off 338 employees, nearly all from police and fire departments, and leave another vacant 105 jobs unfilled.
City officials said they hope for a ruling within the next few weeks.
The city would lease its meters to the authority for 30 years and its garages for 50 years. The port authority would sell roughly $92 million of bonds to finance a one-time up-front payment to the city for the asset. It would privately place a note with the city, and make payments on the note twice a year to pay off the rest of the roughly $105 million.
Guggenheim Securities LLC would be the underwriter. Public Financial Management is the city's financial advisor on the deal. Calfee, Halter & Griswold LLP is bond counsel for the port authority.
Xerox, which also runs Indianapolis' newly privatized parking system, would operate the meters for the authority. Unlike in Chicago, Cincinnati would retain control over all rates, hours, and enforcement.
Of the $93 million, the city would deposit $53 million into its general fund and $39 million into a fund for various capital projects and economic development. It would set aside $6.3 million to add to the city's reserve account.
The authority would also invest up to $98 million over the life of the deal in capital upgrades to the parking system.