Pittsburgh’s City Council last week rejected, for the second time, a plan to enter its parking facilities into a long-term lease agreement with private investors in order to boost the city’s pension fund and avoid a state takeover of the fund.
Officials voted down a revised parking privatization plan in which LAZ Parking would have given Pittsburgh an up-front payment of $305 million and a percentage of future parking revenues. In exchange, LAZ Parking would have owned the rights to operate parking facilities owned by the city and by the Pittsburgh Parking Authority under a 40-year lease with an option for termination after 30 years.
The agreement was a scaled-back version of an earlier one that the council rejected on Oct. 19. At that time, LAZ Parking offered a $451.6 million initial payment for a 50-year lease agreement that did not include revenue sharing.
Pittsburgh needs to increase the funding level of its pension fund to at least 50% from its current 30% level or the Pennsylvania Municipal Retirement System will manage the system.
All municipal pension funds that are not at least 50% funded on Jan. 1 will fall within the PMRS. Such a move will require Pittsburgh to make higher pension contribution payments, as the system uses a lower assumed rate of return on pension-fund investments.