Pittsburgh’s City Council Tuesday approved a $220 million Pittsburgh Parking Authority bond deal that aims to prevent a state takeover of the city’s pension system.
The plan involves the Parking Authority selling up to $220 million of revenue bonds to buy city-owned parking assets. Pittsburgh would then use those asset-sale proceeds to increase its retirement system funding level to at least 50%. The system’s current funding level is nearly 30%.
Pennsylvania will take over any municipal pension system that is not at least 50% funded on Jan. 1 and place it within the Pennsylvania Municipal Retirement System, which is run by the state. Moving to the state system would increase Pittsburgh’s minimum annual pension contribution by $30 million to $75 million, according to Mayor Luke Ravenstahl, as the state uses a lower assumed rate of return on pension-fund investments.
With $990 million of liabilities and $300 million of assets, Pittsburgh’s pension plan has an unfunded liability of nearly $700 million.
Parking-fee increases would pay down the $220 million of debt. The council approved gradual fee increases from March 2011 through January 2015, according the resolution. During that time, customers will pay 50 cents to $1.50 more to park in the Pittsburgh area, depending upon the neighborhood.
The borrowing plan passed in a seven to two vote, with council members Theresa Kail-Smith and Ricky Burgess voting against, according to city clerk Linda Johnson-Wasler.
The city-owned parking assets include one parking garage, five surface lots, and all of Pittsburgh’s metered parking. The authority has $105 million of outstanding revenue bonds.
Ravenstahl opposes the sale of city-owned assets to the authority. On Monday he spoke before the council, urging the nine members to reconsider the borrowing plan. The council would need six votes to override a potential mayoral veto of the bonding plan.
Ravenstahl spokeswoman Joanna Doven did not return messages regarding a potential veto.
The Parking Authority board will also weigh in on the bonding. It is set to meet Wednesday, though it’s not clear if it will discuss the borrowing plan. Scott Kunka, Ravenstahl’s finance director, is chairman of the authority’s board. Kunka helped craft the mayor’s initiative to lease for 50 years all of Pittsburgh’s parking assets, both city-owned and authority-owned. A consortium including LAZ Parking and JPMorgan Asset Management offered an up-front payment of $451 million to operate the parking facilities. The council rejected that privatization plan Oct. 19.