A plan to enter Pittsburgh's parking facilities into a long-term lease agreement with a private operator came back to life Thursday after a City Council member moved to revise the deal.
Councilwoman Theresa Kail-Smith introduced a measure to allow Mayor Luke Ravenstahl to negotiate to lease Pittsburgh's parking assets. Councilmen Ricky Burgess and R. Daniel Lavelle are sponsoring the proposal.
The new bill reopens Ravenstahl's initiative to lease the parking system in a public-private partnership. Lavelle voted against the mayor's privatization plan on Oct. 19, when the City Council rejected Ravenstahl's plan to lease Pittsburgh's parking assets for 50 years to a consortium that includes LAZ Parking and JPMorgan Asset Management in return for an up-front payment of $451.6 million. The initiative lost by a seven to one vote, with one abstention.
"The mayor and the director of the Department of Finance, on behalf of the city of Pittsburgh, are hereby authorized to enter into negotiations with various persons and/or entities for the purpose of leasing parking assets owned or operated by the city and/or the Public Parking Authority of Pittsburgh in exchange for substantial up-front consideration to the city and the authority," the legislation reads. "The terms and conditions of any such lease and related documents must be submitted to and approved by council."
A new privatization deal would involve a lease of less than 50 years and include parking-fee increases that are below the fee hikes proposed in Ravenstahl's P3 concept, according to local reports. Those changes would probably generate a lower initial payment to the city, but could still help Pittsburgh raise its pension funding level to 50% and avoid a state takeover.
Shannon Baker, spokeswoman for the LAZ/JPMorgan consortium, said the group is open to negotiations. Its $451.6 million bid expired Nov. 1.
Pennsylvania will place any municipal pension fund that is not at least 50% funded on Jan. 1 into the state-run Pennsylvania Municipal Retirement System. Such a move would increase Pittsburgh's minimum annual pension contribution as PMRS uses an investment earnings assumption of 6%. That compares with the city's 8% assumed rate on pension-fund investments.
According to a PMRS report compiled by the Cheiron actuarial consulting firm, Pittsburgh's minimum contribution under PMRS would increase by $41 million to $86 million in 2013 from this year's $45 million minimum payment. That minimum contribution would grow to $127 million and $160 million in 2017 and 2030, respectively.
"I've understood the devastating effects that our residents and employees would face under a state takeover scenario, and I've done everything in my power to prevent it and protect this city from another financial collapse," Ravenstahl said in a prepared statement. "Hopefully today, the financial reality of these impossible payments becomes crystal clear for members of City Council."
A different proposal involving $220 million of bonding faced resistance last week as the Pittsburgh Parking Authority board declined to approve a request for proposals for outside professionals to help craft a borrowing strategy. In that plan, the authority would issue $220 million of bonds to buy city-owned parking assets from Pittsburgh, with parking-fee increases paying down the debt. The city would then use the sale proceeds to bring the pension system funding ratio to at least 50%.
Ravenstahl's finance director, Scott Kunka, chairs the authority's board. He helped develop the mayor's parking privatization deal.
