CHICAGO — Indianapolis Mayor Greg Ballard said he would revise key terms of a proposal to lease city parking meters to a private company for 50 years amid rising criticism from members of the Indianapolis and Marion County City-County Council.
The revised deal would allow the city to terminate the agreement every 10 years for a fee and decrease the size of the up-front payment to $20 million from $35 million, while increasing the city’s share of annual parking revenue going forward.
“After nearly two months of review and listening to feedback from the City-County Council, business owners, and the general public, I am pleased to present this revised proposal,” Ballard said in a statement Wednesday, after announcing the changes. “[This] innovative collaboration provides for even greater flexibility for future community development efforts and events, along with new, easy-to-use parking meter technology.”
The Pittsburgh City Council rejected a similar 50-year parking meter lease Tuesday, partly because of criticism over proposed rate increases built into the transaction.
Much of the Indianapolis criticism has targeted the 50-year life of the deal. It remains unclear whether the council will approve the revised proposal, and its sponsor on the council told local reporters additional negotiation is possible.
The lease is Ballard’s latest effort to raise money for infrastructure improvements without tax increases. He approved a plan in July to sell the city’s water and sewer systems to a nonprofit utility in a cash-and-debt transaction.
The parking lease deal would hand control of 3,669 city-owned meters to Affiliated Computer Services Inc., a Dallas-based parking technology company recently purchased by Xerox, for 50 years. ACS would give the city an up-front payment of $20 million — down from $35 million — and a slice of annual parking revenue going forward.
The new agreement increases the city’s share of annual revenue to 30% of the first $7 million in annual revenue, and 60% after that — up from 20% of the first $8.4 million and 55% after that. Revenue includes funds from parking meters and violations. Ballard said the increased share means the city would get $620 million over the 50-year life of the lease, up from $400 million in the original proposal.
ACS also would spend $41 million to upgrade the meters.
The new agreement allows the city to opt out of the deal every 10 years for a termination fee. The city would pay $19.8 million to opt out after the first 10 years, $16.25 million to opt out after 20 years, $12 million to opt out after 30 years, and $8 million to opt out after 40 years.
The revenue-sharing feature distinguishes the deal from Chicago’s precedent-setting parking meter lease as well as the now-dead Pittsburgh proposal and one still under consideration in Los Angeles.
Morgan Stanley is Indianapolis’ financial adviser on the deal. Ice Miller LLP is counsel. The city has no outstanding tax-exempt debt backed by parking meter revenue and therefore will not be retiring any debt as part of the issue.
The proposal also includes a 10-year management contract for the city’s parking garages and lots. ACS, which will partner with two local firms to operate the parking system, maintains parking management contracts with 25 municipalities. The Indianapolis deal would mark its first long-term lease, according to a spokesman.
A private company purchased by Xerox in January, ACS has refused to reveal its financial projections or many details of the transaction.