LAZ Parking wins rights to operate Pittsburgh parking
A Hartford, Conn.-based firm won the rights to operate 12 Downtown garages and 9,000 metered parking spaces for 50 years Monday with a $451.7 million bid.
Pittsburgh Mayor Luke Ravenstahl will use the money to bolster the city's underfunded pension system and erase approximately $110 million in Parking Authority debt. About $120 million will be left over.
LAZ Parking, which operates meters and garages in Atlanta, Boston, Baltimore, and Philadelphia, submitted the highest bid following a nine-month process for Ravenstahl's proposal to get the pension funds to the 50 percent threshold needed to avoid a state takeover. The funds currently have about 27 percent of the $1 billion needed to fund the retirement benefits of about 8,000 active and retired police, fire and municipal employees.
LAZ teamed up with New York-based investment firm J.P. Morgan on the deal. They will be known as Pittsburgh Parking Partners.
"This clearly solves the problem facing us until the end of the year and will provide us with additional revenues as well," Ravenstahl said.
Both the Parking Authority board and City Council must approve the deal. Council is awaiting the results of a $250,000 study it commissioned in June to analyze the mayor's plan and other options to fund the pension system. The study's results are expected Friday.
A majority of council members — Patrick Dowd, Bruce Kraus, Bill Peduto, Natalia Rudiak and Doug Shields — and City Controller Michael Lamb have expressed concern over the mayor's lease deal. Alternatives include allowing the state to take over the pensions, issuing a bond to fund them, or using the value of a few Downtown garages as equity for the pensions.
"I think the way the city did this process netted a better bid," Lamb said. "But I believe there is a less expensive way to do this that still keeps those public assets public that can achieve the mayor's overarching goal."
Residents overwhelmingly opposed the mayor's plan at more than a half-dozen public meetings City Council and the mayor's office held this summer, saying motorists would likely park in front of their homes instead of at meters; business owners said increased meter rates in neighborhood business districts would push shoppers to the suburbs where parking generally is free.
Ravenstahl said his proposal attempts to "balance the needs of the residents with the city's need for money."
Ravenstahl on Wednesday plans to submit to the Intergovernmental Cooperation Authority, a state-picked board overseeing the city's finances, a budget that includes 10 percent cuts totaling $30 million. Those cuts would disappear if council approves the mayor's lease proposal or finds another way to fund the pensions.
"This is what's in the best interest of the city. We cannot allow for a state takeover," said Councilman Ricky Burgess. "I think we should go forward to protect our pension and to protect our city from drastic cuts to services."
Ravenstahl has said council must vote on his proposal by Oct. 29 for the money to be in the bank by the end of the year.