Is Pittsburgh Council Serious About Shutting Down Parking Authorty?

Member Group : Allegheny Institute

(July 20, 2011)–Members of Pittsburgh City Council have expressed frustration with the operations of the Public Parking Authority. Some have mentioned the possibility of dissolving the Authority. Perhaps that’s because Council members have spent the better part of the past two and a half years debating, deliberating, and discussing how to solve the City’s massive pension problems with the Parking Authority and its assets a major element in those discussions.

Recall that in early 2009 the Mayor proposed offering to lease the parking system assets to acquire a lump sum for the City’s pension funds. Council nixed that plan, but came up with an alternative that relied on dedicating a portion of the parking tax revenue the City receives to the pension funds over the next three decades. Whether that alternative will gain state approval will be determined in September.

In the meantime Council has increased rates at street meters (which the City owns) and has requested the Authority do the same for garages and lots (which the Authority owns) but the Authority has not complied with that request as of yet. Now the Authority wants to install new metering devices which would again boost meter rates. The interrelationship between the City and the Authority goes quite deep as they share meter revenue and the Authority makes a payment in lieu of taxes to the City from revenue it earns in addition to acting as a tax collector for the City. The City’s pension bailout calls for a much larger payment from the Authority.

Last week, a member of Council expressed the opinion "that the city consider dismantling the agency and taking over all meters, garages and lots" basically creating a Department of Parking. Another member said earlier in the year in regards to all City authorities that "There has to be either independence or unification [with city government]. You can’t have some halfway state between the two".

Which brings us to the question: What is required to shut down an authority? As we wrote last year (Policy Brief Volume 10, Number 50), under state law, a clear plan and wherewithal to pay off any and all outstanding debt have to be in place before the authority can go out of existence. The City of Pittsburgh could dissolve the Parking Authority as long as it had a plan of how to settle long-term debt and the Authority’s creditors agree to the plan. The Parking Authority has just over $100 million in long-term debt and also has its own pension and retiree health care plans. The board of directors of the Authority could convey the assets to the City once the debt is retired. All this assumes the Mayor and Council could work together or that Council can override any Mayoral objections.

The City would have to agree to pay off the debt and absorb employees and their benefits into the general operations of the City. Ironically, the Mayor’s long-term lease proposal would have used the first $100 million of the lease price to erase the Authority’s debt. If there was ever a time to shut down an authority that would have been the golden opportunity. Under the Mayor’s plan the Parking Authority would have continued to exist but it would have been prohibited from building new garages in the lease area. But rather than take the opportunity to eliminate an authority, Council refused to approve the Mayor’s lease plan and thereby rejected the hundreds of millions of dollars it would have garnered for the City.

Interestingly, the argument was that parking rates would have to be raised by the lessee and that would hurt the City. Now, of course, Council is demanding that the Authority raise parking rates to generate money needed for its pension plan. Moreover, Council’s last minute plan on New Year’s Eve requires millions of parking tax dollars to be earmarked for pensions, leaving a budget hole to fill.

Since the City’s fiscal philosophy for the past few years has been to avoid taking on any new debt for any reason (even capital needs are paid out of recurring revenue) it is doubtful there will be much support for borrowing $100 million or more to pay off the Authority’s debt. Doing so would add to the $633 million in general bonded debt currently owed by the City. Folding the 150 or so Parking Authority employees into the City would increase the City’s full-time headcount to 3,476. Adding employees is exactly the wrong direction for the City.

There are no good data on the number of Pennsylvania authorities that have been terminated or have been absorbed by their incorporating municipality. Therefore it is impossible to gauge whether Pittsburgh would be joining a trend or be a pioneer by shutting down the Parking Authority. Even though the sports arenas are owned by the Sports and Exhibition Authority, the City’s Stadium Authority is still in existence years after Three Rivers Stadium was demolished. If Council were to end the Parking Authority it would be the first dissolution of a City authority.

Reducing the City’s authority count is undoubtedly a good long term goal. Council should start with one that has a lot less debt or that has marketable assets to cover debt and be willing to sell those assets. That does not appear to be in the cards.

Eric Montarti, Senior Policy Analyst
Jake Haulk, Ph.D., President