South Pittsburgh Reporter - Serving South Pittsburgh Since 1939

By Tom Smith
South Pittsburgh Reporter Editor 

Arlington learns more about parking lease plan


August 24, 2010

Parking is such a hot topic of conversation in the greater Pittsburgh area that even a neighborhood void of parking meters and public lots was concerned enough to host a meeting to learn more from City of Pittsburgh Budget Director Bill Urbanic on the proposed monetizing of parking assets in the city.

St. Clair AA/Senior Center in Arlington, in cooperation with District 3 Councilman Bruce Kraus, invited the budget director to explain Mayor Ravenstahl's plan to lease Pittsburgh's parking spaces to a private contractor for the next 50 years and if there are any alternatives.

Mr. Urbanic explained the city's pension woes, the reason for considering selling off the rights to the parking spaces, began all the way back in 1899 with the firemen's pension. When it first began, the city didn't put money into a pension fund to pay the pensions, it just paid as it went along.

The first changes came in 1947 when national standards for funding pensions were established. However, he said, as late as the 1970s the city didn't have funding in place for the pensions and were continuing to pay as it went along. Currently, Pittsburgh has more people collecting pensions than employees.

"Pensions are broke all over the country, but they're really broke here," Mr. Urbanic said.

Under Pennsylvania State Act 44, the State Legislature required the city to fund its pensions to 50 percent, requiring a boost of approximately $210 million. If the fund is not brought up to the 50 percent level, the state could seize or sell city assets to reach the required funding level.

If the city doesn't get the balance up to 50 percent in the pension fund another option for the state would be to require the city to make additional payments of up to $30 million annually. Mr. Urbanic pointed out the two ways the city could raise the additional money is through real estate or earned income taxes, neither of which would be popular with residents.

Reasons why Pittsburgh's pension is in such bad shape are varied, Mr. Urbanic said. City public safety employees aren't part of the Social Security system and the city is required to operate a similar social security system for them with police eligible to retire at age 50.

"Market crashes over the last 11 years have devastated funding levels," he added.

The city budget director complained the state completely funds many wealthy suburban pension funds while requiring Pittsburgh, the only Class Two city in the state, to fund its own.

The 50 year concession agreement for the city's parking assets, metered on-street spaces and Pittsburgh Parking Authority off-street lots and garages would have to bring in a minimum of $330 million for the city to be effective: $100 million to retire Parking Authority debt, $210 for the pension fund and the rest for associated fees.

It's anticipated the vendor could earn $2.2 billion over the 50 year term of the deal. Mr. Urbanic pointed out there is risk involved for the vendor because there is no telling what the next 50 years holds and if parking will still be needed in the same manner as today.

The agreement would allow the company to increase, with City Council approval, rates and enforcement hours; require the company to replace three parking garages by 2025; offer an expanded non-compete area downtown; and, require pay stations that accept alternate payment forms such as credit cards, bank cards and prepaid cards, in areas where it would make sense such as in Oakland and Downtown.

The city would retain the right to revise fees, however Mr. Urbanic noted, if the fees go down the city would be required to pay the vendor the difference. The city would also be required to reimburse the vendor for any parking space that is out of service for more than 22 days a year. Last year many of the city's on-street metered spaces were out of service for more than 20 days due to the heavy snow falls; many more were unable to be used during parades and city events.

Although they will not receive any parking violation fine money, the vendor has the right to add enforcement officers if they feel the city isn't providing enough enforcement of overtime parking.

Mr. Urbanic said all current Parking Authority employees will be hired by the vendor or the city.

Under a vendor, Downtown parking garages will increase to the "private rate." Currently, the budget director said the authority's garages are approximately 25 percent less than the private garages.

By 2014 metered spaces will rise to $4.50 per hour Downtown; $3 per hour in neighborhoods such as Oakland, Shadyside, the Strip and North Shore; and, $2 per hour in South Side and Mount Washington.

Enforcement hours will also increase to 8 a.m. to 10 p.m., Monday through Saturday. Currently, meters are only enforced up to 6 p.m. The increase amounts to 1,700 additional hours per meter per year.

Mr. Urbanic said, in each of the four community hearings City Council held on the parking plan, city officials heard how the increased parking costs will adversely impact many small businesses.

An alternate plan being discussed by City Council would be to take out a bond to cover the pension fund shortfall. Mr. Urbanic said the bond amount needed would only be $180 million.

Under this plan the city would retain control over its parking assets. However, he pointed out parking rates would have to rise to cover the costs of repaying the bond. How much the rates would increase is part of an ongoing study.

"The wish is to not increase the rates to the vendor's level," he said. "If you raise the Downtown garages to market rates, there may be enough money to pay the bond."

The bond issue would cost $13-15 million annually to repay.

"The big problem is that it's still expensive."


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