Plan calls for razing, rebuilding Lexington Market

Baltimore's parking economics [Editorial]

Chicago's 2008 privatization of its municipal parking assets is widely considered to be a colossal boondoggle. Los Angeles considered selling off a few of its parking garages earlier this decade but scrapped the idea after it became clear that the deal wouldn't be nearly as good as initially advertised. Pittsburgh's city council killed a parking privatization deal in 2010 amid concerns about hidden costs in the proposed contract. In 2013, Cincinnati signed a deal to privatize its parking, but then voters rebelled, electing an anti-privatization mayor and city council, who promptly killed the plan.

Why, then, is Baltimore Mayor Stephanie Rawlings-Blake pursing her own privatization plan, asking the City Council to authorize the sale of four downtown garages to fund new recreation centers? The answer, quite simply, is that her proposal is much more modest than those that have failed or proved unpopular elsewhere, and its aims are much more fiscally reasonable. The experience of other cities suggests that in the final analysis, Baltimore may not be able to get a deal that accomplishes as much as the mayor is promising, and it's clear that the details of such an arrangement are important. The City Council should give the mayor's proposal strict scrutiny, but it's an idea worth pursuing.

If there's a template for what not to do, it's Chicago. The city was strapped for cash in 2008, and then-Mayor Richard M. Daly pushed legislation that privatized Chicago's parking garages and meters through the city council. It passed just four days after he introduced it, and neither the public nor the council members knew all the details of the $1.2 billion, 75-year deal. Fast forward a few years, and Chicagoans were paying the highest parking meter rates in the nation, and analysts were estimating that the city should have gotten nearly $1 billion more than it did. Meanwhile, the money Chicago did get is long gone, having merely helped shore up recession-related budget gaps.

What Mayor Rawlings-Blake is proposing is quite different. For starters, it amounts to swapping one city-owned asset for which there is a viable private market, parking garages, for another asset for which the private sector is not well suited, recreation centers. (The Rawlings-Blake administration, during recession-induced rounds of budget cutting, touted privatization as an answer for the city's aging recreation facilities as well, but the feasibility of such a scheme has proved limited.) The city envisions a deal that would net as much as $60 million in profit and would retire the $24 million in debt owed on those four facilities, which would itself free up money for maintenance on other garages or construction of new parking in other neighborhoods. As for the fact that the city would be giving up revenue-producing assets, the finance department estimates the loss would net out to about $728,000 a year after factoring in reduced maintenance costs and the return of the garages to the property tax rolls.

And in contrast to other cities, the mayor's plan doesn't affect street parking or garages outside of downtown. She is talking about selling four garages used primarily by tourists and office workers that account for about 3,000 of the 49,000 spaces in public and private garages and surface lots within a mile of the Light-Pratt intersection. Rather than creating an effective monopoly on public parking, as some privatization plans do, this one would leave significant competition in place, which should limit the extent to which it would affect prices even without legislative controls on parking rates.

But therein also lies a potential pitfall for the proposal. If the market limits the possibility of rate increases, and the garages are already well run, as the city insists, why would private operators pay anything like the $84 million the city expects them to fetch? The four garages currently generate a profit, though city officials could not immediately say how much. Would such a deal to pay off for investors without a fundamental change in the garages' economics? They are already privately operated and have already made the shift from cashiers to automated payment technology, which means a new owner would not be taking over for some bloated government bureaucracy. A private owner would not be able to finance capital improvements through tax-exempt bonds, as the city can, meaning long-term maintenance costs could be higher. And a private entity would have to pay property tax, which the city does not.

That said, Baltimore has every reason to explore a deal. If the city can really get as much for these garages as the Rawlings-Blake administration thinks, it would likely be a good deal. But City Council members need to stop focusing on the visions of rec centers dancing in their heads and instead prepare themselves to apply diligent scrutiny to the mayor's proposal, once it is introduced as formal legislation, to make sure that taxpayers' interests are protected and that we don't wind up selling simply for the sake of selling.

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