Melissa Bailey File Photo
The city’s budget chief plans to offer the first public detailing of a controversial deal to avoid further tax hikes by selling 25 years worth of parking meter revenues.
The budget chief, Larry Rusconi (pictured), plans to appear Monday night before the Board of Aldermen’s Finance Committee.
He’ll discuss a pending so-called “monetization” deal with Gates Capital Partners. Under the deal, New Haven would guarantee an estimated $120 million to Gates over 25 years in collected parking meter revenue. In return the city would get $50 million up front to spend over an expected four to five years to plug short-term budget holes.
Mayor John DeStefano said in a recent Independent interview that the deal will help him avoid raising taxes more or cutting services and laying off workers at a time the city’s making progress. The final details of the deal were still being negotiated when DeStefano spoke at length about its highlights: Click here to read about that.
Now City Hall’s ready to have Rusconi discuss the details of the deal he negotiated with Gates, at Monday night’s hearing, before some skeptical aldermen.
Aldermen are in the process of holding hearings before voting on the mayor’s proposed $476 million budget. This parking monetization deal is proving one of the stickiest questions, after the average 9 to 11 percent tax increase the budget includes (because of a phase-in of property revaluations).
Critics worry that the mayor is saddling future mayors — for 25 years — with no parking revenue in order to pay off short-term bills now.
DeStefano said he hopes to avoid that by stepping parking enforcement, raising hourly parking rates to $1.50, and installing new kiosk-like pay stations where people will pay for street parking. (The latter will prevent parkers from receiving paid time on the meter from previous parkers.) The city would keep any money collected each year beyond the amount it promises to pay Gates. The city will not be handing over control of the parking meters to Gates.
A release issued by City Hall in advance of Monday’s hearing included some of the details and arguments DeStefano offered in that earlier interview. The release said that the city has 2,738 on-street meters. The release follows:
-PRESS RELEASE-
CITY ANNOUNCES INITIAL DETAILS ON STRUCTURE OF PARKING METER
MONETIZATION
NEW HAVEN- The City of New Haven is finalizing a monetization agreement
with Gates Group Capital Partners, LLC (“Gates”) that provides a $50
million upfront payment to the City for a lease-leaseback deal of the
City’s 2,738 on-street parking meters. The terms of the lease are based
on a 25-year fixed lease payment schedule that will be finalized at
closing. As negotiations stand, the City will have the right to
terminate the lease early after year ten.
“With massive state deficits projected over the next several years,
budget cuts and revenue enhancements just won’t be enough to keep New
Haven moving forward — and we are going forward,” said Mayor John
DeStefano, Jr. “This is a short-term solution that is the bridge to long
term fiscal stability. While this is not something I would have
ordinarily sought to do to balance our budget, these are not ordinary
times. The choice was clear: negotiate a deal like this that would
provide a significant revenue stream during the toughest year of our
nation’s fiscal crisis or explore significant future tax increases that
our families cannot afford.”
All proceeds from this deal will be used to create a Property Tax
Stabilization Trust Fund to cover anticipated revenue shortfalls and
mitigate tax increases in upcoming years. This transaction allows the
City to balance budgets in the next few years that will be impacted by
continuously increasing employee pension and health care costs. “This
deal will help the City transition from where it is now to a system that
can really deal with these rising cost drivers,” said DeStefano.
In April 2009, the City issued an RFQ for firms interested in a
public/private partnership to monetize certain City and Parking
Authority Assets. This initiated an extensive solicitation/evaluation
process to assess what type of economic value could be obtained to
address immediate and short-term economic needs. Five firms provided
responses, which included both Concession and Lease only approaches.
In August 2009, the City issued an RFP to each respondent to submit
Lease/Leaseback and proposed agreements.
The City received two follow-up proposals in September 2009; (1): a
Concession Proposal from LAZ Parking to assume operational and financial
control of the NHPA Garages and Parking Meters; and (2): a Lease
Proposal from Gates with a leaseback to the City leaving operational and
financial control with the City.
From September 2009 to February 2010, the City conducted reviews,
analysis and interviews of the proposed firms. The process was thorough
and deliberate, and conducted in accordance with the City’s Charter and
purchasing guidelines. After careful consideration of the two
proposals, the City decided not to proceed with a Concession deal, which
would have relinquished financial and operational control the Parking
Assets. Further, it was decided to proceed with the Lease/Leaseback
proposal submitted by Gates.
“In consultation with our financial advisor, Public Financial
Management, in February 2010, the City awarded the RFP to Gates for
monetization of parking meters only,” said Lawrence Rusconi, Director of
the Office of Management and Budget. “The Gates proposal maximizes the
upfront payment and allows the City to maintain operational control and
flexibility for economic development of our Parking Assets.”
The City is proposing an expanded meter system that will introduce pay
stations to City streets as well as expanded enforcement hours and an
increase in parking enforcement staff who will in turn generate
increased revenues. Changes to the City’s parking meter/enforcement
system will replace meter revenues used to pay lease payments. Gates
has no legal claim to meter revenues from expanded system. After all
lease payments are satisfied, all monies from meter system flow to the
City, and not Gates, to be used at the City’s discretion: Gates’
financial interest is capped at lease payments.
“The proposed transaction is part of a comprehensive plan to help the
City address continuing fiscal pressures from the current recession.
The transaction will provide the funding of a fiscal stabilization fund
to bridge the anticipated budgetary gaps the City expects over the next
couple of years,” said Chuck Matthews of Public Finance Management.
Other cities that have executed or are in the process of executing
parking asset monetization transactions include: Chicago, Hartford,
Harrisburg, Indianapolis, Los Angeles, Las Vegas, Miami, Pittsburgh and
Worcester.
[END]