City lawmakers thought they had killed it. Even the mayor gave it up for dead. Now a group of aldermen, working closely with a company lobbyist, has unearthed and galvanized a disgraced parking meter monetization plan.
Five aldermen have signed on to a letter supporting a plan under which Gates Capital Partners, an Ohio-based investment firm, would receive a dedicated portion of the city’s parking meter revenue for 25 years, plus interest. The city would be on the hook for over $120 million. In exchange, the company would give pay the city $50 million up front.
The latest effort met resistance from an East Rock alderman and a budget watchdog, who called the plan “deeply irresponsible” and akin to a “payday loan.”
The monetization plan was first put forward more than a year ago, during last year’s budget season. It met an outpouring of opposition: Critics said the plan was a short-sighted quick-fix that would saddle the city with debt for years to come. The plan was eventually shelved.
Meanwhile, Gates continued to work to convince aldermen it was a good idea. The company hired Steve Mednick, a local attorney and former alderman, as a lobbyist.
In November, Alderman Justin Elicker put forward a resolution calling on the city to not spend any more time or resources considering monetization as an option. Eighteen of his colleagues signed on to the proposal, which has been sitting in front of the Board of Aldermen’s Finance Committee ever since.
By March, even the mayor seemed to have given up on monetization.
On April 6, the plan resurfaced. Representatives from Gates appeared before the Finance Committee to re-pitch the plan and rebut some of the arguments against it. They were there at the request of Alderman Yusuf Shah, the chair of the committee, who said the city’s dire fiscal outlook is prompting him to put all options back on the table.
On Thursday, Shah — along with Alderman Marcus Paca and Alderwoman Bitsie Clark — emailed a draft of the letter to their colleagues, calling on them to give monetization a second chance. By Monday morning, Aldermen Migdalia Castro and Tom Lehtonen had signed on.
Read the letter here.
There is conflicting information about the authorship of the letter, but it appears to bear the fingerprints of Gates’ lobbyist: The file information of the document emailed to aldermen on Thursday — signed by Paca, Shah, and Clark — lists “Steve Mednick” as the document’s author. The document’s “title,” however, is the first sentence of Elicker’s letter opposing monetization.
Mednick said he didn’t write the letter. Paca said he did. Mednick’s name “just happened to be on the back end of the file,” Paca said.
Paca said he wrote the first draft of the letter himself. As part of the process, Paca said, he corresponded with Mednick, who sent him talking points and different options for monetization.
Shah said he expects the Finance Committee to take up monetization at its May 3 meeting.
City parking meters, which cost $1.50 per hour, took in between $3.7 and $4.1 million in Fiscal Years ‘07-‘08, ‘08-‘09, and ‘09-‘10. The mayor’s budget for the next fiscal year predicts an intake of $5.2 million, as does the approved budget for the current fiscal year, which ends in June.
Just Like Buying A Microwave
Paca and Shah both acknowledged that the monetization plan is not an ideal solution to budget difficulties. But desperate times call for desperate measures, they argued.
Shah said he was inspired to revisit the idea after the February layoff of 82 city workers, including 16 rookie cops. “This made me, as the chair of the Finance Committee, say OK, stop the presses. Let’s review everything that’s out there.”
The monetization deal is simply a means of borrowing money, Shah said. “People do that everyday.” When you go to the store to buy a microwave oven and you don’t have the money, you use a credit card, he said. “This is no different than what we would be doing.”
If the city locks into a deal where it gives a certain amount of its meter revenue to Gates every year, it can always raise the rate at the meter to take in more money for itself, Shah said.
The city would retain control of its meters, and could even put in more meters to bring in more revenue, Shah said.
Shah said the city has run out of alternatives. “Is there a pot of gold under the skating rink? Can we dig it up? I mean, come on.”
Paca said the monetization plan need not be a $50 million deal paid off over 25 years. There are other options, he said, such as $25 million over 10 years.
The money wouldn’t go into a “slush fund” for any old purpose, Paca said. It would not go toward new expenses, he said. “The money is going to be specifically used for tax relief, that’s it.”
“This is all to do with what’s in the best interests of the city,” he said.
Passing The Buck
Alderman Elicker, who was at the April 6 meeting with Gates, said he didn’t hear anything new there, and remains opposed to monetization.
“People have been comparing it to a mortgage,” he said. But it’s not like a mortgage, he said. “In a mortgage, it’s your money. … But it’s not our money.” Long after new aldermen and even a new mayor have been elected, the city would still be paying off the money from Gates, Elicker said.
“It’s an easy out for us,” he said. It’s a “deeply irresponsible decision to make. … passing the buck down to future generations.”
“There must be a lot of money for Gates to gain, because they have been persistent,” Elicker said.
Elicker said laws prohibit cities from borrowing money to pay for general operating costs. They are allowed to borrow only for capital projects. Monetization is “basically a loophole” to get around the law, he said.
Jeffrey Kerekes, budget watchdog and founder of the New Haven Citizens Action Network, also called the plan a “loophole.”
“We’re basically borrowing money to pay for expenses,” he said. “It’s like a payday loan.”
There are laws against it because “it’s not sound fiscal policy,” he said. “How do you ever make any traction when you take a deal that you don’t have any money for?”
The way to provide tax relief is to make a list of priorities and “stop when the money runs out,” Kerekes said.
If the city is willing to raise parking meter rates to pay debt to Gates, then it should just raise rates to pay for operating expenses, Kerekes said.
Authorship
The letter’s metadata window.
While Paca and Shah claim authorship of the letter calling for reconsideration of the parking meter plan, the document’s file information paints a more confusing picture. The metadata associated with the file sent to aldermen on Thursday lists “Steve Mednick” as the file’s author. The “title” of the document, however, is the first sentence of Elicker’s November letter, calling on the city to cease consideration of the parking meter plan.
Elicker said he has no idea why his anti-monetization sentence is the title of the pro-monetization letter. “I’m certainly not involved in drafting the letter, mostly because I hate monetization.”
Shah said he worked with Paca to write the letter to aldermen calling for a reconsideration of monetization. He said he did it to share accurate information about monetization.
“In order to get my facts together I did consult with Gates through their attorney,” Shah said. “We didn’t work in a vacuum.”
Asked how Mednick’s name came to be recorded as the author of the document, Shah said he doesn’t know.
“Me and Marcus composed that letter, and anything else that’s out there is a rumor or a lie,” Shah said. “Marcus composed the first draft and Marcus ran it by me.”
“Steve did send me some information,” Paca said. Mednick sent him “bullet points” and “talking points,” Paca said. He said he and Mednick shared several types of emails and somehow his name ended up on the file that became the letter.
“I wrote that letter. Steve Mednick did not write that letter. I wrote that letter,” Paca said.
Mednick said he had shared information about monetization with aldermen.
“It’s possible that stuff we generated is in that letter,” Mednick said. “I did not write that letter.”
Long-Term Financial Health
On Monday, city spokesman Adam Joseph declined to endorse the monetization plan, instead deflecting attention to the city’s labor negotiations.
Monetization “doesn’t get us where we need to go in terms of the long term financial health of the city. The best thing we can do for the financial sustainability is to make modest changes to our pension and health care plans. That’s what we are working on.”
However, Joseph didn’t rule out the parking meter plan, either.
“If we can address our long term issues with pension and health care and in some cases work rules the City will be in a better financial position and decision on the need for monetization could be made at that time.”