Indianapolis Can Do Better Than The ACS Parking Deal

The City of Indianapolis is currently considering a proposal, being pushed by the Mayor’s office, that would essentially sell off to the private firm ACS (a division of Xerox) a government sponsored monopoly on downtown metered parking. One of the partners in this deal includes an operator of parking garages as well. The deal has been subject of considerable criticism due to its length, stiff penalties for early termination and lack of attempting to create a competitive market for parking. Despite attempts by city officials to try and improve the deal, it still, to use the modern vernacular … SUCKS.There is an appearance that the city is willing to do this woefully one-sided, monopolistic deal because of the substantial up front payment that ACS is willing to make. The city is hungry for money right now to make improvements in the city prior to the 2011 elections and hosting the Superbowl in 2012. Despite a lot of criticism, and some of it justified, of Mayor Greg Ballard the bottom line is that the average person in the street doesn’t perceive the city as being run poorly or having its priorities misplaced right now. I’m not saying this perception is or isn’t accurate, just that despite the wishes of some local pundits the Mayor is not as unpopular as they might want. This is true, even with the very public problems that have plagued IMPD lately and despite having badly disappointed a lot of more free market, small government libertarian leaning folks who at one time cheered his election. Local radio host and political commentator Abdul Hakim-Shabazz of Newstalk 1430 AM is fond of suggesting that if you’re going to throw rocks at a plan, at least bring your own ideas or alternatives to the table. There are a lot of different ways that management of the metered parking could be privatized, here is just one idea.Instead of granting monopoly control over all of the parking for decades at a time and with harsh penalties to the city for terminating the agreement, why not something like this?Divide the metered parking into sections, maybe even into segments a block long (or other appropriate metric) and lease (perhaps via auction) the parking rights in chunks. Assuming that the parking rates are going up, no matter what happens, let’s just use something slightly higher than the present cost, maybe $1.00 per hour as the lease rate and that lease holders could then build a margin into their rates. Parking downtown is hard to come by and most meters are occupied almost all day during the week. Let’s assume the lease is valid from 6 AM to 6 PM during regular weekdays but use 10 hours a day as the expected average occupancy.The lease terms could stipulate that no single lease holder can control more than some percentage of the parking, maybe something around 40%. It could also stipulate restrictions on how many consecutive blocks (or other grouping) could be controlled by one entity. The city could put other restrictions into the lease terms like that weekend and evening parking is still free. Rates for and management of each meter must be clearly marked. Early termination might involve just paying a pro-rated amount back to the lease holder for an remaining term and the city might just need to refund for days where it needs to close a section of street to parking. The lease term lengths could be for anywhere from 1 to 5 years. Shorter term length agreements might carry a premium, perhaps $12 to $15 a day instead of $10 just like how shorter term lengths in other industries carry premiums. Parking rates in excess of a certain cap (maybe $2.00 an hour just to randomly pull a number out of nowhere) might require a 50% premium back to the city. There are, according to an IBJ article I read, around 3,600 spaces and there are about 261 regular weekdays (holidays notwithstanding). Ten dollars a day X 261 weekdays X 3,600 spaces X 5 years = $46,980,000 … all paid up front. Insert your own lease rate, term lengths and other factors and come up with your own figures, this is just one example.Not only could the numbers work, but private operators could opt one day to replace more standard parking meters with meters that can also charge electric cars (for an extra fee) or who knows what else.The point is that as public, government owned property it could still be regulated while inducing privatization, competition and innovation. This is just one idea and I’m sure there are others; but, even as someone of a libertarian persuasion I’d rather the city just retain control than transfer monopoly control to a corporation. At least if it stays under city control the prospect of doing a good deal doesn’t disappear behind millions of dollars in early termination fees. Privatization is fine when properly done, the problem is that government rarely does it so.UPDATES:An article at New Geography regarding privatization is worth a quick read. Tip of the hat to Advance Indiana for posting.Also, it occurred to me to add that legal and administrative costs for managing the kind of system I propose above could be much less than the big, monopoly style deals governments typically engage in. For a small percentage of around 5 to 7% I’m sure an outside firm or consultant could be retained to manage coordinating the rules with city officials, creating basic legal agreements as well as segmenting, managing the bidding process, handling complaints if necessary and providing ongoing compliance checking. Click here for a photo of a solar-powered, multi-space parking meter.

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