May 2010 Parking - 5

Volume 49, Issue 4 May 2010
Parking Magazine
800-647-PARK 202-296-4336 Fax 202-296-3102 www.npapark.org info@npapark.org Publisher John L. Fiegel, CAE Managing Editor Denise Gable Design TGD Communications

Chairman’s Update Herb Anderson
Lessons Learned in Parking Monetization
The economic hardship that North America has experienced over the last two years has produced a number of new trends related to owning and managing parking properties. The latest trend for municipal-owned parking is monetizing the stream of income of their parking related properties. This allows municipalities to collect large checks paid in advance and also participate in the revenue stream of the term of the lease. An important point is while the leases can be from 20 to 99 years, the city does not give up ownership of the properties, which could cause many other complications. During this time of economic hardship many municipalities are struggling to maintain their existing budgets. In the news recently several municipalities are reducing the scope of services provided to the community and are even closing down schools in some areas. By monetizing their parking income the municipalities are able to meet the ongoing needs of their communities. The clear leader in this new game, Chicago, entered into a 99-year lease of four downtown parking garages to Morgan Stanley for $563 million in 2006, and followed two years later with a 75-year concession of its 36,000 on-street parking spaces for $1.15 billion; using the money to build long-term reserves, fund midterm budget relief, and direct a portion to low-income support programs. These concessions were not without their media and political challenges however. Despite the political risks, the bold Chicago deals have clearly inspired other civic leaders to follow suit, albeit with caution. A few municipalities tested the waters in 2009; the city of New Haven issued an RFQ for a concession style deal and then decided not to proceed on that basis; and the Los Angeles City Council approved a $500,000 contract just to study the feasibility of privatizing the city's 41,000 parking meters and six parking garages. It is only in the last six months however, that interest has turned into tangible action, with RFQs issued by both Los Angeles and Las Vegas. In March, New Haven announced that it was finalizing a monetization agreement with Gates Group Capital Partners that provides a $50 million upfront payment to the city for a lease-leaseback deal of its 2,738 on-street parking meters. 2010 promises to be the year that the monetization of parking assets becomes a more accepted municipal funding strategy, with Indianapolis and Pittsburgh currently in the tender process and other municipalities following close behind. These substantial financial deals represent a whole new world of opportunity for our industry; the chance to team with major financial institutions, and to be seen as a real and valuable contributor to civic infrastructure. From recent discussions I have had with municipalities and their financial advisors it is also very clear that while the inspiration may have come from Chicago, some valuable lessons were learned there too. City officials now appreciate that while the amount of money offered by the financial partner may initially sell the deal, the community and the media will focus day-to-day on the results of our efforts; those of the parking operators.
www.npapark.org PArkiNg May 2010

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Officers
Chairman Herb Anderson Immediate Past Chairman Andrew Blair Chair-Elect Jed E. Hatfield Vice Chairman Mark Muglich Vice Chairman Robert Zuritsky Vice Chairman Alan Kahn Treasurer Jeff Wolfe Secretary Tim Leonoudakis

NPA Staff
Interim President John L. Fiegel, CAE Vice President, Events and Business Development Patricia A. Langfeld Vice President, Communications Denise Gable Vice President, Membership and Marketing Andrea H. Bryan Controller Rebecca M. Krzywicki Office Manager/Executive Assistant Jennifer N.Harrison Legal Counsel Michael Stevens, Arent Fox LLP

Parking © 2010 National Parking Association (ISSN0031-2193) is published 10 times annually: Jan./Feb., March, April, May, June, July/Aug, Sept., Oct., Nov., Dec., by the National Parking Association Inc., 1112 16th St., NW, Suite 840, Washington, DC 20036. Editorial Office, same address. Circulated to members of the National Parking Association. For subscriptions write to the Washington office. Subscription rates are $125 per year ($165 for foreign). Periodicals circulation postage paid at Washington, DC and at additional mailing office. Postmaster: Please send change of address to Parking, National Parking Association, 1112 16th St., NW, Suite 840, Washington, DC 20036

May 2010 Parking

Table of Contents for the Digital Edition of May 2010 Parking