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Bloomberg Privatizing Parking Meters in NYC
June 14, 2012 1:25 PM   Subscribe

90,000 of NYC's Parking Meters (and revenue) on sale for $11billion +.

Well, could be a good idea, as most of the revenue comes from parking tickets ($580,000,000 in 2011), not the fees to park. But then again could mean trouble. The Wedtech Scandal was pretty messy and far reaching.
posted by snaparapans (125 comments total) 5 users marked this as a favorite

 
fucking Snow Crash
posted by nathancaswell at 1:26 PM on June 14, 2012 [6 favorites]


Does that mean the private operator has to sue me in civil court to collect my parking fines?
posted by RobotVoodooPower at 1:28 PM on June 14, 2012 [2 favorites]


Does nobody involved in this decision know anyone who lives in Chicago? Because as far as I can tell, everyone in Chicago hates hates hates hates the privatization of parking like mad.
posted by Sidhedevil at 1:30 PM on June 14, 2012 [21 favorites]


We've done this in Chicago and it absolutely sucks giant sweaty donkey balls.
posted by goethean at 1:30 PM on June 14, 2012 [9 favorites]


Well, it worked out to be a terrible deal in Chicago, where Morgan Stanley and Abu Dhabi made $9.5B profit on the backs of Chicago residents for a measly $0.5B investment.

Gotta say, I'll be glad when we go back to the era when government seizes control of private enterprises for the public benefit, rather than the current situation where private wealth seizes control of government services for private profit (or public loss).
posted by Homeboy Trouble at 1:31 PM on June 14, 2012 [32 favorites]


Does that mean the private operator has to sue me in civil court to collect my parking fines?

It probably means you'll have to sue them to get their collection agency to stop ruining your credit even after you've paid.
posted by The World Famous at 1:31 PM on June 14, 2012 [12 favorites]


Does nobody involved in this decision know anyone who lives in Chicago? Because as far as I can tell, everyone in Chicago hates hates hates hates the privatization of parking like mad.

Does that "everyone" include the people making the money off this? 'Cause I imagine that's who they're thinking about.
posted by Bookhouse at 1:32 PM on June 14, 2012 [2 favorites]


If they mess up parking, the private car is one step closer to death in New York. That means more mass transit, and short term rentals like ZipCar.
posted by esprit de l'escalier at 1:35 PM on June 14, 2012 [2 favorites]


Perhaps the Chicago fiasco is what gave Bloomberg the idea. Think about it: what if this is a long-term plot to get people so fed up with the cost and rigmarole of using their cars that they just end up selling their private vehicles and taking the train or biking everywhere.
posted by griphus at 1:35 PM on June 14, 2012 [8 favorites]


Dude, Kickstarter!
posted by RakDaddy at 1:36 PM on June 14, 2012 [2 favorites]


(Next year: Fees levied on every driver whose car doesn't smell of feces within a 10 foot radius.)
posted by griphus at 1:36 PM on June 14, 2012


Does that mean the private operator has to sue me in civil court to collect my parking fines?

No, it means that, once again, the coercive power of the state will be used to protect the interests of corporations.

Business as usual.

Move along, citizen.
posted by R. Schlock at 1:37 PM on June 14, 2012 [6 favorites]


This was a baaaaaaaad idea in Atlanta.
posted by nicebookrack at 1:38 PM on June 14, 2012 [2 favorites]


Does that mean the private operator has to sue me in civil court to collect my parking fines?

According to the report NYC will still collect the violation money which comes to about $500-600 mil/year.
posted by snaparapans at 1:41 PM on June 14, 2012


Man, this is a terrible idea...
posted by schmod at 1:41 PM on June 14, 2012


This went over real well in Chicago.
posted by chundo at 1:41 PM on June 14, 2012 [1 favorite]


(In five years: Parking enforcement will be handled by the city's newly-acquired ED-209 units.)
posted by griphus at 1:42 PM on June 14, 2012 [1 favorite]


The horror described in Chicago -- year-round enforcement, spiraling (and unpredictable) costs -- is business-as-usual in San Francisco. Extra bonus: the cycling situation there is apocalyptic.
posted by Ogre Lawless at 1:43 PM on June 14, 2012


This would actually be kind of neat if I could buy one! I'm not a multimillion-dollar company that can snap up lots of them, but if I owned my own parking meter? Just one? I'd shine it up real pretty! I'd paint the stem different colors and write little messages on it. I'd use the income for laundry. I'd name it "Brian Parking Meter," perhaps, or "Gossamer Jackson." I'd put a single shoe at the base of it, as if it was wearing that shoe.
posted by Greg Nog at 1:45 PM on June 14, 2012 [70 favorites]


Dude, Kickstarter!

But I hardly know her.
posted by The World Famous at 1:49 PM on June 14, 2012 [1 favorite]


I would totally buy one or two outside my house but unlike Greg I would use mine for cruel and capricious acts of evil.
posted by elizardbits at 1:49 PM on June 14, 2012 [6 favorites]


This is fucking great news for cyclists (and bike shop owners).
posted by Halloween Jack at 1:49 PM on June 14, 2012 [2 favorites]


Yeah, just wait until they privatize bicycle traffic enforcement.
posted by The World Famous at 1:52 PM on June 14, 2012 [1 favorite]


I for one am prepared to start the "Buy A Parking Meter For Greg Nog (But Definitely Not Elizardbits)" Kickstarter.
posted by Holy Zarquon's Singing Fish at 1:52 PM on June 14, 2012 [8 favorites]


I oppose this, although Matt Taibbi's white-knuckled rant almost makes me want to support it.
posted by brain_drain at 1:52 PM on June 14, 2012


Whose streets?!? Billionaire foreign investors' streets!
posted by Skwirl at 1:53 PM on June 14, 2012 [1 favorite]


Has anyone mentioned Chicago yet? Because this was a terrible idea there.
posted by desjardins at 1:53 PM on June 14, 2012 [4 favorites]


Couple this with the parking meters that have sensors to reset when cars pull out and enforcement via drone strikes and you'd have maybe the least popular policy of the Bloomberg administration since, oh, MAY.
posted by mattbucher at 1:54 PM on June 14, 2012 [3 favorites]


Ogre Lawless: "Extra bonus: the cycling situation there is apocalyptic."

To be fair, San Francisco's topography doesn't do cyclists many favors (though I didn't think it was an awful city to bike in; Boston, which is a hypothetically more bike-savvy city, seems like a much more hazardous place to ride a bike).

Still, I'm impressed to see that NYC is now a place where the non-suicidal can ride a bike. I seriously wasn't expecting that to happen at any point in my lifetime.
posted by schmod at 1:56 PM on June 14, 2012


Yeah, just wait until they privatize bicycle traffic enforcement.

Bicycle turnpikes
posted by junco at 1:57 PM on June 14, 2012


They tried this in Pittsburgh last year but the city council took a look at what a disaster Chicago turned out to be and bailed on the deal. Can't believe that NYC is falling for it.
posted by octothorpe at 1:57 PM on June 14, 2012


What if you got a free 20 oz soda with every 2 hours of parking? How would New Yorkers feel about that? Conflicted, eh?
posted by desjardins at 1:57 PM on June 14, 2012 [3 favorites]


Well, it worked out to be a terrible deal in Chicago, where Morgan Stanley and Abu Dhabi made $9.5B profit on the backs of Chicago residents for a measly $0.5B investment.

NOT TRUE. The companies will eventually make $9.5 billion profit...over 75 years. Which is the value of what they paid up front at a risk premium of 8.26% to account for a) inflation and b) unknown future risks to that revenue stream, all of which fall on the leaseholder. In return, Chicago has been able to use the cash it received to pay off existing bonds, which would have cost the city more than the amount given up in parking meter revenue.

Net present value, folks. Learn about it, then tell me why you think it's better to pay out more money on bond interest than to retire the debt early. Chicago also did it with the underground parking garages in Millenium park, which is why the capital costs of building said park are already fully paid off, which has had a positive effect on the city's credit rating.
posted by anigbrowl at 1:57 PM on June 14, 2012 [4 favorites]


Learn about it, then tell me why you think it's better to pay out more money on bond interest than to retire the debt early.

Because it involves giving up all control of a public asset and handing it over to a private corporation.
posted by octothorpe at 2:00 PM on June 14, 2012 [14 favorites]


Someone asked a question about enforcement above--seriously, how does that work? Is it a type of public-private partnership whereby the private entity uses the coercive power of the state to enforce the private entity's demands? That can't possibly be right... I would imagine it's more of a small claims court deal, where the private entity has a collections department and they pursue you that way.

How does it work?
posted by resurrexit at 2:02 PM on June 14, 2012


Learn about it, then tell me why you think it's better to pay out more money on bond interest than to retire the debt early.

Because the city will still be around long after the private company has recouped its investment and is swimming in gravy.
posted by The World Famous at 2:04 PM on June 14, 2012 [3 favorites]


Here's the question. Isn't the whole idea that private companies are more efficent then the government based on the idea that private companies compete with one another?

If so, why the hell would you grant all parking rights to a single company?

Unlike cable and other infrastructure, parking is extreemly divisible. You could sell off individual blocks to various operators, and, combined with rules that don't prevent geographic monopolies you could have actual competition between parking providers. Drivers could chose, based on what street they want to park on, which provider they want to park with. So, if they have a bad experience with one provider, they could park with a different provider.

But most of these deals seem to work with an individual company being granted a complete monopoly over the whole city.
Net present value, folks. Learn about it, then tell me why you think it's better to pay out more money on bond interest than to retire the debt early. Chicago also did it with the underground parking garages in Millenium park, which is why the capital costs of building said park are already fully paid off, which has had a positive effect on the city's credit rating.
Sure, but those bonds would have been paid off using presumably somewhat progressive property tax (people who own more expensive homes would pay more) while handing the parking fees over to a 3rd party means that everyone who parks (most middle class people) will now be paying essentially a flat fee. The other people who might suffer are businesses who depend on people parking and then using their services (although on the other hand, they might see an uptick in business if people no longer use the street for long term parking, freeing it up for short term shopping)

Basically they're placing the burden of paying the bonds off on the average person, rather then then based on how much they'd pay in normal taxes.

And in addition there is also an annoyance factor that's being imposed on people as well. the company makes more money by being obnoxious then by being non-obnoxious and because they are a monopoly, there is nothing anyone can do about it.

Interestingly, NYC seems to view Chicago as chumps:
Since the idea of private meter operation arose last year, New York officials have said they want to avoid repeating the experience of Chicago, where motorists may pay a Morgan Stanley- led partnership at least $11.6 billion to park at city meters over the next 75 years, 10 times what former Mayor Richard Daley got when he leased the system in 2008.

"We are taking a careful and deliberate approach to avoid mistakes others have made," Wood said. New York would retain "full control" of rates and violations enforcement, she said.
posted by delmoi at 2:06 PM on June 14, 2012 [9 favorites]


The World Famous: "Because the city will still be around long after the private company has recouped its investment and is swimming in gravy."

True, but perhaps cars won't?

Imagine if Chicago had privatized its public horse stables in 1910, for example. Assuming they had public horse stables
posted by mullingitover at 2:08 PM on June 14, 2012 [3 favorites]


Bicycle turnpikes

That's going to make Sonny's death in my near-future dystopian re-boot of The Godfather look real odd.

Has anyone mentioned Chicago yet?
posted by TheWhiteSkull at 2:09 PM on June 14, 2012


How does it work?

The article implies that the owner gets the revenue from parking fees (money put in meter), and once the meter is expired, the city gives a ticket as usual and gets the revenue from parking violations. Seems tricky though.. I would be pissed if the meter I owned had a car parked illegally (expired meter), because I would be losing money and not collecting any of the big bucks from the violation.
posted by snaparapans at 2:09 PM on June 14, 2012


Here's the question. Isn't the whole idea that private companies are more efficent then the government based on the idea that private companies compete with one another?

If so, why the hell would you grant all parking rights to a single company?
Somewhere between "markets can do great things" and "private companies are great", something very huge got lost in translation. Private companies in markets? Yes! Private companies with monopolies and/or ownership of public assets? Oh word no.
posted by Jehan at 2:10 PM on June 14, 2012 [4 favorites]


I'm curious as to the details of the Chicago contract -- what happens if the cost of upkeep radically exceeds income? Does the city have to buy out the leaseholders, or do the leaseholders just eat the expense?

...because, if it's the latter, then simple civil disobedience/vandalism can take care of the Chicago Situation, given enough time and disposable tubes of cyanoacrylate.
posted by aramaic at 2:10 PM on June 14, 2012


Imagine if Chicago had privatized its public horse stables in 1910, for example.

Actually, I could see this turning into a weird situation where the private companies spend time and money lobbying for funds to be allocated to the horse stable infrastructure rather than allowing cars to take over, so cities are still primarily using horse-based transportation until late into the 20th century. Feel free to use this in an Alternate Reality novel!
posted by Greg Nog at 2:11 PM on June 14, 2012 [3 favorites]


If so, why the hell would you grant all parking rights to a single company?

Because it works so well with cable TV?
posted by goethean at 2:12 PM on June 14, 2012 [1 favorite]


I oppose this, although Matt Taibbi's white-knuckled rant almost makes me want to support it.

As usual, every other sentence of his is a half-truth. You might want to read this before writing off Chicago's experience as a disaster, though Taibbi will never, ever bother his readers with any kind of analysis or background information.

Because it involves giving up all control of a public asset and handing it over to a private corporation.

The city does not in fact give up all control, and it is handsomely paid in the present. A bird in the hand is worth two in the bush, and all that.

Because the city will still be around long after the private company has recouped its investment and is swimming in gravy.

I would rather the city be around with a lower debt burden and a higher credit rating, so that residents and businesses see a smaller share of their taxes flowing to bondholders in the form of interest payments.
posted by anigbrowl at 2:12 PM on June 14, 2012


What if you got a free 20 oz soda with every 2 hours of parking? How would New Yorkers feel about that? Conflicted, eh?

You are a mind reading THIEF as my plan was to have meters that worked like slot machines wherein the user would have the chance to win a free 64oz soda of their choice each time they put in a quarter.

I am not sure where the sodas would be kept. I might have to sit on the street with a cooler.

wait that sucks.
posted by elizardbits at 2:17 PM on June 14, 2012 [1 favorite]


Because it works so well with cable TV?
Heh, right but at least with cable there is a somewhat sensible argument: typically, the cable company pays to install the lines. And while you could probably have smaller regions then a whole city, a house is probably only going to have have one cable hookup to a substation, so each house is probably going to be stuck with one provider.
I would rather the city be around with a lower debt burden and a higher credit rating, so that residents and businesses see a smaller share of their taxes flowing to bondholders in the form of interest payments.
Which implies that you make enough money that you pay more in local taxes then parking fees, which may not be the case for most city residents, and you're prioritizing yourself over most of the people living in the city.

That said, in NYC isn't driving something of a luxury anyway? My impression is that most people get around via subway rather then by driving, so increasing parking fees isn't something that's going to impact the middle class, as it might somewhere like Chicago or certainly LA or most other US cities.
posted by delmoi at 2:18 PM on June 14, 2012


Ugh. Why aren't cities following San Francisco's example instead? The problem seems to be not only an interest in getting some quick revenue, but also a complete unwillingness to price parking at market rates. So you get the bizarre approach of selling off the public asset of parking (to someone who would charge higher rates) rather than actually raising the prices. Cities should raise the prices to the point where some parking is always available to use -- but lower the prices if there's tons of free spaces. Considering just how crowded on-street parking is in New York City, this strategy there would not only improve congestion and parking access, but it would raise a huge amount of revenue.
posted by parudox at 2:18 PM on June 14, 2012 [2 favorites]


Imagine if Chicago had privatized its public horse stables in 1910, for example. Assuming they had public horse stables

They didn't. I am actually working on a book about the end of the horse era in US transportation. Very few people drove their own carriages around the streets of Chicago in 1910--the bulk of transportation was done via public transit.

For those who were driving their own carriages, as in most US cities, you were either rich enough to have a hired driver, or you hired someone to stand with your horse (usually a low-income child who had never been to school, hello Dickens) or you tied it up to a rail or post provided by the business you were patronizing, or you took it to a privately owned livery stable.
posted by Sidhedevil at 2:19 PM on June 14, 2012 [1 favorite]


What if you got a free 20 oz soda with every 2 hours of parking? How would New Yorkers feel about that?

Last weekend I went to the movies and ordered a giant soda because I was all, "I want to drink the giant movie theatre soda before it's banned!"

Shared the soda with my boyfriend, and still couldn't finish it. Had to bring it home and put it in the fridge.

Anyway, the parking situation is bad enough even with the city running the meters. Back when I still had a car, I would frequently get tickets even when the meter still had time left on it. I think the rule of thumb for meter maids (is there a more politically correct term?) is just, "Ticket everybody. No one will contest it."
posted by brina at 2:20 PM on June 14, 2012


I would rather the city be around with a lower debt burden and a higher credit rating, so that residents and businesses see a smaller share of their taxes flowing to bondholders in the form of interest payments.

Yes, that would be nice. What makes you think the city's not going to incur any debt once it gets that juicy new credit rating?
posted by The World Famous at 2:21 PM on June 14, 2012


My impression is that most people get around via subway rather then by driving...

You're technically correct (the best kind of correct!):

"Among all NYC households, 46 percent own cars, according to Census data gathered between 2005 and 2009..." From here.
posted by griphus at 2:22 PM on June 14, 2012 [1 favorite]


You are a mind reading THIEF as my plan was to have meters that worked like slot machines wherein the user would have the chance to win a free 64oz soda of their choice each time they put in a quarter.

I am not sure where the sodas would be kept. I might have to sit on the street with a cooler.

wait that sucks.
See, this is the kind of thing could happen with my "sell off the blocks individually" plan. Actually, you could even quantize to individual parking spaces, but that would prevent companies from saving money by consolidating meters.
posted by delmoi at 2:23 PM on June 14, 2012 [1 favorite]


Also, Greg Nog, the spoiler is that in the US the equine influenza epidemic of 1872 was so economically debilitating that it sparked a WWII-war-effort-style drive to transition to non-horse-based public transit (horsecars replaced with electric trolleys, etc.) in major cities.
posted by Sidhedevil at 2:24 PM on June 14, 2012 [5 favorites]


Here's the question. Isn't the whole idea that private companies are more efficent then the government based on the idea that private companies compete with one another? If so, why the hell would you grant all parking rights to a single company?

False premise. You have competitive tenders for a long-term contract. Also, you have competitors offering off-street parking.

Unlike cable and other infrastructure, parking is extreemly divisible. You could sell off individual blocks to various operators, and, combined with rules that don't prevent geographic monopolies you could have actual competition between parking providers. Drivers could chose, based on what street they want to park on, which provider they want to park with. So, if they have a bad experience with one provider, they could park with a different provider.

Yes, but transaction costs. Imagine the legal and administrative overhead of dealing with so many stakeholders. You'd end up with the same economic inefficiencies that beset taxi medallions. Plus the idea that drivers would select their parking based on the identity of the administrator is refuted in practice. If you're in the street hailing a taxi, you take the first one that comes along. Same reason filling stations operated by different companies can operate cheek-by-jowl - fuel demand is relatively inelastic and subject to other considerations like time and accessibility.

Sure, but those bonds would have been paid off using presumably somewhat progressive property tax (people who own more expensive homes would pay more) while handing the parking fees over to a 3rd party means that everyone who parks (most middle class people) will now be paying essentially a flat fee.

That doesn't answer the question of why you would want to spend more money on paying off bond interest than you give up in meter revenue. Unless I've read you wrong, your approach seems to be 'can't we just jack up somebody else's property taxes?' Speaking as someone who pays property taxes but doesn't own a car, I feel absolutely zero desire to subsidize motor vehicle owners.

Basically they're placing the burden of paying the bonds off on the average person, rather then then based on how much they'd pay in normal taxes.

?

Interestingly, NYC seems to view Chicago as chumps:

Lip service. Read the valuation document above.
posted by anigbrowl at 2:25 PM on June 14, 2012 [1 favorite]


graphs:"Among all NYC households, 46 percent own cars, according to Census data gathered between 2005 and 2009..."

I think that most of the meters are going to be in manhattan... the majority of people who have cars live in residential neighborhoods in Brooklyn, Queens, Staten Island, or the Bronx, where there are no meters, or they have a house with a garage.
posted by snaparapans at 2:26 PM on June 14, 2012


Yes, that would be nice. What makes you think the city's not going to incur any debt once it gets that juicy new credit rating?

Why bother with fiscal responsibility at all? Just go with boom and bust, get somebody else to pay for it. Well, this is often historically the case, but governments that take Keynesian economics seriously can and do save for a rainy day. I'd like to think that corruption and ineptitude weren't inevitabilities.
posted by anigbrowl at 2:32 PM on June 14, 2012


so, Angibrowl, is your contention that Chicago was not chumps, or not as much chumps as everyone says?

Because having to pay the leaseholder for the meters when there's a blizzard, or when you shutdown the street for construction or a block party sounds like chumps to me. Not having the balls to raise the rates yourself so instead selling the rights to someone else seems like chumps. But I'm happy to see the other side.
posted by garlic at 2:34 PM on June 14, 2012 [1 favorite]


People hate it in Chicago the same way people like to gripe about everything. But of all the complainers I've heard, the vast majority were people who abused the parking meters as medium-term or long-term parking instead of the short term parking they are meant to be. Like if a garage costs $34 a day, they would find a meter that's $1 an hour and park there for work. Or the people who live in congested areas with metered parking nearby, who would come home at 6, drop a quarter in the meter and be able to park all night, instead of paying for a residential permit or renting a parking space.

They are somewhat expensive, as meters go, ($1.75 an hour generally), but they have solved the above problems. You can actually go into many areas and find short term parking without having to go to a lot and pay $20 for the first 20 minutes.

Another nice thing is that the new ones give tickets you put in your windshield. You can then drive away and park anywhere else on the same ticket until the time runs out, as long as where you are parking has the same rate or lower.

As for tickets, I don't think there needs to be a difference. The street still belongs to the city, and the law basically says "you have to feed the meter". It doesn't say anything about who has to own the meter or write the ticket. I *think* they are real tickets and run through the usual municipal kangaroo court, just that the parking consortium gets a cut after they are paid.
posted by gjc at 2:35 PM on June 14, 2012 [2 favorites]


"Among all NYC households, 46 percent own cars, according to Census data gathered between 2005 and 2009..." From here.
Remember, though a household typically has more then one person. In most cities you probably have multiple cars per household and you have to use it to get anywhere.
False premise. You have competitive tenders for a long-term contract. Also, you have competitors offering off-street parking.
What is the false premise? There is a "competitive" process but one company ultimately wins the contract, an thus a monopoly.
Yes, but transaction costs. Imagine the legal and administrative overhead of dealing with so many stakeholders. You'd end up with the same economic inefficiencies that beset taxi medallions. Plus the idea that drivers would select their parking based on the identity of the administrator is refuted in practice.
Ugh, that's completely absurd. The world is full of things that people chose in part based on brand: car insurance, mobile phone service, where to eat, and on and on. Gasoline might be the best example: You need to get gas somewhere close to where your car currently is, but people make decisions based on a number of different factors: Including price.

You're also assuming that every parking space would have exactly the same basic service, like what you get with taxis. In Chicago, though the monopoly parking company does get to set it's own rates. In NYC they want to keep control over rates, but you could have companies provide extra bonuses to people who park at their spots (like a 64 ounce coke, for example)

Taxis in NYC are highly regulated. If you had a wide range of vehicle types, cleanliness, cost, and other factors people would almost certainly chose different rides depending on what they felt like.
posted by delmoi at 2:35 PM on June 14, 2012


Because having to pay the leaseholder for the meters when there's a blizzard, or when you shutdown the street for construction or a block party sounds like chumps to me. Not having the balls to raise the rates yourself so instead selling the rights to someone else seems like chumps. But I'm happy to see the other side.

I don't know what that means. The city has to pay the parking meter people if nobody is parking at the meters?
posted by gjc at 2:37 PM on June 14, 2012


It is wrong to consider on-street parking as something to be sold off (competitively or not) to maximize profit. There are other potential uses for street space, such as bike lanes, wider sidewalks, park space, more space to build, bus lanes, or driving lanes. A city can benefit economically from the provision of on-street parking, and thus it can make sense to have that instead of some of those other uses. But then maximal benefit is not obtained when you maximize profit, but rather when you maximize its use -- which are totally different things.

The province of Ontario built a toll highway called Highway 407, and then sold it off for peanuts to a foreign-owned consortium. It works great, and is wide and free-flowing. But during off-hours, few people drive on it because it's incredibly expensive. The focus of the consortium is of course on maximizing profit, rather than making the most use of the resource. It is considered to be a disaster, and has unfortunately ruined the idea of tolls on highways for many people in Ontario.
posted by parudox at 2:39 PM on June 14, 2012


The city has to pay the parking meter people if nobody is parking at the meters?

If the city closes a street, yes. The mayor got all pissed recently about this when the monopoly billed the city for millions due to various street shutdowns (eg: NATO). I'm not personally sure about the snow thing, but I could believe it.
posted by aramaic at 2:40 PM on June 14, 2012 [1 favorite]


Why bother with fiscal responsibility at all? Just go with boom and bust, get somebody else to pay for it. Well, this is often historically the case, but governments that take Keynesian economics seriously can and do save for a rainy day. I'd like to think that corruption and ineptitude weren't inevitabilities.
Please. selling off assets to pay off bonds is the opposite of Keynsianism. What they should have done would have been to sell off the spots at the peak of the bubble (where they could almost certainly have gotten a higher rate) or at least
If the city closes a street, yes. The mayor got all pissed recently about this when the monopoly billed the city for millions due to various street shutdowns (eg: NATO). I'm not personally sure about the snow thing, but I could believe it.
That's hilarious.
posted by delmoi at 2:41 PM on June 14, 2012 [2 favorites]


(Er, I was going to say 'or at least use the money for stimulus, rather then simply paying down bonds)
posted by delmoi at 2:42 PM on June 14, 2012


If the city decides to block off a section of street, thus making it impossible for people to park there, they have to compensate the parking-meter company for revenue that was lost due to an act of government beyond their control.

Now, you could say that any company that makes its money from on-street parking is implictly assuming the risks that sometimes the street will be closed, because closing streets to traffic is a regular function of government. But that involves not giving public money to a private monopoly, and let's not talk crazy here.
posted by Holy Zarquon's Singing Fish at 2:45 PM on June 14, 2012


so, Angibrowl, is your contention that Chicago was not chumps, or not as much chumps as everyone says?

Yes.

Because having to pay the leaseholder for the meters when there's a blizzard, or when you shutdown the street for construction or a block party sounds like chumps to me. Not having the balls to raise the rates yourself so instead selling the rights to someone else seems like chumps. But I'm happy to see the other side.

Seems perfectly reasonable to me. If you don't keep the streets free of snow, or if you temporarily shut down part of a street, you're interfering with the meter company's ability to rent out the parking space. Same problem if the city owns all the meters, except that it's buried on page 1037 of the municipal budget report so only the accountants care about it...at least until tax time. As for raising rates, they did that in 2005...after leaving them alone for almost 20 years, thus providing a huge subsidy to private vehicle owners who got 25-cent per hour parking at the expense of public transit users. I have no sympathy.
posted by anigbrowl at 2:46 PM on June 14, 2012


Egads, yes, this is working out badly in Atlanta. Corruption. Tickets when the vehicle is clearly not in violation. More corruption. Suffering businesses in a city that is unfriendly to cyclists and pedestrians, and woefully inadequate public transportation. ParkAtlanta is the most hated agency in ATL right now.
posted by sadiehawkinstein at 2:48 PM on June 14, 2012 [3 favorites]


Anigbrowl wrote: The city does not in fact give up all control, and it is handsomely paid in the present. A bird in the hand is worth two in the bush, and all that.

Government sale-and-leaseback or sale-and-operate contracts are a bad idea because they provide a short-term benefit to one administration while restricting the choices that future administrations can make. For example, my state government wanted to expand a freeway near where I live. They agreed to a contract that let a private company widen the road in exchange for receiving tolls (arguably OK) and blocking any competing road or rail line. This means that future voters can't decide to promote public transport in that area - the government has handed over its monopoly to a private company. I think this isn't just a bad financial deal or bad public policy, it's anti-democratic.

What happens here if voters want to get rid of parking meters or public parking or institute a radically different means of charging? I suppose they could make a generous offer to buy out the contract, but that offer might always be declined - and the point is that they'd be paying for their right to regulate public streets. That's a public monopoly, and it isn't the sort of thing that should be sold.
posted by Joe in Australia at 2:52 PM on June 14, 2012 [7 favorites]


Please. selling off assets to pay off bonds is the opposite of Keynsianism. What they should have done would have been to sell off the spots at the peak of the bubble (where they could almost certainly have gotten a higher rate) or at least

1) they didn't sell off the assets, they leased them. Big difference.
2) read the valuation document linked to above. These aren't speculative investments whose value can't easily be estimated. Net Present Value is a very basic tools of financial analysis, nothing like the methodologies used for evaluating exotic derivatives or turning mortgages into financial lunchmeat.
3) The essence of Keynesianism is that you borrow to increase G when C and I fall, and increase revenue during good times. If you have the opportunity to lower your cost of capital, you take it. If they had not realized the cash value of the parking system they would have had to either raise taxes and fees going into a recession or issue GO bonds at a ruinous rate of interest.
posted by anigbrowl at 2:54 PM on June 14, 2012


The chicago reader doesn't think our parking meter deal turned out so great. Here's there story.
posted by garlic at 3:02 PM on June 14, 2012 [1 favorite]


Wait... there's parking in NYC?
posted by not_on_display at 3:15 PM on June 14, 2012 [1 favorite]


That's going to make Sonny's death in my near-future dystopian re-boot of The Godfather look real odd.

Mooks on BMXs ridin' by, all swingin' Kryptonite Fuhgeddaboudit locks with the vinyl peeled off the crossbar like war hammers. It'll be brutal.

Chicago!
posted by Halloween Jack at 3:23 PM on June 14, 2012


From part 3 at the reader on the Chicago meters deal:

"Not only did William Blair advise the city on the deal—it came up with the idea in the first place. Then it provided the city with the only estimate it ever received of what the system was worth and coordinated the bidding process."

So I'm not sure they count as an unbiased source (in anigbrowl's linked defense of the Chicago meter deal) to show that the Chicago deal really was a good one since it's in their interest to defend their work in instigating the deal to begin with.
posted by garlic at 3:24 PM on June 14, 2012 [2 favorites]


Government sale-and-leaseback or sale-and-operate contracts are a bad idea because they provide a short-term benefit to one administration while restricting the choices that future administrations can make.

That's the best objection, and one that I am to some extent on board with. On the other hand, lack of funds (eg as a result of expensive debt service) also restricts choices in a major way.

In the case of Chicago, all the economic risk from changing use patterns falls upon the private operator, and I think this will turn out to be a very shrewd move on the city's part over the longer term, in a way that could also be true for NY. Consider 2 modern parallels to the decline of horse-powered transport. One is zipcars, and similar services - rent vehicles by the hour, instead of owning a car and having it taking up space and doing nothing for 22 hours of the day. There's a similar peer-to-peer car-sharing service starting up in San Francisco. If you have access to decent public transit or live in a walk/bike friendly neighborhood, you may not need full ownership of a car. Related to this: self-driving cars. California has just issued permission to Google to operate them within the state, and all the data so far suggest that self-driving cars are likely to have much lower externalities - fewer road accidents and deaths, improved fuel economy, reduced traffic jams - while maintaining the advantages of going door-to-door in a way that buses and trains can't. If the preliminary studies are correct and self-driving cars take off, they're going to be an important part of a public transit strategy. Now imagine that you can summon them via your phone, like cheap taxis. They're going to spend much less time parked than the typical privately-owned vehicle. That's going to result in a significant long-term loss to parking operators, but states/counties/cities permitting such vehicles via regulation is quite different from operating a public transit service directly, which means they won't be directly undermining the bases of the lease. Pushing the long-term risk onto the private sector seems both appropriate and efficient (since the private sector can easily hedge this risk).

I'm not saying it's all gravy, government should be careful when considering fiscal policy tools like these. But the way Matt Taibbi covers these issues is so one-sided as to be dishonest. As I said in the other thread where this came up recently, this is the kind of sober and low-risk investment that banks are supposed to make.
posted by anigbrowl at 3:25 PM on June 14, 2012 [1 favorite]


There is real risk in these deals to the private investors, and real opportunity for the public seller to make a windfall profit. Tobacco settlement bonds are a great example -- states and municipalities securitized the expected revenue of the big 1990s settlements with the major tobacco companies, raising billions of dollars. The bond-buyers bought based upon expected smoking rates. And, now -- smoking rates are lower than expected and still declining, and many of those bonds are at risk of default sooner or later.

I'd say parking meters are about that level of risk. You could see the urban renaissance reverse itself into another 1970s-1980s period of decline -- fewer people, especially coming in from the suburbs = less demand for parking. You could see more effective car service / on-demand taxi service reducing the need to self-drive private vehicles. You could see shared car service (zipcar, etc.) reducing the amount of urban residents who own cars. Heck, in 20 years it could all be self-driving cars operated on a fractional ownership basis, where your car drives off to its next customer after dropping you off, and no one needs a parking space.
posted by MattD at 3:31 PM on June 14, 2012 [2 favorites]


Heck, in 20 years it could all be self-driving cars operated on a fractional ownership basis

SOCIALIST HE'S A SOCIALIST
posted by nathancaswell at 3:36 PM on June 14, 2012


So I'm not sure they count as an unbiased source (in anigbrowl's linked defense of the Chicago meter deal) to show that the Chicago deal really was a good one since it's in their interest to defend their work in instigating the deal to begin with.

I'm not saying they are. But you can rely on it for factual matters such as the discount rate employed, and compare that with the discount rate on other long-term infrastructure projects in both the private and public sector.

Most people don't seem to appreciate that over a 75 year period inflation is going to substantially eat into the profits earned by the private operator. Pop the amount of money Chicago got into a standard inflation calculator with a 75 year period and an 8.26% inflation rate, and it comes out at - surprise! - the long-term value of the contract. The reason Taibbi is being dishonest is that he's looking at the nominal value of the contract (the top dollar amount) instead of the real value (taking inflation into account). A billion dollars in the year 2083 is unlikely to be worth nearly as much as a billion dollars today, just as a million dollars in 1937 would have been a much larger fortune than a million dollars today. In any graph of money vs. time, the very first thing you have to look at is whether the numbers are adjusted for inflation or not. If they're not, the comparison being made is (usually) misleading. Matt Taibbi is an intelligent and well-educated guy. Don't tell me he can't figure out the idea that inflation matters over a 3/4 century timespan.
posted by anigbrowl at 3:42 PM on June 14, 2012 [1 favorite]


I prefer this use for parking meters. They took old parking meters and stuck them in the street to collect donations for charity.
posted by arcticseal at 3:56 PM on June 14, 2012 [1 favorite]


resurrexit, here's an explanation [PDF] of how Atlanta tried to get out of their contract with the private agency ParkAtlanta. Creative Loafing, our alt weekly, has been pointing out issues with the contract, and how ParkAtlanta pricing, enforcement, and potentially fraudulent ticket-writing has been damaging to in-town neighborhood businesses. (Atlanta MeFites, do you ever go to VaHi any more? I don't, unless I can find side street parking.)
posted by catlet at 4:03 PM on June 14, 2012


Seems perfectly reasonable to me. If you don't keep the streets free of snow, or if you temporarily shut down part of a street, you're interfering with the meter company's ability to rent out the parking space. Same problem if the city owns all the meters, except that it's buried on page 1037 of the municipal budget report so only the accountants care about it...at least until tax time.

Except the contract requires payment as if the meters were 100% of the time generating max revenue, even if it's a street where half the spaces are typically empty, or are only full during certain times of day.
posted by misskaz at 4:06 PM on June 14, 2012 [1 favorite]


Oh, and there were cynics who said privatization of prisons would lead to increase rates of imprisonment, draconian sentencing laws, and legislators bought by the big prison lobby.
posted by dances_with_sneetches at 4:20 PM on June 14, 2012 [2 favorites]


misskaz, aren't you leaving out the fact that the city has an allowance for required closures, and only closures in excess of that allowance trigger repayments to the conceessionaire? See clause c) on page 83.

Oh, and there were cynics who said privatization of prisons would lead to increase rates of imprisonment, draconian sentencing laws, and legislators bought by the big prison lobby.

These things have been problems in states without private prisons or where the prison guards' union is an active participant in political lobbying. California passed a three strikes law in 1994, but didn't enter into any private prison contracts until 2006 (and then onyl following a court order to relieve overcrowding in the state-run prison system; the value of such private contracts rose over the following 4 years but is now in decline). Frankly, I don't think this is a useful or relevant comparison.
posted by anigbrowl at 4:37 PM on June 14, 2012 [2 favorites]


Does the company that buys the meters also provide and pay for the people who check them and write the tickets, or do the taxpayers provide workers for the companies as well?
posted by Legomancer at 4:38 PM on June 14, 2012


They did this in Atlanta. It was (and still is) a total nightmare. I don't know who's out there selling this ridiculous scheme to the cities, but they must be quite the salesperson.
posted by spilon at 4:47 PM on June 14, 2012


Seems perfectly reasonable to me. If you don't keep the streets free of snow, or if you temporarily shut down part of a street, you're interfering with the meter company's ability to rent out the parking space.


Hahahaha! Do you know how municipal services traditionally work in Chicago?
posted by TheWhiteSkull at 4:48 PM on June 14, 2012


resurrexit: "Someone asked a question about enforcement above--seriously, how does that work? Is it a type of public-private partnership whereby the private entity uses the coercive power of the state to enforce the private entity's demands? That can't possibly be right... I would imagine it's more of a small claims court deal, where the private entity has a collections department and they pursue you that way.

How does it work?
"

Oh god... Oh god oh god oh god. So... lemme tell you a story.

Way back when symbioid was just a wee lad (shortly after high school) and after he just discovered the GREATEST POLITICAL IDEOLOGY EVAR (yeah, you know capital L Libertarianism) he went to visit a friend (and smoke some dope and play some Magic at these great little gatherings) and it was -40 with windchill on one blustery January night, so he decides that the appropriate life-saving measure for him was to park close to the apartment that said friend lived in.

The place to park was a lot right next to the building that was owned by a bank that was not used off hours yet, nevertheless, had a "no parking" sign, even for after hours.

So stoned out of his mind sym decides to leave at some ungodly hour (3, 4 am?) and sees a little ticket on his window.

THE INDIGNITY!

So being the good capital-L Libertarian that I was decided I would just write the chief of police and give him a damned good lesson on the great freedoms of private property. It had some stupid lines about Adam Smith and the Founding Fathers and that I would pay this five dollar fine, BUT the issue I had with it was that it was private property and thus the bank had the right to the money, NOT the state. I did realize that the government has a reason to exist in order to enforce private property rights so here's a check for six (6) dollars, 5 dollars for the fine (to be paid directly to the bank as it was their property that I violated) and 1 dollar to the government/police as a tax to pay for the private property enforcement. I did, of course, explain why I parked there (for my own safety).

I received a note stating that the 5 dollars was staying with the police and that if I wanted to have my dollar back I would have to come into the office and "don't expect me to debate politics with you"... But of course I tried to understand "Why? Why do you have the right..." yada yada... The answer (as well it should) was something along the lines of "You should go talk to a lawyer if you have such questions..."

So there I was 16, 17 years ago demanding that the state send my money to a private entity.

What kind of upside down Ayn Rand world did I inhabit and then I realize that this is the same kind of world that the Tea Party dipshits inhabit and it's these kinds of people who make this kind of thing possible and I cry for the world.
posted by symbioid at 4:56 PM on June 14, 2012 [1 favorite]


The more I think about it, the more I think a lottery system would work brilliantly, from a fundraising point of view. If the parking meters take in $2m per day under the current system, with an estimated 10% non-payment rate ($200,000), there is plenty of scope for randomly giving one person per day $10,000. One chance per hour of paid parking, and "drawing" in the morning so that a random meter at a random time will spit out a "golden ticket". It would likely decrease the non-payment rate by considerably more than the cost.

This is operating on the assumption that meters spit out tickets, which are to be displayed on the dashboard. Ours have the vehicle numberplate on them as well, entered by the driver on the keypad of the parking meter, and there is usually one parking meter per block which prints the tickets. Your parking meter system may vary, however so long as they are electronically linked some variant of the lottery could be developed.
posted by aeschenkarnos at 5:13 PM on June 14, 2012 [3 favorites]


Bloomberg is pretty shrewd. He didn't become a billionaire getting suckered. I hope he has some tricks up his sleeve.
posted by Ad hominem at 5:28 PM on June 14, 2012


The more I think about it, the more I think a lottery system would work brilliantly, from a fundraising point of view. If the parking meters take in $2m per day under the current system, with an estimated 10% non-payment rate ($200,000), there is plenty of scope for randomly giving one person per day $10,000. One chance per hour of paid parking, and "drawing" in the morning so that a random meter at a random time will spit out a "golden ticket". It would likely decrease the non-payment rate by considerably more than the cost.

That might work from a fundraising point of view, but the purpose of meters is to limit parking, not to encourage it.
posted by gjc at 5:31 PM on June 14, 2012


Hahahaha! Do you know how municipal services traditionally work in Chicago?

Badly, I understand, but I don't see why people should subsidize that poor quality of service.
posted by anigbrowl at 6:04 PM on June 14, 2012


gjc That might work from a fundraising point of view, but the purpose of meters is to limit parking, not to encourage it.

Whether people park is not the same problem as whether people, having parked, pay. It's the second problem that the lottery system would fix. (And would also reduce parking attendant salary costs.)

I'm not a fan of using blunt-trauma economics to force reduction in parked-car numbers by increasing the cost to park. It's dumb, it's inequitable, and it doesn't work as intended unless there is a significantly cheaper public transport option. All it does is cause low-income drivers to have lower discretionary spending budgets, to the harm of the general economy.

I live in a city where there basically isn't a cheaper public transport option; the public transport prices are pegged to only just below the cost of driving. The result of that is that everyone drives, and curses the lack of parking spaces. They may try public transport for a while, then they figure out that they aren't actually saving money, and in fact they are just costing themselves a whole bunch of time and raising their aggravation, and they go back to driving again.
posted by aeschenkarnos at 6:24 PM on June 14, 2012 [1 favorite]


anigbrowl: Net present value, folks. Learn about it, then tell me why you think it's better to pay out more money on bond interest than to retire the debt early.

This is an absolutely terrible deal. Using the numbers from your link, in the case of Chicago, they used a discount rate of 10% . What this deal amounts to is floating a 75-year bond and borrowing money from Morgan Stanley at 10% interest secured by the parking meter income stream. This money is then used to pay off other bonds that the city is borrowing at 5%.

Now if you as an individual went to a credit counselor and proposed borrowing money on your credit card at 10% to pay off a school loan at 5% he would tell you that you are crazy. Anigbrowl is trying to tell us its a good deal.

Net present value is only meaningful when used as a comparison to an alternate case. Investment comparison, anigbrowl. Learn it and use it.
posted by JackFlash at 6:32 PM on June 14, 2012 [5 favorites]


Badly, I understand, but I don't see why people should subsidize that poor quality of service.

Actually, Chicago's called The City That Works for a reason. We tolerate corruption in exchange for shit being taken care of, for better or worse. Not saying that's a good thing, that Daley can bulldoze an airport runway in the middle of the night to fulfill his plans for a park or what have you. But, yay park! You can't take care of snow removal, you lose the election. We're a practical people.
posted by misskaz at 6:42 PM on June 14, 2012


What this deal amounts to is floating a 75-year bond and borrowing money from Morgan Stanley at 10% interest secured by the parking meter income stream. This money is then used to pay off other bonds that the city is borrowing at 5%.

This comparison isn't really the right way to look at things, because the hypothetical income stream of the parking meters needs to be discounted by the risk of that specific income stream, which is obviously higher than the city's general tax base. I mean, we're talking about 75 years in the future--we don't even know if people will still be driving cars then.
posted by dsfan at 7:08 PM on June 14, 2012


Ad hominem: Bloomberg is pretty shrewd. He didn't become a billionaire getting suckered. I hope he has some tricks up his sleeve.

Well you may be right Ad hominem. I just remembered that there may be more to this story than meets the eye. Bloomberg suffered a vicious defeat when he tried to pass a congestion tax on cars entering Manhattan. The plan was modeled after London's congestion tax.

State Legislators slammed the plan sending it to the dustbin. As an act of revenge Bloomberg went full speed ahead with continuing to put bicycle lanes through the 5 boroughs. Bloomberg is no fan of cars in Manhattan, so he may be planning to sell the parking meters to the Saudi's in continuation of his war on cars. Car owners who want to park will have to bargain with a Saudi for any given spot, and that is no quick operation. This scheme will really make people think twice about bringing their car into Manhattan. Win for Bloomberg.
posted by snaparapans at 7:16 PM on June 14, 2012


1) they didn't sell off the assets, they leased them. Big difference.

Uh, they leased them for 75 years--tantamount to a sale and everyone participating in this discussion will be dead by the time the lease runs out.

So you can say "lease" but as 75-year lease is the equivalent of a sale as far as everyone here is concerned. So from our human perspective it is equivalent of a permanent sale and from the "net present value" perspective the value of a 75-year lease is only 0.2% less than the value of an outright sale.

So--for all intents and purposes, it's a sale.

I for one would be far less opposed to such schemes if they were done over fairly short time periods like 5-10 years rather than 50-100.

That would be more like a lease.

Thanks to the marvel of "net present value" almost all of the present value of the deal comes from the first years. The discount rate means that the far-out years are valued at a very low amount.

Compared with the 75 year deal, you get 61% of the money for just a 10-year lease and a full 35% of the money for only a 5-year lease.*

So if you did a 10-year lease you'd get the lion's share of the benefits of the current deal plus an additional huge benefit: You've avoided tying the community's hand on the matter of those parking spots for the remaining 65 years of the deal.

*This is calculated at the 8.26% discount rate mentioned in the City of Chicago docs about the parking deal.
posted by flug at 7:20 PM on June 14, 2012 [3 favorites]


OK, seriously, is there any particular reason why we all shouldn't just go out and break a few of the meter units? Then break their replacements? Then break the replacement replacements? What would be the loss to the city if 3/4 of the units were to ... accidentally ... catch fire tomorrow evening?
posted by aramaic at 7:37 PM on June 14, 2012


OK, seriously, is there any particular reason why we all shouldn't just go out and break a few of the meter units?

That depends. Can you eat fifty eggs?
posted by The World Famous at 7:39 PM on June 14, 2012 [2 favorites]


While Cool Hand was a clever fellow, history to date has shown that I am a far more capable felon than he ever dreamed of being. As demonstrated by my continuing freedom.
posted by aramaic at 7:40 PM on June 14, 2012


Thanks to the marvel of "net present value" almost all of the present value of the deal comes from the first years. The discount rate means that the far-out years are valued at a very low amount.

Compared with the 75 year deal, you get 61% of the money for just a 10-year lease and a full 35% of the money for only a 5-year lease.*


No argument on that point, other than the one about the demand for parking discussed above.

OK, seriously, is there any particular reason why we all shouldn't just go out and break a few of the meter units? Then break their replacements? Then break the replacement replacements? What would be the loss to the city if 3/4 of the units were to ... accidentally ... catch fire tomorrow evening?

Can I break in and take your stuff while you're out vandalizing parking meters?
posted by anigbrowl at 7:48 PM on June 14, 2012


You can go ahead and try. Absolutely!
posted by aramaic at 7:49 PM on June 14, 2012


Well, that's my answer to you: you can try. But chances are it won't get you anywhere, plus it's sort of an asshole thing to do. But hey, knock yourself out. As a walker/transit user your parking rage is amusing to me.
posted by anigbrowl at 7:51 PM on June 14, 2012


The funny thing about rentiers is the way they think they know everyone.

Well, it's one of the funny things about them. There are a couple others.
posted by aramaic at 7:59 PM on June 14, 2012


I agree Bloomberg is no fan of cars in Manhattan, but neither were previous mayors. Koch instituted bike lanes in the late 70s, so Boomberg just revived an old idea. Bloomberg is the first to significantly narrow the streets by putting parking to the right of the bike lane, separating the cyclists from traffic. He also turned portions of Manhattan, into pedestrian malls. Again, not a new idea. The areas around the seaport and Fulton street in lower Manhattan have been pedestrian malls for decades.

A significant portion of parking is already private. Icon Parking Systems already owns a crazy amount of garages.

As a Manhattanite I would really like to see cars removed from the island, or reduced significantly. So I support Bloomberg in his war on cars. I'm crazy though, I support the 42nd street trolley.
posted by Ad hominem at 8:01 PM on June 14, 2012


You know this whole debate could be headed off, by offering the parking lease for some sort of reasonable term, like 1-5 years. Then they could have a voter referendum to see if the people like it.

Locking yourself into a 75 year contract without a trial period is stupid and directly related to the fact that no one who made the decision will be anywhere nearby even 10 years from now.

I hope they get a populist mayor in the future who goes and uses imminent domain to seize all the parking spaces for bike lanes and street cars.
posted by psycho-alchemy at 8:02 PM on June 14, 2012


Ad hominem: Agree.. Also as a Manhattanite, I would love to see all cars removed from the Island. It is New Jersey's turn to be the car park. I have season tickets to daily NJ Symphony horn section rehearsal most days between 4 and 7 pm. And I do not even have to leave my apartment!
posted by snaparapans at 8:10 PM on June 14, 2012


Actually, Chicago's called The City That Works for a reason.

I just realized that Chicago is Ankh-Morpork, just with less competent Patricians.
posted by Kutsuwamushi at 8:14 PM on June 14, 2012


I'm lucky that through some alien technology or rift in space they managed to build my apartment with each and every window facing an air shaft. I only have to contend with people shouting at each other across the airshaft.

Really they should put streetcars across 125th,110th,57th, 42nd,34th and 14th and Canal. They should also tear down MSG but that is a whole different issue, that place is an eyesore.
posted by Ad hominem at 8:26 PM on June 14, 2012


All sounds good to me... and MSG horrible, including penn station, although I recently found out Penn Station it is likely the largest transport hub in the western world. 600,000 people go through it every day..
posted by snaparapans at 8:40 PM on June 14, 2012


2) read the valuation document linked to above. These aren't speculative investments whose value can't easily be estimated. Net Present Value is a very basic tools of financial analysis, nothing like the methodologies used for evaluating exotic derivatives or turning mortgages into financial lunchmeat.
You honestly expect parking rates to stay constant over the next 75 years? How much parking money is made today compared to 1947? Ridiculous. Of course it's speculative.

And, in a bubble you would account for more economic growth in the future, while in a depression you would account for less. More people would have more money to spend, so you would get more bids
Heck, in 20 years it could all be self-driving cars operated on a fractional ownership basis, where your car drives off to its next customer after dropping you off, and no one needs a parking space.
Or self driving cars that drive themselves to private garages when they're not in use.
This is an absolutely terrible deal. Using the numbers from your link, in the case of Chicago, they used a discount rate of 10% . What this deal amounts to is floating a 75-year bond and borrowing money from Morgan Stanley at 10% interest secured by the parking meter income stream. This money is then used to pay off other bonds that the city is borrowing at 5%.
I wouldn't go that far, I'm sure Rahm's campaign funds got some nice checks out of the deal.
Actually, Chicago's called The City That Works for a reason. We tolerate corruption in exchange for shit being taken care of, for better or worse.
People might tell themselves that, but if they do they're delusional. It's entirely possible to get things done with minimal levels of corruption.
Well, that's my answer to you: you can try. But chances are it won't get you anywhere, plus it's sort of an asshole thing to do. But hey, knock yourself out. As a walker/transit user your parking rage is amusing to me.
It's much easier to vandalize a parking meter then it is to break into the house of an anonymous internet commentator.
posted by delmoi at 8:48 PM on June 14, 2012 [1 favorite]


Although for all we know the company got it worked out so the city has to pay to replace any vandalized meters anyway.
posted by delmoi at 8:52 PM on June 14, 2012


This comparison isn't really the right way to look at things, because the hypothetical income stream of the parking meters needs to be discounted by the risk of that specific income stream, which is obviously higher than the city's general tax base. I mean, we're talking about 75 years in the future--we don't even know if people will still be driving cars then.

Well, the whole 75 year thing is a red herring. No one expects them to be collecting on parking meters 75 years in the future. The only reason they structured it as a 75 year deal is so that they can make the argument that it is risky in order to justify their ridiculous 10% discount rate. It seems that you took the bait exactly as planned.

It turns out that present value calculations are very sensitive to the discount rate. The bigger the discount rate, the smaller the present value of the property you are trying to lease. If you use a big number like 10%, it makes the value of the parking meters seem relatively small. So they used the phony number 75 years to justify that high discount rate and the pitifully small cash payment to the city.

More realistically, you could say that for the next 10 years the risk is almost zero that people won't still be driving cars the same as today or 10 years ago. So then the more appropriate discount rate would be closer to the current riskless rate of 1.6%. Then you realize that when Morgan Stanley actually looks at it this way they make back their entire investment in the first 10 years and anything after that is pure profit.

Just as Matt Taibbi accurately pointed out, this is a fabulously lucrative deal for the banks and Chicago is getting just a fraction of its real value in cash. His analogy to those vultures that give you just pennies on the dollar for cash up front for your annuity or lottery winning is an apt one.
posted by JackFlash at 9:23 PM on June 14, 2012 [2 favorites]


Actually, Chicago's called The City That Works for a reason.

I'm not really sure what the slowplough issue is, then.

You honestly expect parking rates to stay constant over the next 75 years? How much parking money is made today compared to 1947? Ridiculous. Of course it's speculative.

Uh...no. They're keyed to inflation. All investments are speculative, but relative to things like CDOs, investing in parking meters is about as conservative as it gets.

It's much easier to vandalize a parking meter then it is to break into the house of an anonymous internet commentator.

Most criminals get caught because they're predictable and can't resist the urge to show off.
posted by anigbrowl at 9:33 PM on June 14, 2012


So then the more appropriate discount rate would be closer to the current riskless rate of 1.6%.

You're suggesting that the proper discount rate is less than expected inflation? That's not serious. I haven't "taken the bait," as you rather arrogantly put it, no government agency in its right mind would use this rate. I'm not saying 10% is "right" (they really should break the income streams up and discount them differently), I'm saying that comparing it to a 5% bond is definitely wrong.
posted by dsfan at 9:41 PM on June 14, 2012


Most criminals get caught because they're predictable and can't resist the urge to show off.
I don't know why you're arguing about this. Most criminals aren't caught at all. Do you really think the Chicago PD is going to take time off from tracking down murderers and muggers to do an in-depth investigation of a smashed up parking meter?
posted by delmoi at 9:44 PM on June 14, 2012


Well, the whole 75 year thing is a red herring. No one expects them to be collecting on parking meters 75 years in the future. The only reason they structured it as a 75 year deal is so that they can make the argument that it is risky in order to justify their ridiculous 10% discount rate. It seems that you took the bait exactly as planned.

a) if they're not collecting on parking meters for the next 75 years then what are you worying about?
b) it isn't a 10% discount rate, which just proves you didn't read the lease terms.

It turns out that present value calculations are very sensitive to the discount rate.

You don't say!

So they used the phony number 75 years to justify that high discount rate and the pitifully small cash payment to the city.

Like Taibbi uses the same period to calculate the nominal value of the lease and then presents that without accounting ofr inflation?

Then you realize that when Morgan Stanley actually looks at it this way they make back their entire investment in the first 10 years and anything after that is pure profit.

Wrong. They'd get back half their investment because they have to subtract their own cost of capital.

Just as Matt Taibbi accurately pointed out, this is a fabulously lucrative deal for the banks and Chicago is getting just a fraction of its real value in cash. His analogy to those vultures that give you just pennies on the dollar for cash up front for your annuity or lottery winning is an apt one.

The lottery itself applies the discount rate if you take the lump sum instead of the 25 year annuity payment. What is with this assumption that everyone that knows how to account for inflation is doing so only to screw someone else?
posted by anigbrowl at 9:50 PM on June 14, 2012


I don't know why you're arguing about this. Most criminals aren't caught at all. Do you really think the Chicago PD is going to take time off from tracking down murderers and muggers to do an in-depth investigation of a smashed up parking meter?

No, but since he's proclaiming a desire to put 3/4 of them out of action I figure he's likely to get caught in much the same way most serial vandals are.
posted by anigbrowl at 9:51 PM on June 14, 2012


if they're not collecting on parking meters for the next 75 years then what are you worying about?

That's the whole point. The bankers aren't planning on 75 years. That was just a phony number used to gin up the phony 10% discount rate. They are really looking out just 10 years or so, in which case a discount rate closer to the riskless discount rate is more appropriate. They make their money back in the first 10 years. Who cares what happens 75 years from now?


it isn't a 10% discount rate, which just proves you didn't read the lease terms.

I took the 10% rate from the document that you linked to in your argument justifying the deal.


Wrong. They'd get back half their investment because they have to subtract their own cost of capital.

You seem to be terribly confused. The cost of capital is included in the discount rate.


The lottery itself applies the discount rate if you take the lump sum instead of the 25 year annuity payment. What is with this assumption that everyone that knows how to account for inflation is doing so only to screw someone else?

Yes, if you get your lump sum from the lottery commission, a fair discount rate is applied. Taibbi is talking about vultures like J.G. Wentworth who give you a terrible discount rate.

The whole point of this discussion is that the deal Chicago got had a terrible discount rate which means they only got a fraction of the value they should have in cash. The fact that they are using a 10% bond to pay off 5% debt is a loser on the face of it. You don't need to go any farther in the analysis.
posted by JackFlash at 10:11 PM on June 14, 2012 [2 favorites]


Note also for the Chicago deal: even after the already shitty for the city financials, the company charges the city for disabled people who park at metered spots.

Privatize the profits, socialize the losses
posted by Evilspork at 11:13 PM on June 14, 2012


I took the 10% rate from the document that you linked to in your argument justifying the deal.

You can't just pull a random number out of it, jeepers.

That's the whole point. The bankers aren't planning on 75 years. That was just a phony number used to gin up the phony 10% discount rate. They are really looking out just 10 years or so, in which case a discount rate closer to the riskless discount rate is more appropriate. They make their money back in the first 10 years. Who cares what happens 75 years from now?

Why? Even this, the Inspector General's report, which is seriously flawed (omitting maintenance and replacement costs and thus overestimating cash for by about $9m a year, among other things) argues for starting from a very low low risk discount rate of 7% (page 22, which ignores the methodology used in the cited study and arbitrarily picks a lower discount rate).

You seem to be terribly confused. The cost of capital is included in the discount rate.

I know that. I disagree with your claim that they break even after a decade and that they should be using the riskless discount rate. Why would you do that? Is there any reason to assume that the demand for parking meters is perfectly inelastic? Or that the maintenance and replacement costs of parking maters are $0? (In fact, they need to be replaced about every seven years - source)

Yes, if you get your lump sum from the lottery commission, a fair discount rate is applied. Taibbi is talking about vultures like J.G. Wentworth who give you a terrible discount rate.


Sure, that's why he compares the two using numbers to explain the concept of a fair discount rate to his readers - oh wait, he doesn't, he treats the nominal value of the deal as if it were the real value and completely ignores inflation.

The whole point of this discussion is that the deal Chicago got had a terrible discount rate which means they only got a fraction of the value they should have in cash. The fact that they are using a 10% bond to pay off 5% debt is a loser on the face of it. You don't need to go any farther in the analysis.

What 5% debt are we talking about here? I seem to remember 2008 as a year muni bond spreads widening in alarming fashion. How was it Chicago wound up with this huge and unexpected budget gap? Of course it would make no sense to borrow (or lease) at a 10% discount rate to pay off a 5% debt. Are you telling me that Chicago had nothing outstanding but AAA+, risk-free GO bonds at a negligible premium to 30 year treasuries? Really?
posted by anigbrowl at 12:40 AM on June 15, 2012 [1 favorite]


Note also for the Chicago deal: even after the already shitty for the city financials, the company charges the city for disabled people who park at metered spots.
The Sun-Times last year observed dozens of able-bodied people using relatives’ placards, deceased people’s placards, fake placards and even stolen placards to cheat Chicago’s meter system. A subsequent Sun-Times report revealed that taxpayers are on the hook to reimburse the meter company for drivers who use disabled-parking placards or plates to park for free.
No surprise there - that's a problem in many California cities too. You neglect to mention that CPM eats the first $5m of lost revenue for disabled parking, by contract. That was, I believe, calculated based on the number of registered disabled people in Chicago. Why should other drivers or the meter operator subsidize people who cheat the disabled parking system?
posted by anigbrowl at 12:49 AM on June 15, 2012


Actually, Chicago's called The City That Works for a reason.

I'm not really sure what the slowplough issue is, then.


http://en.wikipedia.org/wiki/Chicago_Blizzard_of_1979

The conclusion is that the voters won't throw someone out of office for being machine-corrupt, but they will if they don't get shit done.
posted by gjc at 7:58 AM on June 15, 2012


People might tell themselves that, but if they do they're delusional. It's entirely possible to get things done with minimal levels of corruption.

No one thinks that there must be corruption to get shit done, just that if stuff gets taken care of, they'll look the other way on a lot of things, including corruption. Like gjc just said.
posted by misskaz at 8:47 AM on June 15, 2012


The conclusion is that the voters won't throw someone out of office for being machine-corrupt, but they will if they don't get shit done.

I propose a new nickname to replace The City That Works. How about The City With The Mayor That Makes The Trains Run On Time? Has a nice historic ring to it.
posted by The World Famous at 10:10 AM on June 15, 2012


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