Privatizing the City's Public Parking Garages Could be Risky
To lease 10 city parking garages for 50 years or not? That is one of the current big financial questions, which the LA Times explores today. At issue is the $212-million budget shortfall that officials want to solve mostly with money from the reserve fund, which should be kept around 5%--$230 or so--of the city's overall budget. But depleting the reserve fund can tank the city's bond ratings so, in turn, the city would have to quickly backfill the reserve and one way to do that is leasing 10 parking garages for a large sum of money upfront with some shared profit coming in over the years.
If the drastic move of taking reserve funds to save the day is done, the city absolutely needs to privatize the parking garages, which could bring in $100 to $200 million, in a record amount of time. By contrast, the plan to privatize the city's golf carts has taken seven years and still no action.
Council President Eric Garcetti says it's an extremely risky proposition, calling it "largely untested [in a] somewhat unpredictable market area." Mayor Antonio Villaraigosa's Deputy Chief of Staff Matt Szabo believes the opposite, citing a good amount of interest from the private market. "The risky proposition is doing nothing," he said.
Previously on LAist
- Hollywood & Highland, ArcLight & Other Public Parking Lots Could Soon be Run by Private Entities
- City Panel Recommends Moving Forward with Privatization of 10 City Parking Garages
- Parking Operators Owe the City Nearly $100 Million