NYC Asks Banks For Ideas on Parking Privatization

New York City is moving forward with possible plans to privatize its on-street parking to some degree. An RFP released last week by the city's Economic Development Corporation asks investment banks to submit their best ideas for privatizing city assets. Parking tops the list of assets the city is interested in contracting with the private sector over. (Large pieces of transportation infrastructure are also on the list).

So far, the city is just asking for ideas. Mayoral spokesperson Marc LaVorgna told us that the city wants to retain "central control" over the operation of city assets, confirming that a private company would not be allowed to set parking meter rates, for example. The city is also "not interested in selling city assets to plug short-term budget deficits," he said.

Beyond that, he said, the city hasn't made any decisions about how to proceed. Issues like whether parking enforcement might be contracted out, for example, haven't been determined yet.

The Wall Street Journal today that Deputy Mayor Stephen Goldsmith has suggested one possible model for an on-street parking deal: having a private company install new technology that would enable higher revenues, whether by introducing demand-based pricing or ensuring that meters function more reliably. The company and the city would split the increased income.

The best-known parking meter privatization deal was finalized in Chicago in 2008, and it is now widely viewed as a debacle. After a closed-door process, the city signed a 75-year deal with Morgan Stanley in exchange for a one-time payment. It was later reported that the one-shot revenue for the city was worth several billion dollars less than what Morgan Stanley is likely to earn from the meters. What's more, Morgan Stanley now holds a veto over the removal of metered parking, a potential roadblock for street redesigns.

New York City could structure a meter privatization deal in a very different manner, however. Budget watchdogs will need to be sure that if the city signs any privatization deals, it gets every dollar it can. They'll also need to ensure that this isn't a one-shot revenue deal dressed up as efficiency finding. If there's a need for better parking technology, for instance, why couldn't the city install it in-house and avoid splitting the revenues?

There are a lot of open questions about the transportation policy implications of any potential deal. Who handles parking enforcement under a privatized system -- and what their incentives are -- could have a big impact on how on-street spaces are used. Would the terms of the deal strengthen or weaken the incentives for the city to begin metering some of the city's overwhelmingly free on-street parking? Will the terms of the deal put an additional roadblock in the way of innovative street redesigns that remove metered parking spaces? Will a deal lock in curbside practices that decades from now will be utterly outdated, in ways we couldn't even predict?

City Council transportation committee chair Jimmy Vacca told the Post that he'd be opposed to any privatization deal that served as cover for an increase in parking rates. From this distance, it's hard to game out how a privatization deal that didn't directly touch meter rates would shift the politics of parking. But with reducing the subsidy for on-street parking critically important for reducing congestion, it's a question to start thinking about.