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L.A. City Council Considers Plan To Partially Privatize Parking Garages; No One Likes Idea

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Wed, Aug 11, 2010 at 8:14 AM

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The cash-strapped City Council will move closer today to partially privatizing 10 city-owned parking garages, including Pershing Square downtown. The city hopes to ease its cash flow problems to the tune of $100 million to $200 million by receiving money, including an up-front lump sum, for allowing private companies to operate and profit from the garages for 50 years.

In the process, the council could wind up angering everyone: Neither car lovers nor car haters like this plan.

LA Downtown News has a good summary of the plan. The garages only netted the city $2 million last year because of debt service on two Hollywood garages and overhead.

But downtown boosters are opposed to the decision to include the Pershing Square lot in the deal. It provides cheap parking for customers of the jewelry district and nightlife spots.

They fear big rate hikes -- as happened when Chicago embarked on a similar path -- and less supply of parking as more people live downtown and take up spots.

The Pershing Square garage made $2.3 million in 2008-09. It's owned by Rec and Parks but run by General Services, with most of the money going to programs at the park, and $500,000 going to Rec and Parks general fund, LA Downtown News reports.

Jack Humpreville of CityWatch isn't just opposed. He headlined his post on the Pershing Square garage, "The Rape of Recreation & Parks." Ok, then. In fairness, Humpreville seems like a genuine and passionate defender of the city's parks.

So if people who love cars and subsidized parking don't like the plan, how about car haters who would like to see less, not more parking, or at least less subsidized parking?

Well, one of the city's key advocates for pedestrians and pedestrian-friendly development doesn't like this plan either.

Damien Newton of the former Streetsblog LA would rather see the council just flat out privatize the lots, which would allow the new owners to develop the properties into something other than parking if they so chose. Instead, from Newton's standpoint, we're stuck with parking garages for 50 years, which has been discussed as the length of the agreements.

And though the likes of Newton would normally be happy to see a private company raise parking rates, forcing drivers to pay market rates to park, he suspects the council would never have the stomach to allow what happened in Chicago, where rates went up considerably. So, rates would stay artificially low, further encouraging people to drive downtown.

This whole discussion throws into sharp relief the strange politics of parking: So-called "smart growth" like the kind Newton adheres to is usually associated with liberals, but he espouses the free market when it comes to parking: People should pay what the market demands, and no less. Privatize public garages and stop subsidizing an activity that is best left to the free market. (This has the effect of increasing the cost and hassle of driving, which will get people out of their cars.)

Car-loving conservatives, meanwhile, have a tendency to become communitarians when it comes to parking, calling it every American's cradle-to-grave right to have free or cheap parking.

It seems to us there are a few reasons for government activity: The free market can't or won't do engage in that activity -- like building an army. Or, it's some activity we want to subsidize because we think it has some social benefit for all of us, like say, education or public art or a baseball stadium. One could argue that a vibrant downtown is a social good that the free market can't produce on its own, and that building a parking garage with cheap parking would give people an incentive to visit downtown. Look at Culver City.

But at some point, downtown will be able to stand on its own two legs without the lure of cheap parking. The question is whether that moment has arrived.

Then too, there's also the question of whether this is a good deal for the city financially. It's worth noting that one of the potential bidders in question is the famed private equity firm KKR, which was at the center of the masterful tale of 80s financial excess, "Barbarians at the Gate."

On the city's side of the negotiating table is JP Morgan Chase, which got in a spat with KKR in 2007, according to this Reuters story.

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