Hard Cases, Bad Policies

Lawyers have a saying: “hard cases make bad law.”  That is equally the case when hard-pressed city administrations look for ways to generate revenue. There is an excellent example in Indianapolis, where the Mayor has recently proposed to privatize the city’s parking infrastructure by entering into a fifty-year lease with a private company.

The proposal raises a number of issues particularly pertinent to those of us who teach local government policy.

1)      Why would any city turn over an important part of its infrastructure to any private company for fifty years? Even if the deal were less one-sided fiscally than this one appears to be, decisions about where to place meters, how to price them, optimum lengths of time to allow and so on have an enormous impact on local businesses and residential neighborhoods. They are decisions requiring flexibility in the face of changing circumstances; they are most definitely not decisions that should be held hostage to contracting provisions aimed at protecting a vendor’s profits.

2)      Why would a city enter into a contract that will add significantly to the costs of downtown development? Indianapolis, like many cities, has worked hard to encourage construction of hotels, retail establishments and residential units in our urban core. Often, that construction has interrupted adjacent parking. When the city manages its own parking, it can choose to ignore that loss of parking revenue, or to charge the developer, based upon the city’s best interests. Privatization will require payments to the contractor whenever such interruptions occur, adding significantly to the costs of development in the urban core.

3)      Will the proposed contract provide incentives for mischief? Much has been written about the problems with Chicago’s parking privatization, but far less about problems in places like Washington, D.C., where an audit documented mismanagement, overcharging, over-counting of meters, and the issuance of bogus tickets—the latter because the agreement provided that the contractor got all of the revenue for tickets.

Why would a city choose to enter into a contract having the potential to create so many problems down the road? In Indiana—and probably elsewhere—the answer is obvious: we are starving local governments. Mayors do not have the resources needed to provide even essential services. As the urban blogger Aaron Renn (the Urbanophile) has noted, they are vulnerable to seduction by the municipal equivalent of payday loans.

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