Making Sense of Recent U.S. Parking-Lease Transactions from Page 18
(including debt and equity capital) and its return requirements (see sidebar).
Balancing act Long-term leasing of parking assets presents a very attrac-
tive value proposition for public and private stakeholders. From the private sector perspective, such contracts offer fairly stable, inflation-adjusted cash flows with upside potential resulting from technology upgrade and operating efficiencies. On the downside, the private operator takes the primary risk for future utilization over a very long period of time. While the number of bidders on recent solicitations reflect
these attractive characteristics, investors are wary of half-hearted attempts resulting in failed deals after having completed all the steps of the competitive process. Such failures are costly, for pri- vate participants aswell as for public sponsors. From a public sponsor’s perspective, leasing parking assets
provides an opportunity to divest from what many consider a non-core function of city government and results in an immedi- ate up-front payment and, in some cases, a continued stream of revenue (see sidebar, Indianapolis). Some also see an advantage in passing the responsibility for
rate increases to the private sector as political realities frequently make it difficult for cities to generate consistent rate growth to manage demand, or even just catch upwith inflation. The primary drawbacks are a potential loss of control over parking policy decisions (although such concerns can be
addressed within the concession contract); loss of existing labor force and potential union disputes; and potential public opposi- tion over rate
increases.Although the use of proceeds is at the dis- cretion of the public sponsor, the decision to use long-termassets to cover short-termbudget deficits can expose a sponsor to strong public criticism. Looking back at the transactions over the past 24 months
seems to showan evolution frompuremonetization deals toward more conscientious tradeoffs between higher transaction value and broader public policy objectives: • Afirst generation of lease agreements, such as in Chicago
(see sidebar), focusing onmonetization with very long terms and aggressive rate increase clauses; •Asecondwave of transactions trying to replicate the initial
(financial) success of Chicago, but which were ultimately met with opposition by city councils, such as in Pittsburgh and New Haven; and •What may be regarded as a new generation of concession
agreements for parking facilities, as illustrated by Indianapolis (see sidebar), showing a more complex structure, more moderate rate increases, revenue-sharing clauses, and options providing flexibili- ty for decision-making on urban planning over the long term. As cities and transportation agencies consider their options
for the long-termoperation andmaintenance of parking facilities, setting up a framework for addressing such tradeoffs should be a first priority. Questions such as—What level of control to retain on rate setting and fines? Should revenue be shared and how?
Continued on Page 26
Affinity Partner E 20
very day your customers depend on you. Tey leave their cars in your parking garage or with your valet and assume everything will be fine. But things can go wrong. Vehicles
disappear from parking garages. Valets crash cars. Pedestrians trip on potholes. And customers file claims. So who can you depend on? For more than
25 years, Alliant Insurance Services has been offering complete insurance solutions for all types of parking operations.We can help you prevent and manage risks while making sure you have the most appropriate coverage for your business. Contact us today.
Customers depend on you.Who can you depend on? Alliant, the specialty insurance leader.
(866) 805-7275, Ext. 775
www.alliantinsurance.com/parking kphillips@alliantinsurance.com
Parking Today
www.parkingtoday.com
Page 1 |
Page 2 |
Page 3 |
Page 4 |
Page 5 |
Page 6 |
Page 7 |
Page 8 |
Page 9 |
Page 10 |
Page 11 |
Page 12 |
Page 13 |
Page 14 |
Page 15 |
Page 16 |
Page 17 |
Page 18 |
Page 19 |
Page 20 |
Page 21 |
Page 22 |
Page 23 |
Page 24 |
Page 25 |
Page 26 |
Page 27 |
Page 28 |
Page 29 |
Page 30 |
Page 31 |
Page 32 |
Page 33 |
Page 34 |
Page 35 |
Page 36 |
Page 37 |
Page 38 |
Page 39 |
Page 40 |
Page 41 |
Page 42 |
Page 43 |
Page 44 |
Page 45 |
Page 46 |
Page 47 |
Page 48 |
Page 49 |
Page 50 |
Page 51 |
Page 52 |
Page 53 |
Page 54 |
Page 55 |
Page 56 |
Page 57 |
Page 58 |
Page 59 |
Page 60 |
Page 61 |
Page 62 |
Page 63 |
Page 64 |
Page 65 |
Page 66 |
Page 67 |
Page 68