CITY ANNOUNCES INITIAL DETAILS ON STRUCTURE OF PARKING METER MONETIZATION
(3/19/2010) NEW HAVEN- The City of New Haven is finalizing a monetization agreement with Gates Group Capital Partners, LLC ("Gates") that provides a $50 million upfront payment to the City for a lease-leaseback deal of the City’s 2,738 on-street parking meters. The terms of the lease are based on a 25-year fixed lease payment schedule that will be finalized at closing. As negotiations stand, the City will have the right to terminate the lease early after year ten.
“This is a short-term solution that is the bridge to long term fiscal stability,” said Mayor John DeStefano, Jr. “ While this is not something I would have ordinarily sought to do to balance our budget, these are not ordinary times. The choice was clear: negotiate a deal like this that would provide a significant revenue stream during the toughest year of our nation’s fiscal crisis or explore significant future tax increases that our families cannot afford.”
All proceeds from this deal will be used to create a Property Tax Stabilization Trust Fund to cover anticipated revenue shortfalls and mitigate tax increases in upcoming years. This transaction allows the City to balance budgets in the next few years that will be impacted by continuously increasing employee pension and health care costs. “This deal will help the City transition from where it is now to a system that can really deal with these rising cost drivers,” said DeStefano.
In April 2009, the City issued an RFQ for firms interested in a public/private partnership to monetize certain City and Parking Authority Assets. This initiated an extensive solicitation/evaluation process to assess what type of economic value could be obtained to address immediate and short-term economic needs. Five firms provided responses, which included both Concession and Lease only approaches.
In August 2009, the City issued an RFP to each respondent to submit Lease/Leaseback and proposed agreements.
The City received two follow-up proposals in September 2009; (1): a Concession Proposal from LAZ Parking to assume operational and financial control of the NHPA Garages and Parking Meters; and (2): a Lease Proposal from Gates with a leaseback to the City leaving operational and financial control with the City.
From September 2009 to February 2010, the City conducted reviews, analysis and interviews of the proposed firms. The process was thorough and deliberate, and conducted in accordance with the City’s Charter and purchasing guidelines. After careful consideration of the two proposals, the City decided not to proceed with a Concession deal, which would have relinquished financial and operational control the Parking Assets. Further, it was decided to proceed with the Lease/Leaseback proposal submitted by Gates.
“In consultation with our financial advisor, Public Financial Management, in February 2010, the City awarded the RFP to Gates for monetization of parking meters only,” said Lawrence Rusconi, Director of the Office of Management and Budget. “The Gates proposal maximizes the upfront payment and allows the City to maintain operational control and flexibility for economic development of our Parking Assets.”
The City is proposing an expanded meter system that will introduce pay stations to City streets as well as expanded enforcement hours and an increase in parking enforcement staff who will in turn generate increased revenues. Changes to the City’s parking meter/enforcement system will replace meter revenues used to pay lease payments. Gates has no legal claim to meter revenues from expanded system. After all lease payments are satisfied, all monies from meter system flow to the City, and not Gates, to be used at the City’s discretion: Gates’ financial interest is capped at lease payments.
Other cities that have executed or are in the process of executing parking asset monetization transactions include: Chicago, Hartford, Harrisburg, Indianapolis, Los Angeles, Las Vegas, Miami, Pittsburgh and Worcester.
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