With limited prospects for filling its estimated $30 million budget hole, the City of Hartford is turning to one of its most reliable revenue generators for a potential solution — parking.
Potential investors have until March 22 to respond to the city’s six-week-old ‘request for information,’ an expression of interest in taking over the city’s 6,396 downtown metered and off-street parking spots as a concessionaire. The city is looking for someone willing to pay unspecified millions of dollars up front in exchange for what’s likely a 20- to 30-year lease on all city-owned parking operations, including its four garages and one surface lot.
Officials at City Hall and the Hartford Parking Authority say they have no clue how much they might fetch for a parking concession that annually nets at least $5 million. But they agree that given the economy’s debilitating impact on municipal budgets, it’s an idea worth investigating.
“We’re examining it,’’ said David Panagore, the city’s chief operating officer and chief development officer. He is joined by the city finance director, legal counsel and parking authority officials on the exploratory team.
“The best way to do that is to go out and see what the market is,” Panagore says.
One motivator, city officials say, is the city of Chicago’s experience. In February 2009, the Windy City exchanged a 75-year lease on 36,000 metered spaces for $1.15 billion from a partnership of Wall Street bank Morgan Stanley and Hartford’s LAZ Parking.
It’s unclear whether LAZ, which operates a host of downtown lots that compete directly with the city’s parking network as well as parking lots in other cities, would be interested in bidding on the Hartford project. Officials at LAZ were unavailable for comment.
The idea of selling off revenue generating infrastructure is a hot idea among fiscally strappedAmerican cities.
In 2005, Chicago also garnered $1.8 billion upfront from Australia’s Macquarie Group for a 99-year lease of its Skyway toll highway — the deal that one adviser says “lit the firecracker’’ to future deals like the one Hartford hopes to do.
Other U.S. cities — including Los Angeles, Las Vegas, Indianapolis, Pittsburgh and Harrisburg, Pa. — have, or are awaiting, offers on their parking concessions, said investment banker Thomas Lanctot, of William Blair & Co., the parking-concession adviser to Chicago and now Hartford.
The cities are, Lanctot says, the latest examples of using private capital to leverage public resources at a time when communities, counties and states are hamstrung in their ability to raise taxes for education, public safety and other services. An estimated $80 billion in private capital, along with loosened credit, is held by investors eager to invest in relatively low risk, steady return public infrastructure projects such as parking, he says.
Lanctot, too, declined to estimate what Hartford’s parking concession might bring.
“Clearly we think it’s a valuable asset,’’ he said. “But we don’t want to put a ceiling on what investors are willing to bid.’’
Hartford is proceeding cautiously. “The good thing about Chicago moving first,’’ Panagore said, “is you get to learn from the mistakes that they’ve made.’’
Hartford’s review will happen in two phases. The March 22 deadline is for private parties to show interest in the idea. That filing requires their financial and technical qualifications as well as details on how they would run, maintain and price the spaces.
Following three months of due diligence, the next step would be submission of proposals from interested bidders by a tentative June 28 deadline, according to a timeline in a city document circulated among prospective bidders. A finalist would be chosen Oct. 1.
Parking authority Chairman Patricia LeShane said her quasi-public agency wants to fulfill its mission for adequate, affordable public parking, but doesn’t want to stand in the way of the city realizing a financial opportunity.
“If we do it, it’s going to be the right thing to do,’’ LeShane said.
One consideration, LeShane said, is that several of the city’s parking garages are aging and in need of major renovation. The 56-year-old, 1,300-space Church Street garage, for instance, has had modest repairs to extend its useful life in the near term.
Another, the 35-year-old, 934-space garage at Main and Trumbull Streets, better known as “MAT,’’ will undergo a makeover in connection with Hartford Stage Co.’s expansion-renovation, LeShane said.
Private partners typically assume responsibility for capital improvements and maintenance in such deals, the reason municipalities covet them, Lanctot says.
This wouldn’t be the city’s first brush with privatization, she said, pointing to longstanding agreements between the parking authority and private parking agencies to collect fees, do customer service and other operations.
Bidders also must appreciate, Panagore said, that aside from the public service, parking has value as an economic development tool.
One downside is that parking fees could increase. But Hartford officials say that in any deal the city would retain authority for setting parking rates.
After property taxes and service fees, public parking is the city’s biggest revenue pot.
Parking last year generated $10.4 million in revenue — including $2.7 million in parking fines — netting after expenses $4.98 million. That was a decline from $12 million in revenue and net of $6.7 million in 2008, largely due to a 33 percent cut in meter rates to $1 an hour from $1.50, bid documents show.
Hartford operates 1,645 metered spaces, with the other 4,751 downtown slots spread among the four parking garages and one surface lot. The biggest and newest of the garages is the 2,290-space Morgan Street facility, opened in 2001 and housing the parking authority’s administrative offices. All would be included in the parking concession, bid papers say.
In all, downtown is home to 48 public and private parking garages and 50 public and private surface lots, the city says.
Control of on-street parking would pass to a private firm if Hartford strikes a deal to sell its parking operations.