LAZ Has 1,300 Locations, 425,000 Spaces And $500 Million In Annual Receipts.
Kenneth R. Gosselin
November 07, 2010
In 1981, Alan Lazowski spotted a way to make some money the summer before his senior year of college: start a valet parking service for a restaurant on Asylum Street in downtown Hartford.
He borrowed $3,000 from his grandfather, hired four valets and parked cars for Frank's Restaurant, where Max Downtown is today. Soon, Lazowski signed other nearby restaurants. By the end of the summer he had five locations and 30 employees.
He never went back to the University of Connecticut.
Today, Lazowski's summer venture has blossomed into LAZ Parking, the fourth-largest parking company in the country and, by most measures, the fastest growing, with 1,300 locations, 425,000 parking spaces and $500 million in annual parking receipts.
Lazowski, 50, has joined forces with some of the titans of Wall Street, including Morgan Stanley and JP Morgan Chase to finance some huge deals — including the first-ever, controversial privatization of city-owned parking in the U.S., in Chicago.
Now, Lazowski and his company are at the center of a national debate over the merits of privatization, in which cities give up the rights to collect parking revenue in exchange for an upfront payment they can use to solve budget woes.
Last month, the city council in Pittsburgh rejected an agreement under which LAZ and its Wall Street partners would have paid $452 million for parking rights for 50 years. The council agreed with consumer advocates, who say such deals lead to windfalls for the private firms and loss of control for the cities.
LAZ still has its eye on Los Angeles, Indianapolis and Hartford — and the council in Pittsburgh could reconsider.
Frank's Restaurant in downtown Hartford is long gone, closed when the building the restaurant occupied was razed to make way for the CityPlace I tower in the 1980s.
Lazowski is still known to park cars on occasion, but LAZ is now far-flung — with 6,000 employees in 21 states and a dozen regional offices. That is making it tough to maintain the small company culture the business was founded on.
"For us, the challenges as we grow are to make sure that we retain the proper training and values and culture that we have established," Lazowski said. "That's our No. 1 objective in our success. As you grow with locations and employees, you have to work hard to retain those standards."
Key to that success are the lot and garage attendants on the front lines.
"The values that I think are so important is that the guy in the parking lot, the attendant, is just as important or more important than any person we deal with every day," Lazowski said. "When they are representing our company, if they are happy and have a smile on their face a lot of wonderful things can happen."
'Bunch Of Huggers'
Lazowski's valet business was not yet a year old when he caught the attention of local real estate developer and telecommunications magnate David Chase.
Chase had long been a friend of Lazowski's father, Philip. Both are Holocaust survivors — Philip Lazowski narrowly escaped death in Poland as a young man — and are well-known in the Greater Hartford Jewish community.
Philip Lazowski immigrated to America and became a prominent rabbi in Bloomfield, where Alan Lazowski grew up. Philip Lazowski is now retired, but serves as a chaplain to the Connecticut state Senate, the Institute of Living and the Hartford police.
Alan Lazowski asked Chase if he could run the valet service at the old Hilton Hotel that once stood near Hartford's Bushnell Park. Chase surprised him with a counter-offer: How about running the entire parking operation?
In the next year, net profits rose by 50 percent, and it turned out to be his big break, a springboard for the founding of LAZ. Lazowski went on to manage other parking facilities for Chase and soon expanded outside of Hartford.
"I felt tremendous confidence in him, and he hasn't disappointed me," Chase said. "It's not just the profits, or the money. It's the way he works with people. His word is good."
Chase, who has never been an investor in LAZ, added: "Once you build your reputation and people trust in you and believe in you, things go forward very quickly."
Lazowski has built the business — now split between facilities LAZ owns and those it is hired to manage — and its management team with people who have worked for the company a long time. Some, like Jim Marzi, began as an attendant in 1989 at a parking lot in New Haven, making $7.25 an hour.
Today, Marzi is a partner and has 31 parking facility managers reporting to him.
"Thirty of the 31 managers have been promoted from within, from the booth, like I was," Marzi said. "We all came from the lots, and so did my manager. In the parking business, it doesn't start at the top but at the bottom with the attendants."
The core of company management remains homegrown. President Jeffrey Karp, a friend of Lazowski's since childhood, focuses on potential acquisitions. Michael Kuziak, a former valet and University of Hartford graduate, is now chief operating officer.
The company's soaring growth has made it impossible for every higher-level manager to be homegrown, however. Those who have joined the company through acquisition or long-term management contracts learn the culture quickly through retreats in Hartford.
Lazowski sets the tone right away, and not just with a firm handshake.
"We're a bunch of huggers around here," Lazowski said.
Each Monday at 3 p.m., Lazowski is on a conference call with regional managers from around the country. Whenever there is a new contract or deal — or the prospect of one — Lazowski rings the brass ship captain's bell in his office he has nicknamed the "Big Daddy Deal Bell."
His is greeted by that same sound from other offices on the line. He has given each of them a bell of their own.
"I am personally on the phone with these guys celebrating their successes," Lazowski said.
Risk And Reward
LAZ's meteoric growth in recent years has come despite a recession that has cut parking receipts by as much as 30 percent. Acquisitions and new contracts have kept LAZ on the growth track, said Lazowski, whose ownership stake in the private company has not been disclosed.
A crucial milestone in the company's history came in 2007 when LAZ sold a 50 percent stake in the company to VINCI Park, which operates over 1.2 million parking spaces in more than 350 cities and 12 countries.
That partnership and a surging interest by cities with beleaguered budgets eager to sell off their municipal parking for an upfront payment have been well-timed for a company like LAZ that is looking to grow.
LAZ doesn't disclose its earnings, but its profits could be poised for significant growth, especially if city privatization deals move forward.
In 2006, LAZ was the first parking company in the country to win a privatization deal, taking over nearly 10,000 parking spaces in four Chicago garages. The deal, with Morgan Stanley, provided the city with a $563 million payment in exchange for a 99-year lease agreement.
In privatization deals, the payment is financed by investors, who reap a return later. A company seeking to run the operation is typically a partner in bidding for the lease.
That deal was followed in late 2008 by an even larger one in which LAZ secured the contract to operate Chicago's metered street parking, some 36,000 spaces. That 75-year deal, also with Morgan Stanley, was worth nearly $1.2 billion.
"Cities are realizing that public-private partnerships are really a tremendous way to go to solve some of the budget gaps," Lazowski said. "But they also are realizing that parking is not a core activity that cities should necessarily be in. It's not like running a fire department or a police department."
Consumer advocates argue that the upfront payment may seen attractive to cash-strapped cities, but the payments are dwarfed by what investors — and LAZ — will eventually reap.
There also are costly conditions that come along with such agreements, such as payments for lost meter revenue if streets are closed for events, according to Phineas Baxandall, senior analyst for tax and budget policy at the U.S. Public Interest Research Group in Boston.
"Public officials need to ensure that public assets are operated in the public interest, not just for some company's profits," Baxandall said.
The rejection in Pittsburgh is a sign of growing wariness of such deals, though LAZ remains optimistic that other similar deals will be struck.
In the Chicago parking meter contract, a report from the Chicago inspector general conservatively estimates that the $1.2 billion, while appearing large, is about $970 million less than it would have received had it continued operating the meter system.
Vehicle operators also saw the hourly charge jump from 25 cents to $1.25. In some areas of the city, including The Loop, charges rose from $3 an hour to $4.25 and will rise to $6.50 by 2013.
Lazowski said the increase was set by the city council in Chicago, not Morgan Stanley or LAZ. The rates also rose steeply because the rates hadn't changed in years, he said.
He also defends the payments to the city.
"Most of these critics underestimate the significant risks associated with these deals," Lazowski said. "Risks include the time value of money, level of demand for parking and costs of repairs, maintenance and reconstruction of parking systems."
Critical to concerns about the future is whether mass transit will significantly cut into car use, Lazowski said.
In LAZ's corporate headquarters in downtown Hartford, the company is about to move into a third floor of the five-story building it owns on Lewis Street. The company has about 75 employees in the home office operations.
This year, the company started a charitable foundation and played a strong role in bringing Cirque du Soleil to Hartford.
Lazowski's office is full of mementos, including one of his most prized: a Kovad Award presented to his daughter Jesse, then 14, at a summer camp she attended for years.
He is often flying to other parts of the country to visit regional managers. And it isn't unusual for him to return to his roots out on the asphalt.
When Rentschler Field opened in 2004, LAZ was there to park the cars — and so was Lazowski. He reported at 4 a.m. in a purple Sebring convertible with doughnuts and coffee. He was assigned to the VIP section.
"One thing's for sure," Marzi said. "He's not up in the oval office."
Reprinted with permission of the Hartford Courant.
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