In the frenzied hunt for new revenue streams, municipal authorities are getting creative in capitalizing on their assets. Nate Berg follows the example of Sacramento, who is considering privatizing its parking meters to pay for a new sports arena.
Sacramento is seeking to become only the third city in the country to privatize its parking meters, following the example of Chicago and Indianapolis. However, as Berg reports, the experiences of the two Midwestern cities offers a cautionary tale of the unforeseen effects of such efforts.
The long-term approach to maximizing their asset has proven beneficial to Indianapolis as increases in convenience for customers, and revenue to the city, have offset the pain of price increases.
In Chicago, privatization brought in a lump sum payment of $1.16 billion that was immediately used to fill budget holes in exchange for a 75-year private lease. This more short-sighted approach has left many in Chicago grumbling about the bad deal, notes Berg.
Although according to Berg, "Sacramento's decision will likely be ironed out over the next few months," it sounds as though city officials may have learned from Chicago's hard lesson. According to John Dangberg, Sacramento's assistant city manager, "We're not interested in taking these assets and tying them up for a long time and then using the proceeds on budgetary holes where it fills a gap for a short period of time."
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