Devil is in the Details: NYC Parking Meters
I want to expand a slight bit on Felix Salmon’s post on New York City’s plan to lease out their parking meters. The basics of the story is that New York City is going to lease out it’s parking meters (around 90,000 of them) to a private company. A couple of writers have come out against the plan, citing the catastrophe in Chicago as evidence. But Salmon sums up best why this is actually the perfect time to privatize the meters:
The fact is that New York, like most cities, is bad at monetizing the value of its on-street parking. This deal gives the city the opportunity to change that, and at the same time to introduce technology which could reduce congestion substantially, while also raising billions of dollars for investment in the city’s future. It’s a win-win-win.
He also adds in that New York is facing a $3 billion deficit and faces very low-interest rates. The deal would bring in approximately $11 billion, more than enough to cover the hole this year. With that money, New York will not have to lay off more government employees and cut social services. It can even do the opposite, use the money to fund infrastructure developments or hire more teachers. Such actions will spur demand and add money to an economy still facing a liquidity-trap. It’s the absolute perfect time to privatize the meters.
Except there is one detail that has not been revealed: the length of the deal. That is the most important point. Chicago’s 75-year deal is a disaster because it was both heavily under-priced and lasts for a very long time. Chicago is stuck.
But New York can learn from the Windy City’s mistakes. In a perfect world, the city would make a deal for just a few years, effectively a short-term loan to cover its current deficit. However, investors are not likely to be that interested in a short-term deal so I expect this to be for at least 25, very likely closer to 40, years. That’s what will be key. If it turns out to be 2o years, then it is a huge win for New York. If it’s for 100 years though, New York City has big issues. But until the contract is finalized and we see the exact terms of it, we can’t say either way whether it’s good or bad for the city.