By Dave Anderson:
This is a Pittsburgh-centric municipal finance wonk-out of a post with some serious speculation. Readers, you are warned!
The Port Authority of Allegheny County (PAT) provides the local urban and suburban bus service. Its funding stream is a combination of fares, state support for elderly reduced priced fares, and direct state subsidies. Its service area is large but it is mainly designed to funnel people from the suburbs into downtown with a secondary goal of getting people to Oakland where the universities and most of the core hospitals are located. It does that very well.
Buses are a key component of the downtown employment matrix. PAT moves over a quarter of the daily workforce into and out of Downtown. The rest basically drive in and park either downtown itself or at one of the outlying lots at Station Square, the Lower Hill, Strip or the Northshore/Stadium.
Zone 1 bus fares ($2.00 each way) is significantly cheaper than any lot that I have seen while the suburban fares for Zone 2 ($2.75 each way) are competitive with parking lots that are a 20 to 25 minute walk from the downtown office core. A monthly bus pass makes sense if an individual plans on making more than 18 round-trips per month if they buy the pass at retail; slightly fewer trips would be needed to reach break-even if the pass was bought via a flexible spending account as it generates a tax break. At my last job in Downtown Pittsburgh, my bus stop was 50 feet from the front door of my office building. Parking across the street (Mellon Square garage) would have cost $13.75 per day. Using the bus saved me significant money, time (as I would be choke-pointed in at least two locations every day) and frustration as I hate sitting in traffic.
The Port Authority is in trouble. The state is broke, and it planned to fund public transit this year, and in future years by tolling I-80 (which goes east-west through central Pennsylvania). The federal government said no as I-80 was built with Interstate Highway Act money which prohibits tolling without a federal waiver and a damn good reason. So the Port Authority is also broke as money it counted on is no longer coming. It is making very significant cuts.
The Authority's proposal includes a 35 percent reduction in
transit service across Allegheny County that would start Jan. 9, 2011.
This would be the largest service reduction in the Authority's history,
affecting every route in the system in one way or another.
Most of the cuts are on the longer-distance suburban routes that bring workers into and out of Downtown during Rush Hour. Most of those riders will still be working downtown (especially as the economy continues to suck, movement to avoid costs will be slow and sticky), and they will be parking instead of hopping off a bus.
As of 2008, there is at best frictional parking vacancies in Downtown (99% usage) during work-days. Since then the new Greyhound Station garage has opened up, and there is the potential for slightly more surface parking at the Mellon Arena site in a few months. Over the long term, the North Shore near the stadiums will provide more convenient parking as the new T-line extension services the biggest park and ride lot ever. Right now, parking is a scarce good that is slightly under-priced in the Downtown Pittsburgh market.
One of the major parking providers downtown is the Pittsburgh
Parking Authority (PPA). They have numerous garages in the Downtown core.
They are an authority created by the city and whose board is responsive
to the mayor. Their prices are (anecdotally) 25% to 35% better than the privately owned lots and garages when you do back of the envelope adjustments for local (within 2 blocks or less) employment densities. PPA has some political pressure to keep parking prices lower (although that pressure is mainly suburbanites screaming, so it is indirect as they don't vote in city primaries.)
The city of Pittsburgh has three massively underfunded pension plans. The mayor and his allies want to get the pensions to a 50% or better funding level by the end of this year to avoid a state-takeover of the plans. Their plan is to offer the PPA garages for a 99 year lease. The upfront payment would be dumped into the city pension funds, and they would all end the year at 50.x% to 60% funded and the local fiefdoms would be preserved.
One of the main value drivers of the PPA lease idea is that private entities would have no compunction against raising PPA garage rates to current market rates. That frees up a lot of cash flow in a very inelastic pricing structure which is basically pure profit for the lease-holder.
I just wonder what happens to the parking rate structure in Downtown Pittsburgh and its immediate adjourning neighborhoods if there are an additional 5,000 to 10,000 cars that want to park in close proximity to downtown as the Port Authority cuts its commuter routes. Does that push the value of the PPA lease to a point where the pension funds actually look sickly instead of either dead (as of now) or deathly ill (under the current plan)?
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