3rd pension plan option could raise parking rates 34 percent

Mar 10, 2010 — The Pittsburgh Tribune-Review

Adam Brandolph

Mar. 10, 2010 (McClatchy-Tribune Regional News delivered by Newstex) -- City Council President Darlene Harris wants to save Pittsburgh's pension funds by potentially raising rates at Downtown garages by 34 percent and increasing parking fines throughout the city.

Harris' plan announced Tuesday is the third proposal to get the city out of a pension crisis that has plagued the city over the past couple decades.

"I just don't feel comfortable losing another asset," Harris said referring to Mayor Luke Ravenstahl's plan for a long-term lease of Parking Authority garages. "Once an asset is gone, it's gone."

Her plan includes issuing a $110 million bond for the pension funds so the city could keep its parking facilities and have insurance for a possible economic slump in the future. Harris estimates the bond will cost the city about $15 million a year for 10 years. If the city raises parking rates about 34 percent, the city could sock away $23 million a year even after the bond is paid off, Harris said.

"No one is going to lease our garages and not make money on them. Nobody. So why shouldn't we make the money, keep our asset and keep feeding our pension fund?" she said.

The city pension funds have about a third of the money needed to cover an estimated $1 billion in obligations. They must contain 50 percent by the end of the year or face a state takeover.

Ravenstahl started the process to lease the facilities to a private operator in a long-term lease. He expects to generate a one-time $200 million cash infusion and erase $105 million in parking authority debts. The private operator would set parking rates at market value. Ravenstahl last week said a bond deal would come with "ramifications" in the future while "with the leasing of a garage, there's no future obligation."

City Controller Michael Lamb and Councilman Patrick Dowd introduced their plan last week to transfer ownership of some parking garages to the pension fund and the revenue those garages generate to the fund. Their proposal would allow the city to retain ownership and the parking authority would continue to set rates. Lamb said he has stayed away from pension bonds since then-Mayor Tom Murphy sold more than $250 million in bonds in 1998 to save the pension funds. When the stock market bottomed out in 2000 and again in 2008, the bonds were all but worthless, Lamb said.

"The city historically had bad performance with respect to pension bonds," he said.

Harris also wants to spend up to $50,000 for the Government Finance Officers Association and the city's Intergovernmental Cooperation Authority to study the real estate values and "all the different ideas ... and see what is best for Pittsburgh." The study won't necessarily make a recommendation on which plan is best, but will provide numbers to let officials figure it out for themselves, Harris said.

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