Mayor Luke Ravenstahl announced today that the City has received a winning proposal of $451,680,000 million from Pittsburgh Parking Partners, LLC, for a long-term partnership agreement to lease the City’s parking garages and meters for 50-years. Initial bids were received on Sept.16, and a Best and Final Offer (BAFO) process was triggered when more than one proposal was within ten percent of the highest proposal. That BAFO process resulted in a nearly $40 million increase in the winning bid. The bids were received at 4 p.m. today, and opened in the Mayor’s Conference Room with media and council members present. Judge Eugene F. Scanlon was present to certify this last step of the bidding process.
The proposed public-private partnership has been in the works for about two-years. In addition to all scheduled rate increases, the partnership requires City Council approval. Even with the liabilities and guidelines the operator must assume, the proposed lease will generate well over the estimated $330 million one-time large cash infusion needed to prevent a state takeover of the City’s pension fund. Avoiding this takeover will protect City residents and businesses from drastic service cuts or tax increases, while modernizing and improving the parking system.
“This number certainly exceeded our expectations and further solidifies my view that this partnership is the best solution to protect our residents from the burden of higher taxes, more debt, or serious service cuts,” Ravenstahl said. “I look forward to having more productive discussions with council members and I hope that they support this plan. ”
In addition to the large upfront payment, the 50-year partnership agreement will require the operator to invest at least $50 million over the next 15 years to overhaul and rebuild three aging Downtown garages. In addition, the agreement lays out requirements for the operator to implement new parking meter technology, such as those allowing meter payments by credit card or mobile phones. This investment is estimated to cost the operator more than $8 million dollars.
“As the winning bidder, we are honored to have the opportunity to work with the City of Pittsburgh, Pittsburgh City Council and the Pittsburgh Parking Authority to undertake this historic project. We appreciate the diligence and hard work of the Parking Authority and Mayor Ravenstahl and his staff throughout the bidding process, and we look forward to working closely with them to provide enhanced parking services and facilities to Pittsburgh residents, visitors and employees.” said Peter D. Levin, CEO of Pittsburgh Parking Partners, LLC.
Pittsburgh Parking Partners LLC is a consortium of investors comprised of institutional investors advised by J.P. Morgan Asset Management and P4 Partners, an affiliate of LAZ Parking. LAZ Parking, the operator, is based out of Hartford, Connecticut. As required in the guidelines, LAZ must open a Pittsburgh office, pending City Council approval of the Pittsburgh Parking Plan.
LAZ manages parking systems in 99 U.S. cities, and currently operates the largest public-private parking concession in the country – in Chicago.
“We were extremely impressed by the guidelines Pittsburgh set forth in the legally binding request for proposal agreement,” said Peter D. Levin. “Some of these pre-established guidelines will require that we install new technology in areas that will experience significant rate increases, before those rate increases occur. With our proven track record and experience in Chicago and the dozens of other cities in which we operate, we know that we can and will manage a successful transition as the Pittsburgh Parking System modernizes and expands its facilities.”
City Council is expected to consider the agreement and the use of proceeds over the next several weeks. The bid is legal until Nov. 1, 2010.
To learn more about the Pittsburgh Parking Project, visit www.parking.pittsburghpa.gov
Best and Final Offer Process
The entire bidding process was overseen by Judge Eugene F. Scanlon. Initial bids were due to the City on Wed., Sept. 16. The City received three bids:
The first of the two bids above entered into a Best and Final Offer Process (BAFO). Those bids were opened today.
The BAFO process was written into the request for proposal agreement. As a result, the City received a nearly $40 million dollar increase in the up-front payment.
“It is important to understand that this number does not represent the value of our parking system as a whole,” Ravenstahl said. “Instead, this market-driven process represents what the value of our parking system is with all of the guidelines we are legally holding the operator to.”
To learn about those guidelines and view more information on the Pittsburgh Parking Project, go to www.parking/pittsburghpa.gov
About the Pittsburgh Parking Project Process
In early 2009, Mayor Ravenstahl put out a request for proposal (RFP) for an analysis on the feasibility of leasing the City’s parking system. Scott Balice Strategies’ analysis showed that a public-private partnership of the City’s parking system would generate the cash needed to improve the City’s pension fund, while improving the state of parking in Pittsburgh.
In Jan. 2010, the Mayor decided to move forward with the proposed partnership and formed a Parking Advisory Committee to help structure the proposed long-term partnership of the city’s parking assets.
Since that time, public information sessions and meetings with City Council members have further shaped the agreement, adding specific measures that will protect union jobs, enhance parking enforcement in business and residential areas, and require the parking operator to maintain offices in the City to meet customer service requirements. The City hired Morgan Stanley, Katten Muchin Ronsenman LLP, and K&L Gates to prepare the financial and legal documents associated with the process.
The Pittsburgh Parking System is made up of 8,946 spaces in 11 garages, 7,012 on-street meter spaces and 1,729 off-street metered spaces located in 32 surface lots.
About J.P. Morgan Asset Management – Global Real Assets
J.P. Morgan Asset Management – Global Real Assets has approximately $44.6 billion in real estate and infrastructure assets under management, as of June 30, 2010. With a 40-year history of successful investing and a staff of 362 professionals, J.P. Morgan Asset Management – Global Real Assets identifies, analyzes, negotiates, acquires, develops, redevelops, renovates, operates, maintains, finances and sells assets, on behalf of its clients. J.P. Morgan Asset Management's broad investment capabilities and framework for analyzing opportunities in today's complex real estate and infrastructure markets provide critical insights for its institutional clients in both the public and private markets.
J.P. Morgan Asset Management is the marketing name for the asset management business for JPMorgan Chase & Co. and its affiliates worldwide.
About P4 Partners:
Created in 2008, P4 Partners is the affiliated entity through which LAZ Parking pursues public-private partnership investments. P4 Partners is controlled by individuals who are the senior officers and controlling owners of LAZ Parking. P4 Partners seeks to pursue parking public-private partnership investments, leveraging the operational and concession expertise resident in LAZ Parking to create long-term durable investments for P4 Partners and other infrastructure investors.
About LAZ Parking:
LAZ Parking is a national parking company headquartered in Hartford, CT with regional offices in Boston, New York, Philadelphia, Washington, D.C., Atlanta, Miami, Chicago, Dallas, Houston, San Diego, and Los Angeles. Founded in 1981, LAZ Parking now manages over 1,300 locations in 99 cities across 21 states, and oversees gross revenues in excess of $500 million annually. In the fall of 2007, LAZ Parking combined forces with Europe’s top parking operator, VINCI Park, This transaction represented a mutual growth strategy, allowing LAZ to continue its U.S. expansion. Currently, LAZ Parking’s portfolio includes management of parking operations for municipalities, entertainment/stadium venues, residential and office buildings, hotels and resorts, hospitals and medical complexes, airports, and university campuses.
Tuesday, September 21, 2010
Pittsburgh Parking Partners, LLC
Office: 412-381-5400 ex. 107
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Office of Mayor Luke Ravenstahl
512 City County Building | 414 Grant Street
Pittsburgh, PA 15219
telephone: 412-255-2626 | facsimile: 412-255-2687