Should Mayor Luke Ravenstahl's proposal to lease Pittsburgh's parking garages and lots go through, the city won't just be giving up a dozen garages it already owns Downtown. It will also forfeit much of its power to build new garages there in the future.
Under the lease proposal, two portions of Downtown will be considered "non-compete" regions -- areas where the Parking Authority would be prohibited from building any new garages to compete with those it is giving up. Building such a garage would require government officials to compensate the leaseholder for damages.
Administration officials say they had to make the concession in order to fetch top dollar for the lease. But not everyone agrees.
"My concern is, we're trying to find a way to attract people to the Downtown region who don't live and work there," says Pittsburgh City Councilor Patrick Dowd. "But if we don't have some way to provide general-purpose parking, we're in trouble.
"The benefit to the city is the upfront cash that they're going to get on day one," Dowd adds. "But the loss to the city is the capacity to build general-purpose parking in exactly an area of Downtown where we're going to need parking structures in the future."
The larger of the two non-compete regions stretches across most of Downtown -- north to south from 10th Street Bypass to Fort Pitt Boulevard and east to west from Grant Street to Stanwix Street. That rules out the Cultural District, which attracts a sizable amount of traffic. The smaller non-compete zone cordons off an area surrounding the Allegheny County Courthouse, near the First Avenue and Second Avenue parking garages.
"I think it's a tremendously serious problem," says state Rep. Chelsa Wagner (D-Brookline). "It pretty much includes the whole Downtown area."
Still, things could have been much worse.
According to city Finance Director Scott Kunka, when talks about leasing the garages began, potential bidders wanted non-compete zones in neighborhoods all across the city. But "[w]e worked very hard to whittle that down to what we consider a very small, manageable space," says Kunka. "We think it's a fair compromise."
Kunka says that from a potential bidder's perspective, the non-compete zones make sense. "The concern from the investor's standpoint is that we don't sign on the dotted line -- and then build a garage right next to the garage we just leased to them."
"It's probably a deal-killer if [the non-compete zones] are not in there," agrees Jake Haulk, president of the Allegheny Institute, a conservative think tank. "[Investors] can't afford to plop down $300 million and have the Parking Authority build garages" across the street.
While the Parking Authority is prohibited from building garages within the non-compete zones, Kunka notes that the lease proposal doesn't exclude private operators from doing so. The Parking Authority currently controls just 25 percent of the parking garages located Downtown. The other 75 percent are privately owned.
"Parking [Downtown] can be tight at times," Kunka admits. But "if there was a market for a new facility, the private sector may step in."
So could other city agencies, like the Urban Redevelopment Authority, which has built garages to accompany redevelopment projects elsewhere. In fact, even the city itself could eventually build garages within the non-compete zone -- at a financial risk, of course.
"Let's say that 10, 20 years down the road there's a need for 1.5 times the number of parking spaces Downtown," says Kunka. "We can [build a garage], and as long as we don't harm the [leaseholder]," the city won't have to compensate the leaseholder.
For instance, he says, if the concessionaire's facility is running at 95 percent capacity before the city builds a nearby garage -- and that occupancy rate doesn't change once the new garage opens -- "there is no harm."
"They're making all the money we guaranteed them in the first place."
