Posts Tagged ‘Big Government’

How industry enlists government to thwart change

A great opinion piece by Tom Keane of the Boston Globe about how private industries use government to squash competitive innovation particularly when it comes to parking, taxis and cars.

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History has a way of repeating itself, and that certainly seems to be the case with the parking privatization dispute going on in Cincinnati. The city has been in negotiations with Xerox and Denison Parking to lease out all of the city’s parking meters and parking garages (the meters being leased to Xerox, the garages to Denison Parking). Specifically, the city council voted back in March to lease the city’s parking assets to the Cincinnati Port Authority, which in turn would be turning over operations to Xerox and Denison parking; the lease would be for 30 years, though the Port Authority has been unclear on how long they intended to allow Xerox and Denison to manage the properties. In exchange, the city would receive $92 million upfront for the sale, as well as $3 million annually which would gradually increase over time. Of course, none of this is certain, as much of the deal still remains vague or is yet to be determined, and there have been conflicting statements about the exact nature of the deal throughout the negotiation process.

Local residents are less than thrilled to say the least, especially many members of the local business community. One area of particular contention is whether Xerox would be allowed to extend meter hours from 6 pm to 9 pm; local business owners worry this would impact their businesses and that they would have far fewer avenues to address this going through Xerox instead of the city. Another concern is that Xerox would be incentivized to step up enforcement, which in turn could drive away customers. While there have been assurances that Xerox wouldn’t see any extra money from writing extra tickets, the reason for that is rather flimsy; extra revenue from enforcement would go into a an infrastructure fund for Port Authority and parking improvements, but there haven’t been any specifics into how this fund would be sequestered off and safe from being raided. Finally, how much parking rates might rise under Xerox management is unclear, since as yet there haven’t been any rate controls mentioned as part of the deal. If rates got too onerous, residents would have far less options for recourse with Xerox than they would with the city.

Of course the biggest indicator of there being something fishy with this deal is how city officials have tried to ram this deal through. First, there was the move by the city to use a parliamentary trick to shield this deal from a public referendum like many residents wanted. A lawsuit has been brought against the city over this, and while the city’s case was upheld by an appellate court, the case has now moved to the Ohio Supreme Court. This is of particular concern since the entire lease is going to be funded by public bonds issued by the Port Authority. As I’ve discussed before, Port Authorities frequently issue bonds, sometimes massive bonds, with no input or control from the public, and this can quickly lead to massive debt or even bankruptcy for a city without them even knowing about it until it happens. As usual, the city is interested in using the funds from the lease of their parking assets to pay for other city projects and to shore up holes in the city budget, while the Port Authority is trying to claim about a third of the $92 million upfront payment for itself (while ultimately the city and its residents are on the hook for the bonds issued to generate that money). It also recently came out that the original consulting firm that was hired to assess the deal, Walker Parking Consultants, had issued a memo critical of the deal, saying that Xerox would be making too much profit off of this deal and the revenue projections were too high (particularly concerning considering that bonds were being issued based on these revenue projections); but this memo was kept secret from the city council by city management, not coming out until after the city council had voted in favor of the deal. Right around the time this memo was issued, the Port Authority insisted that Walker no longer be used in the deal because of a potential “conflict of interest” created by Walker working for both the city and the Port Authority. After some of the information that has come out since the vote, a number of city council members have said they would change their vote and kill the deal, but city management says that the city council no longer has the ability to vote on or kill the deal. So basically, the city council voted on the deal before it was done being written, and now they’re being told they can’t vote on the actual deal that would take place.

So essentially, Cincinnati is looking at a deal being ramrodded through by the Port Authority and city management, one to generate short term profits and to deal with short term problems at the cost of real, long term solutions to the budget problems the city and Parking Authority are facing, with an all but guaranteed chance of major issues stemming from this deal down the line, and all of this being funded by public debt while those behind the deal try to exclude the public from having any input, control or even basic knowledge about it. It stinks to high heaven, and while leasing Cincinnati’s parking assets is not an inherently bad idea on paper, doing it this way certainly is. The deal should be killed and a new one started, this time with input from the public and transparency throughout the whole process. If all of that wasn’t damning enough, these numbers sum it up pretty well: in today’s dollars, the city’s parking assets over the next 30 years would be worth approximately $475 million, and they’re looking at making a total of $197.4 million off of this deal. With the city and the Port Authority fighting tooth and nail to keep citizens from having any say in this, I don’t know how much hope Cincinnati residents have, but with 2014 around the corner it might be a bad idea to start reminding the elected officials of Cincinnati who they have to rely on to vote them back into their jobs, and it sure as hell isn’t Xerox and the Port Authority. So to anyone in Cincinnati, good luck, it looks like you’re going to need it.

The economic crash and recession has affected everyone’s lives, and it’s no secret that the travel industry has been hit particularly hard. While many sectors of the travel business have been receiving government support, whether in the form of giant subsidies like the airlines receive or marketing from local government to promote tourism, one important sector has not been completely ignored, but has been actively under siege: offsite travel parking businesses. Whether cruise port or airport parking, parking businesses across the country have been facing obstacles whose size and number the industry has never seen before.

One of those obstacles, one more easily dealt with but still of concern, has been the privatization of parking management at many cruise ports and airports. Parking authorities and management are notoriously plagued with waste, inefficiency and corruption, so much so that they’ve bankrupted cities on more than one occasion (I’m looking at you Scranton). As many municipalities have been gripped by crushing budget shortfalls, they’ve finally been paying attention to their under-utilized and mismanaged parking programs. One relatively easy solution to these problems has been to lease or contract out their parking services to a large private parking firm such as Standard Parking. These private management firms will typically pay a lump sum to lease the parking infrastructure from the city for years or even decades at a time, giving the city a big short term windfall, such as what Chicago did with their entire parking system. When they take over a parking facility, these companies frequently invest in infrastructure improvement as well as upgrading facilities with the latest parking technologies and management systems, dramatically improving service and efficiency and putting far more competitive pressure on offsite travel parking businesses.

Now this in and of itself is not a bad thing. Competition is good for the market, as it means better service and prices that more accurately reflect the level of service that you’re getting. And frankly, there are offsite parking businesses that are not well run and have only been able to survive because their county-owned competition was even worse; these businesses being forced to meet basic business standards or go under is a good thing for travelers and the parking business as a whole. Where this becomes a problem is when local governments try to interfere with the market and use their ability to control and abuse the laws and ordnances governing the business to drive out the private competition. A great example of this is Port Canaveral, Florida. I’ve written about the Port Authority there and their downright repugnant attempts to kill the local parking businesses there on a number of occasions (and about one incredibly unsavory illegal business “owner” that they allowed to operate under their noses for years with no license). And the situation there, while extreme, is far from unique. Across the country, local governments have been using their authority to unfairly bludgeon offsite travel parking businesses.

For instance, earlier this month the Indianapolis airport finally gave up their fight to keep any parking businesses from opening near the airport. You see, back in 2008 the Indianapolis International Airport moved to a new location, while at the same time not approving any permits for new parking facilities to be built near it. This move had forced a number of off-site parking facilities to close, as they no longer were close enough. It was rather shocking, as I lived in Indiana until the end of 2008 and flew out of Indianapolis frequently, and always parked in one of the close to half dozen parking facilities there. When I started working in the parking business a few years later and was looking to contact Indianapolis parking facilities, I was shocked to find that that there was only one left. That was because the Airport Authority has been wasting money in court for years fighting the development of new off-site parking, a battle which they finally gave up earlier this month after three failed appeals and more than $55,000 wasted, and more than $250,000 in legal fees spent by the business they were fighting. And all so they could maintain a government created monopoly.

And these are just a couple examples. In part two of this story, we’ll look at some of the other ways local governments have been putting the squeeze on the travel parking business and the motivations behind those moves, and how they have had a chilling effect on the investment side of travel parking, changing what was once viewed one of the most stable industries to invest in to one which now faces unprecedented amounts of uncertainty. All this and more in part two of The Big Squeeze.

It all started with a $20 parking ticket given to Toledo lawyer Jeffrey Zilba while he was parked in front of the Ottawa County courthouse in Port Clinton, OH in the summer of 2011. Since the legality of his parking was ambiguous (and being a professional arguer for a living), Mr. Zilba wanted to challenge the ticket, as many of us have unfortunately been forced to do at one point or another. That was when he realized that the ticket had no phone number and no way of challenging it given on the ticket. Failure to pay the $20 ticket would result in a misdemeanor, meaning that the only option for someone receiving one was to either pay the fine and admit guilt or become guilty of a crime. Not only was this unacceptable to Mr. Zilbas, but he saw it as a violation of his right to due process as guaranteed under both the U.S. and Ohio constitutions. So Mr. Zilbas paid the ticket to avoid the misdemeanor and decided to start a suit against the city.

And that’s when things started to spin out of control. The suit dragged on for more than a year and a half, finally ending with a ruling in favor of Mr. Zilbas. The city was ordered to decriminalize their parking tickets and provide a way to challenge them, as well as paying damages to Mr. Zilbas. Those damages? $45,000 worth of lawyers fees! The money to pay the settlement was approved by the Port Clinton city council, which has also started the process of changing their ticketing ordnances. The money to pay for this case will unfortunately come from the city’s general fund, which will cause the delay or abandonment of some of the projects slated for the city this year.

So where does the blame lie? Well, despite what seems like some pretty high lawyer fees and what must be heaping helpings of determination or stubbornness, Mr. Zilbas is not the one at fault; his rights were infringed on, and he had a legitimate case. The blame and responsibility really lies with the city. They enacted the unconstitutional ticket policy in the first place, and also failed to resolve this case out of court when it would have been much cheaper for taxpayers and saved a lot of time as well. When it gets down to it, it was, as always, the combination of a lack of oversight and attention to the city’s parking program and not wanting to give up some of the cash cow that is parking fees, even if those fees are being levied unfairly and without a way to challenge them. It’s a small tyranny, but it’s still a tyranny when meter maids are made into judge and jury for Port Clinton citizens.

Taxes have been a big dispute in this country, particularly during the past few years of recession. While we’d all like to pay less taxes, the combination of federal and state level austerity combined with some of the lowest tax rates in our history (because apparently a lot of politicians somehow think that two negative hits to their budget will somehow equal a surplus) has left many local governments struggling to find new ways to generate revenue and get themselves back in the black, and for many cities this has meant ramping up parking fees and parking enforcement, using them as a hidden tax. The problem with this is that many municipalities had already been heavily relying on parking to shore up their budget, and the financial burden it creates is saddled almost entirely by low-income citizens.

The pressure to generate more and more revenue through parking puts an undue strain on both parking enforcers, who are still seeing budget cuts, furlough days and pay freezes on top of dealing with irate parkers who blame them for city ordnances, and average citizens who find that they’re having to pay more and more just to run errands, go shopping or just to go to work thanks to less and les free parking and skyrocketing meter rates and parking fines. And on top of all of that, all too often the money garnered through these more draconian parking policies isn’t being used to improve the parking situation for parkers or for long overdue infrastructure improvements that more and more parking garage and facilities are desperately in need of.

Examples of this are everywhere. In New York and New Jersey, the transportation authority raised rates on parkers and subway travelers yet again, and yet none of the their revenue for the next few years is budgeted for much needed upgrades to those services which have been overburdened and in need of upgrades for close to a decade. And all too often the funds being generated are being used to pay down massive debts incurred by parking authorities that were being mismanaged with next to no oversight for years if not decades, so that increased parking fees are going toward construction debts for projects that may not have even been finished or were unnecessary in the first place (cronyism is rampant in parking authorities, as I’ve pointed out before). And paying down these debts often keeps the authorities in question from embarking on projects that are actually needed and would either lessen the burden on themselves and parkers, increase revenues, or both.

At the end of the day, it’s folks like you and me that end up paying the price. Just the other day in Sacramento, a man left for work in the morning, leaving his car parked at the curb in front of his house like he usually did. When he returned home, he found that the city had put in “No Parking” signs along the street (without informing any of the street residents beforehand), including one right in front of his car, and had then ticketed him for being parked in a no parking zone; and when he tried to appeal the nearly $60 ticket, the county dismissed his appeal! Lucky for Casey Elson (our victim in this story), his local news station did some digging and was able to get the city to void the ticket. During a ride along with a parking enforcer earlier in the week, an L.A. reporter witnessed them ticket a car that had accidentally parked behind a street sweeping sign, a sign which was bent sideways and completely obscured by a low hanging branch. The enforcer reported the broken sign, but still slapped the car with a $73 ticket since there was a sign further down the block (because who doesn’t check the street signs a block away to make sure they didn’t accidentally park in a no parking zone?!).

I could go on and on, as the examples keep coming every week. And it doesn’t seem like there’s an end in sight, as local municipalities find themselves getting squeezed tighter and tighter. So what can we do, besides riding a bike or continuing to wait for Start Trek transporter technology? Well, at this point the best thing is to let your local government know; call your city council members, contact your local transportation authority, and when you hear or see a parking injustice, write a letter to the editor or email your local news. The reason that these parking authorities are so mismanaged and keep saddling lower income residents with more and more of these hidden taxes is because they are operating in the dark and they know that no one is paying attention to what they’re doing. That’s why a little sunlight shined on your local parking authority can lead to a little relief for yourself and other parkers and force your local government to actually tackle their budget issues instead of continually subsidizing government laziness with parking fees.

Airport Parking Fees Could Rise After State Takeover

by ISRAEL BALDERAS Bio    | Email   | Follow: @israel_balderas       by PHOTOJOURNALIST TIM MULLICAN

Story Created:            Mar 18, 2013 at 11:04 PM EDT

Story Updated:        Mar 19, 2013 at 12:33 AM EDT

CHARLOTTE, N.C. – Parking rates at Charlotte-Douglas International Airport are quite lower than other similar size airports. Those fees, in turn, help to partly fund operations.

But under a profit-sharing arrangement with U.S. Air, millions of dollars also flow to the airport’s largest tenant.

To get higher revenues, fees could go up. But for that to happen, city council oversight would also have to be removed.

“Charlotte used to be great to fly out of,” said Mooresville resident Chuck Fogle. “With this, it’s really made business travel difficult.”

Fogle says construction plans for a new hourly parking deck are lacking. Most travelers have to use the long term area, which can be a hassle on a rainy day.

“You have to walk a long distance from your car to the bus stop,” said Fogle.

For those returning back to their cars after a flight, there’s confusion about which bus to take.

“This is the fourth bus already, and its not ours yet,” said Greenville, S.C. resident Dave Overbaugh. “We’ve never seen a daily north before.”

But the parking headaches are worth it, as long as it’s cheap to park and fly, and fares don’t go up.

“I hope not,” said Overbaugh with a laugh. “It’s a whole lot cheaper to fly out.”

Currently, U.S. Air receives almost $10.5 million from the airport budget in “non airline terminal revenue.” That is money travelers spend, such as buying coffee or parking their cars.

A spokesperson for U.S. Air says they supported raising parking rates, along with other airlines. But, U.S. Air adds, “we did not initiate, drive or influence the actual rates.”

Keep in mind, the airline accounts for 90% of the airport’s 700 daily flights.

Right now, Charlotte City Council is fighting the Republican controlled General Assembly over a proposed takeover of the city’s airport.

By turning it over to a regional authority, Charlotte would have its management oversight taken away by state legislators.

“There’s clearly an issue of political accountability,” said Mayor Anthony Foxx.

Any increase in concession costs and parking fees ultimately has to go through the city. But with a regional authority, citizens would have no one to address their concerns.

FOX Charlotte sources say airport manager Jerry Orr has researched parking rates in other markets. To raise them, Orr would have to appear before city council and make such request.

If that were to happen, council members would be the first ones getting the phone calls.

State legislators who propose a regional authority say the move would take away any politics from airport decisions.

“Today citizens can call and complain about various things that have to do with the airport,” said Foxx, “and we have to manage that.”

Republican State Senator Bob Rucho wrote the legislation that turns Charlotte-Douglas from a city managed airport to a regional authority.

Section 5 of the bill states future board members will receive free parking.

Officials in Britain’s National Institute of Health and Clinical Excellence (NICE) as well as local governments and businesses are considering raising parking rates in an attempt to force people to walk more and get more exercise. The goal is to curb the rising obesity rates in Britain’s population which have increased nearly fourfold over the past 30 years to 24% as of 2009. Still, the UK pales in comparison to the US which still holds the number one spot for fattest asses on the planet with a whopping 36% obesity rate. NHS research has shown that Britons are walking less and less, which is one of many contributing factors to the rising UK obesity rate (McDonald’s is undoubtedly taking a top spot on that list of causes though).

So how do you get people walking more? Apparently, NICE decided to go with “Make them!” as an answer. The idea is that by raising parking rates they will effectively price people out of driving unless absolutely necessary. On paper, this could almost make sense. After all, many cities are adopting demand-based electronic parking meters that change prices based on availability, raising rates as available parking fills up so that there’s almost always open parking in a given area. The success of using a free-market system like this for parking to meet both consumer and municipal goals (convenient parking and positive revenue flow respectively) has been well researched and documented; in fact, nearby San Francisco has implementing this system with great success as part of a case study run by Professor David Shoup (and as all you Shoupistas know he is THE authority on parking systems and economics). And there’s no denying that folks aren’t getting enough physical activity these days. But once you look beyond the surface, the gaping holes in this idea become clear.

The first logical fallacy in this plan is the idea that many people are CHOOSING to drive rather than NEEDING to drive. It’s the same type of thing that happens when celebrities talk about how everyone can take a little time out of there day for yoga or a workout or a colon cleansing or whatever, they have no concept of how much easier having an army of servants and personal assistants and personal trainers and nannies make the minutia of life, and how much harder it is to find not just the time but the mental energy and motivation to put some time into yourself during the day. It’s the same thing for many people that are driving, particularly those who are working class. It’s been proven that the poorer you are, the farther away you’ll be from fresh sources of food such as a grocery store; for example, there are no actual grocery stores within the city limits of Detroit! So there really is no other option for many working class folks than to drive to get their groceries. Same goes for a lot of other everyday things; a significant amount of people have to pay their bills in cash for instance, or don’t have buses that can take their kids home, or are working two jobs and simply don’t have the time to walk somewhere. For these folks, who don’t have the luxury to forgo driving as part of their day to day routine, this parking hike is going to place an undue burden on them, essentially just making it more expensive for the less affluent to go through their day.

This will also hurt businesses anywhere a policy like this is in place. When a parking market system is used to raise or lower parking rates so that there is always available parking in a commercial area, this benefits everyone. Businesses make more money because their customers can always find parking to reach them, and customers are only looking at paying a little more for convenient parking if it’s a busy day. By contrast, the NICE plan of essentially pricing people out of parking so that they have to walk will leave numerous empty spaces in front of businesses that won’t get filled, thereby driving away customers that might have shopped there. Which ironically will lead to people shopping at home online more, and only increase their lack of physical activity. And of course on top of all of that, the truly obese will hardly be affected by this at all because they’ll still have access to convenient handicap parking and rascal’s waiting for them at the entrance of the grocery store.

So at the end of the day, all this policy would do is make life harder and more expensive for the working class while having virtually no effect on the wealthy or those who are desperately in need of more exercise. And let’s not forget that all these parking rate revenues go into government coffers, making this yet another way that big government is trying to pay it’s bills by taking money out of the back pocket of the working class. But hey, what are they supposed to do, actually provide basic nutritional education to children in school and revamp the school lunch program to have healthier, balanced meals?

Now, those of you reading this who are stateside like myself may be thinking “Why should I care about the British nanny state?” Well let me tell you why. As you may or may not know, New York city mayor Michael Bloomberg passed a ban on sodas larger than 16 oz a little while ago, in the interest of combating obesity. Some have been calling for Mayor Bloomberg to implement a similar parking program in the projects of New York, both by raising rates and literally eliminating some parking spaces in the projects and reducing the number of NYCHA issued parking permits. So we could be seeing these same misguided, nanny-state policies coming to the U.S. because apparently government, not willpower and motivation, is the solution to too many people being fat and lazy. Don’t get me wrong, I definitely think that Americans are way too fat and need to exercise more, but that will take a concerted, across the board effort that addresses the many root causes of the obesity epidemic in this country, not by trying to price our waistlines into shrinking at the meter.

At least when it comes to their parking authorities. I already detailed the fiasco of the city of Scranton and how their mismanaged and allegedly corrupt parking authority dragged the entire city into near bankruptcy, but unfortunately Scranton is not the only city to suffer from a bad parking authority. Yesterday, the city council of Montclair, NJ voted to disband their parking authority and turn over control of the city’s parking to the city council (who will in all likelihood contract out the control to a parking management company) after a scathing report commissioned by the city council. On top of that, in mid-October the State of New Jersey announced they were doing an investigation into the MPA and its finances going back to 2007. So just what was going on to prompt all of this?

Well, there’s a laundry list of reasons. Despite accusations of the council’s report being a “hatchet job”, the numbers don’t lie. The parking authority had virtually no budgetary controls or oversight; they held cash for the authority in an unsecured office, which led to more than $1300 of it going missing; until just a few months ago, the MPA commissioners were completely unaware that not one but two different parking decks were THREE YEARS behind on their utilities bills, which now amount to $100,000 each; they have no purchase order or expense system, no financial controls, and no materials requisition system; a full 10% of the city’s meters were consistently broken; and multiple outside audits found that the MPA was violating state law by not having a purchaser/voucher system in place due to “management being unaware of the requirement”, an excuse which I believe only works after the FIRST audit pointing that out, not the second.

You can call that a hatchet job if you like, but in my experience pointing to your head and saying “It’s all in here” is not the most effective or reliable way to run a business, let alone a multi-million dollar parking authority. And despite claiming that the reports are untrue, the Chairman, Vice Chairman and Treasurer of the parking commission all resigned in short order just ahead of the state finance board approving the dissolution of the MPA; hard not to think that the rats are fleeing the sinking ship. Unlike Scranton, it doesn’t appear that it was corruption and cronyism that brought down the MPA so much as just laziness and a laissez faire management approach by the commissioners. Considering that part of what triggered the state’s investigation into the MPA was their travel expenses, you get the distinct impression that at least some of the commissioners were just enjoying the free ride on the city’s tab for as long as it lasted.

As the state’s investigation continues and the city goes through the process of dismantling and cataloguing the MPA, I’m sure more details will emerge  so that we get a more complete picture of what went wrong and who is ultimately accountable, but even without that future insight it’s clear that the city council is making the right move. $200,000 in unpaid bills is nothing to sneeze at, but it’s a far cry from the millions that the the Scranton Parking Authority was saddled with. By taking these steps now, the city of Montclair is saving themselves from being added to the list of communities dragged down by their parking services. Hopefully, other cities will learn from these examples and not wait until something goes wrong or a debt collector shows up at a city doorstep thanks to their parking authority; you can’t operate without oversight, even if it is something as mundane as parking! Just like a private enterprise can’t operate without oversight and budget control, public sector “businesses” like parking authorities can’t either. And yet as I’ve shown, time after time they are allowed to run wild with an entire city on the hook for any mistakes they make.

Car Hit With Over $100,000 In Chicago Parking Tickets | theexpiredmeter.com.

 

Holy crap! Amazing story by Mike Brockway, who is the expert on all things parking in the Chicago area. Check out his blog at http://theexpiredmeter.com/ for more interesting Windy City stories and to see why “local government” is synonymous with corruption there.

A banner promoting Dunder-Mifflin, the fiction...

A banner promoting Dunder-Mifflin, the fictional paper company on NBC’s “The Office” hangs outside city hall in Scranton, Pennsylvania. (Photo credit: Wikipedia)

Scranton, PA doesn’t have many claims to fame; if someone has heard of it it’s because they’re a comedy fan and know that this is the home of “The Office” and Vice President Joe Biden. Lately though, Scranton has been in the news thanks to the furor generated around the Scranton Parking Authority and how it’s mismanagement set off a chain reaction that has bankrupt the city and destroyed it’s credit rating. It seems unbelievable that a mismanaged parking authority could put an entire city in economic jeopardy, but as you’ll see not only is it possible, it’s a situation that almost ANY city could find itself in when no one is paying attention.

Although Scranton’s financial crisis is more recent, the foundation for it, like the recession that currently grips the whole country, was laid years ago quietly and surreptitiously. Like many city authorities, the Scranton Parking Authority has the ability to issue bonds on projects such as new parking structures, and these bonds are backed by the full faith and credit of the city (and it’s taxpayers). Even during the worst of the nationwide financial crisis, bond investment has remained strong, so bonds have continued to be a preferred option for paying for city projects. The idea is that the bond helps pay for the initial costs of a project like a parking garage, and then once the new structure is completed payments are made on a regular basis to the bond. So long as the project is something that will turn a profit, the bond gets paid off and the city is left with a shiny parking structure or sports arena or whatever.

Problems arise when the bond payments can’t be met though. Because the bonds are backed by the city, the city is then on the hook to make the bond payments with taxpayer money. And usually, such as in the case of the Scranton Parking Authority’s bonds, these bonds were issued without any kind of outside oversight or voter approval, even though it’s the voters being put on the hook. And the SPA issued a number of these over the years to build parking structures when the ones they had weren’t even filling up. Now according to rumors from some members of the Scranton City Council, these structures were built not because of a need by the city, but to facilitate political cronyism by giving contracts to a local construction company. Considering that a quick look at the past ten years of financial reports for the SPA shows that most of the new parking structures were built after revenue had already plateaued and that each of these structures made the SPA progressively more financially unstable, that charge probably isn’t too far off the mark.

Despite warnings of financial insolvency in the SPA’s annual financial audit, little seems to have been done to right the ship, and by last June the SPA found itself on the hook for a more than $3 million dollars in loans that the city council didn’t even know about and a bond payment that they couldn’t make. It was at this point that the SPA came to the council about making the bond payment. And rather than making the payment, and despite the warnings of Mayor Doherty, the council decided that now was the time they were going to put their feet down and take a stand for austerity by refusing to make the bond payment. By defaulting on the payment, they effectively destroyed the full faith and credit of the city of Scranton. Suddenly, the city found itself no longer having access to the credit market. This proved devastating.

The city was already suffering from having more indebtedness than revenue, and without access to credit markets, they couldn’t receive the credit needed to cover the city’s expenses. By July, the city had $5 in it’s bank account and had had to reduce all city workers’ wages to minimum wage; to put that in perspective, the city of Scranton found itself with same level of fiscal solvency as your average hungover college student in line at Taco Bell. SPA employees found themselves furloughed and not getting paid, and are now negotiating with the city to try and get their back pay and contemplating suing for their wages. The courts appointed a receiver to take over the SPA, and a parking management company, Central Parking, was hired to take over running the parking business.

Needless to say, things were grim. Since hitting rock bottom in July, the city has been struggling to recover. Employee wages have normalized again, and the city has gotten court permission to pursue a nearly $10 million loan to cover their costs. It’s still unclear whether SPA employees will be paid their back pay, or if they will have to sue the city for months of unpaid wages. Scranton is by no means out of the woods, as they are still racking up more costs than revenue for the operation of the city. Scranton’s way forward is unclear, but for the rest of us this city provides a cautionary tale that we can all learn from.

First, we learned that apparently after leaving Dunder-Mifflin, Michael Scott became the head of the Scranton Parking Authority (or was at least consulting on how to run it). But more importantly, we learned that an unchecked mandate and a lack of oversight wreaks havoc, whether it’s on Wall Street or a city like Scranton. Whether looking at Scranton or Port Everglades (as in my last post), it seems like when you take an otherwise sound business person and put them in charge of taxpayer dollars, all business and common sense goes out the window. Taxpayer’s are not an unlimited source of money, they are investors expecting a return, whether in social or financial gain. Especially in light of the recent election, this illustrates just how big an impact those smaller, local issues can have on a community, and why it’s important to pay attention and stay engaged. Because otherwise all it takes is a parking authority, a school board, a commission, or some other small piece of local government that through ignorance and recklessness tugs on the yarn of city government and unravels the whole thing.