Pittsburgh City Council Turns Down Parking Lease Plan

(October 19, 2010) — Pittsburgh’s City Council has rejected Mayor Luke Ravenstahl’s proposal to lease parking assets for a pension bailout, voting down all four bills that would have authorized the lease, the Pittsburgh Post Gazette reported.

Following the vote against the mayor’s plan, attention now turns to an alternative strategy to fund the pension system, supported by some council members and city Controller Michael Lamb. The mayor, however, has remained resolute that he doesn’t believe in an alternative strategy.

Ravenstahl had predicted the City Council would vote down his parking lease plan to lease the parking facilities to private investors for 50 years for $452 million and he has already instructed his staff to begin preparing for a state takeover of the pension. The mayor had hoped to use some of the money created by his plan to pay off the parking authority’s debt and pump more than $200 million into the city’s pension fund to avoid a state takeover by January 1. “Alternative plans are likely to be floated,” Ravenstahl told aiCIO a couple of weeks ago. “However, none do what we’re trying to do here – make a lump-sum payment into the pension to avoid the state taking it over,” he said, equating rejection of the plan to endorsing state takeover.

Ravenstahl has said he and his staff have spent nearly two years working on creating a strategy that would funnel money from leasing parking facilities to a private operator for a pension fund bailout. The plan was created in an attempt to avoid state takeover of the city pension, resulting in severely higher pension payments that the city could make only by increasing taxes or cutting services.

According to Ravenstahl, the city needs $330 million to both pay off the parking system’s debts, as well as top-up the city’s pension system, which will be taken over by the state at year-end if roughly $220 million is not injected into it. This figure would bring the city’s current $239 million pension above a 50% funding status.