Council Committee - Some Curious Items Introduced In Mysterious Ways

I was pulling down the public notices of this week's Council committee meetings when what did I see, but an example of a proposal that comes in by the side door - usually too late for the public to realize what is happening - and some Councillors don't even realize that this side door exists.

The prescribed pathway for introduction of Proposals is to meet a date certain to submit the Proposal in writing - usually 10 days prior to a full Council meeting. Then, the Proposal is read into the Council record along with all of the other Proposals introduced that night. The introduction of the Proposals always includes the name of the committee to which that Proposal is assigned. The committee then takes up discussion of all Proposals assigned to it, the next time they have a scheduled meeting.

This pathway does not hold for some Proposals that come before the Economic Development committee. I am still not clear on the limitations of topics that may avoid the usual pathway, but they include applications for State financial assistance to build apartments that will include some low income units - or section 42 housing. It seems there are other uses for the side door, as well - as in hiding the setup for a development called 'North of South' - or No-So, as dubbed by a commenter on another blog. There is also a pesky little $14 million bond for Harlan Bakeries that is using that side door tonight.

Proposals 284 and 293 will be considered by the Economic Development committee of the Council when they meet tonight at 5:30 pm in room 260 of the City-County Building.

The digest of Prop 284 states:

consents to the waiver of certain recovery zone bond volume to the state in exchange for an allocation of midwestern disaster area bond volume

The digest of Prop 293 states:

authorizes the issuance of one or more series of Economic Development Revenue Bonds in the aggregate principal amount not to exceed $14,000,000 for Harlan Bakeries, LLC for the design, construction, renovation, improvement and equipping of a new building and expansion located at 7575 Georgetown Road (Council District 1)

If you were to look for these Proposals online, you would be disappointed. They have not been posted. I have asked for a copy of Prop 284. But, each individual having to make an open records request for a Proposal to be discussed within 12 hours is more than preposterous, and begs the question - what are they trying to hide?

The only thing that comes to mind for Prop 284 is No-So, because it calls for the use of 'midwestern disaster area bonds'. That caught in my memory, because the area proposed for the development isn't the site of a disaster, by any means.

Yup, this side door has been opened to allow the consideration of these Proposals without taking a chance that the public might object and want to appear in person to speak out against them.

How's that for transparency?

[edited to update - 11-8-10] I received a copy of Prop 284 from Melissa Thompson, Clerk of the Council office. It proposes swapping an UNSPECIFIED amount of stimulus money bond volume that is due to expire at the end of 2010, for an equal amount (whatever that might be) of bonds from the 'Midwestern Disaster Area' bond volume, that will expire at the end of 2012. The swap would be between the City and the State. The Proposal further says that this deal was struck by the Director of the Indianapolis Bond Bank, who would be Deron Kintner. Kintner is the City's point person in pushing the No-So deal. At the Economic Development committee of the MDC meeting that I attended a week or so ago, Kintner told the Commissioners that they wanted to close the No-So deal by the end of the year to take advantage of the stimulus bonds. Guess that's not so important now. Since the MOU with the No-So developers mentioned the Midwestern Disaster Area bonds and not the stimulus bonds, I have to be suspicious of his comment to the Commissioners, anyway.]

Blog Roundup

There are two particular blogs by fellow bloggers that caught my eye and which I'd like to recommend to HadEnoughIndy readers.

First was an article penned by Aaron Renn, author of the Urbanophile blog, that he wrote for NewGeography.com, entitled "The Privatization-Industrial Complex". In it he illuminates the concern that few cities have in house talent or hire impartial outside review of privatization plans. Thus we are all at the mercy of those whose livelihoods depend upon 'working deals'. In this piece, he also notes the difference between privatizing jobs that are already being done by numerous businesses and privatizing government monopolies. The former, in theory at least, can bring competition and its resulting efficiencies to tasks that the government can outsource or privatize completely. The latter, does no such thing and as Renn notes :

"But these transactions differ markedly from the Goldsmith-style privatization. They are driven not by efficiencies but by an investment banker mindset focus on money and narrow parameters of the asset operations. They also provide enormous temptation to elected officials to grab the money now even at the expense of future generations. They are also rife with potential conflicts of interest and incentive problems."

That sounds exactly like what is happening in the sale du jour - the 50 year parking meter deal that is proposed between Indy and politically connected ACS.

Which brings me to another post - this one by Paul Ogden, over at OgdenOnPolitics, entitled "What's Wrong With the ACS Parking Contract? How Much Time Do You Have?". In his entry, Ogden lists broad categories whereby the deal fails to protect the best interests of the true owners of the City's rights of way and parking meters - our citizens. His title truly tells it all, but its a review of the facts that we all should be conversant with.

New Tangential Impacts of Proposed Parking Meter Deal

Its funny, the more I hear about the proposed parking meter deal, the more I see value in the City holding on to the PUBLIC ASSET. Last night was no different. I attended the public meeting called by Libertarian, Councillor Ed Coleman. There were a couple dozen people in attendance, including maybe a dozen representatives of the City or 'ParkIndy', which turns out to be the combination of private businesses that will benefit financially from OUR meters.

The Council Rules committee is expected to review the revised proposal next Tuesday, November 9, beginning at 5:30 pm in room 260 of the City-County Building.

Right now, I'd like to go into two new ideas that I heard last night - ideas that could bring a lot of money to the City, if the City only holds on to the rights. Deputy Mayor Mike Huber claims that the rights to these ideas are not being handed over to ACS along with the parking meters. I cannot find such limitation in the proposed agreement yet, though.

The first new use of the parking meter system was that the computerized system will allow a real time view of which meters are occupied and which empty. Huber envisioned a phone app whereby drivers could locate the nearest open meter. Cool. But, there is money in apps. And, there is a future in competition among app writers that can be good for Indianapolis. Huber says that the data are public records. But, it is not realistic to think that ACS could or would make real time public records available to app writers who would like to compete in the public arena.

The second new use of the parking meter system was to install electric car charging stations on the meter. I fully realize that the solar cells to be used to run the electronics of the new meters would not power an electric car. But the meter posts could be adapted in the future. The posts are part of the 'Metered Parking System' being contemplated as part of the 50 year lease. Here is the definition from the proposed agreement:

"Metered Parking System" means the Metering Devices, supporting structures, computer systems and software used in connection with the administration of Metered Parking Spaces and the collection of Metered Parking Fees and Temporary Closure Fees therefrom, and all improvements of any and every kind whatsoever forming a part of and used in connection with the operation and maintenance of the metering system associated with the Metered Parking Spaces (including all Metering Devices but excluding any interest in the streets, sidewalks, paving or similar real property).

Its a fantastic idea to make electric car charging stations readily available throughout Indianapolis. And, yes, the technology is currently too cumbersome to fit in a parking meter - but that won't always be the case. Shouldn't the City clearly retain rights to future improvements in OUR rights of way?

These are the PUBLIC's rights of way. These are the PUBLIC's meters. We should be very circumspect when trying to predict what razzle and dazzle new technology will provide in the next 50 years, and, the amount of money these assets could generate in the future. Every time I hear about this proposed 50 year lease to ACS, I hear of another use that the City should retain for the next generation of City leaders and City residents to enjoy.

US PIRG Issues Analysis of Indy Parking Meter Deal

Yesterday, the United States Public Interest Research Group, contacted a few local bloggers with their in-depth analysis of the revised proposed 50 year lease of Indy's parking meters to ACS. Dr. Phineas Baxandall, US PIRG, sent the analysis in pdf format, which I have uploaded should anyone want to print it out. Below I have cut and pasted the report in its entirety. Dr. Baxandall tells me that they did this same sort of analysis for the recently proposed Pittsburgh deal and many of their Council members found it very useful. That proposal was defeated, by the way.

Fellow blogger, Gary Welsh, ran with the US PIRG analysis yesterday, adding his own comments and dissection of the deal. You can view that here: "Public Interest Group Questions Ballard's Parking Meter Privatization Deal".

Here is the US PIRG analysis in its entirety - I have formatted it to be as close to the original formatting as blogspot will allow:

U.S. PIRG

Questions about Indianapolis’ Proposed Parking Privatization

Why is Indianapolis considering leasing its public parking system in the first place?

Cities throughout the country have been considering leasing important public assets in response to budget crises. Unlike ordinary outsourcing to private companies, these deals provide elected officials with upfront cash that is borrowed against the higher fees they agree to charge citizens in future decades. The current proposal is akin to introducing a new tax, while borrowing $20 million against its future revenue and dividing the proceeds with a private tax collector. If the goal of the City-County Council is merely to outsource the operation of its parking system and pay for those services with a share of revenue, then there is no need for an upfront payoff and future parking fees charged to citizens could be much lower. The Mayor has stated his intention to use upfront proceeds from a parking deal for capital improvements. The city, which can borrow at much lower rates than a private company, would ordinarily finance capital improvements through bonds.

What is the current status of the proposal?

The Mayor has asked the City-County Council to grant him authorization to sign the proposed contract by the end of December. The Mayor selected the bid from Affiliated Computer Services (ACS) on August 20, 2010. The original contract and corresponding ordinance were introduced to the City-County Council on August 23. Subsequently, members of the City-County Council voiced concerns and the Mayor negotiated some provisions in the proposal without changing its basic features.

What would happen to parking rates?

Under the current proposal, the private operator would have the authority to raise rates nearly 1,000-percent over the course of a fifty year lease. This means an hourly rate increase from $0.75 per hour to about $7.50 per hour.

Did the changes that the Mayor made to the proposed deal fix the problems?

Some sections were improved slightly, but a few new problematic provisions were introduced. The main changes were: a provision for early contract termination, a reduction in the city’s upfront payment, and an increase in its share of revenues. The mechanism for the city paying compensation to ACS for policies that reduce profits has also changed. Instead of paying penalties separately, the city will simply have the money docked from its monthly share of meter revenue shares. A provision added to the new contract proposal also states that should 30 percent of validly issued parking tickets be challenged, the city must pay a penalty to ACS.

Would the city maintain full control of the public parking system?

Not if the private company believes public decisions would hurt its bottom line. Under the contract, the city would cede much of its control over Indianapolis’ parking system to Affiliated Computer Systems, a Xerox affiliate, and other contractors including the companies Denison Global Parking and Evens Time. When making future decisions about the city’s parking systems and street management, the public would need to weigh decisions about what is best for the community against their contract’s requirement to pay compensation to the concessionaires for actions or inactions that the companies claim infringe upon their profits. In response to virtually any action taken by the city that might reduce the parking system’s revenues or divert drivers to other locations, the city could be forced pay compensation to ACS. These actions might include holding new parades or street fairs, repairing nearby roads or closing roads to repair other infrastructure, improving nearby public facilities for parking , reducing scheduled parking rate increases, changing parking tax rates, or not enforcing ticketing rules strictly enough. Even the calculation of the compensation contains additional hidden costs. The city would be forced to pay for a day’s worth of meter revenue even if the meter is only blocked for four hours. In some areas, the contract would require the city to pay ACS compensation for meter "closure" that would nonetheless exceed the amount that the meter could collect if it was occupied for every minute of the long operating day.

Does the deal shift future financial risk from the city and onto the private operator?

Proponents tout parking privatization as a means for reducing the city’s financial risk in the future. If people stop using parking lots or meters in Indianapolis, the private companies would lose out. But the measures in the proposed contract that require the city to pay compensation are designed to shift those risks instead onto the public. Meanwhile, the city takes on the added risk of ACS demanding anticipated compensation for city policies that could be decades in the future and may result in expensive lawsuits.

Bottom line, how much would the city receive, and how much would residents pay?

ACS estimates the city would receive $620 million over the fifty-year lease. The company’s anticipated revenues and costs are not known because ACS refuses to disclose that information. But plugging this figure into the contract implies that city drivers would pay at least a billion dollars and perhaps close to 1.5 billion. ACS’ share would therefore range between almost $400 million to almost $830 million. These are conservative figures because they assume the city never pays additional compensation to ACS for actions that inadvertently block meters. These numbers are calculated based on average historical levels of inflation. Since the precise share taken by ACS will depend on thresholds adjusted under the contract by future inflation rates, the actual numbers could be somewhat higher or lower.

What is ACS’ track record as an operator of privatized public assets or services?

ACS does not have a favorable track record in operating public assets and services. The company is best known for its role in Indiana’s failed privatization of social services and the additional costs that Washington D.C. suffered as a result of ACS mismanagement detailed in the City Auditor’s scathing 2007 report. When Chicago and Pittsburgh were considering exploring privatization of their parking systems, they opted against ACS.

After Indiana contracted with ACS to manage the state’s social service eligibility review and claims processing, the state decided to cancel the ten-year contract after less than a third of the term. State officials justified this move because of inferior quality of service, including long waits, slow approvals, lost files, and erroneously cancelled or denied eligibility for food stamps, Medicaid, and welfare. Governor Daniels brought the privatized functions back in-house after losses that some estimate may have reached $500 million to the taxpayers of Indiana.

The Washington D.C. auditor’s report on the performance of ACS in the maintenance and operation of the leased parking system showed that from the years 1999 to 2005, costs under ACS privatization were 33.4 percent higher and resulted in $8.8 million additional spending of taxpayer funds than if services had remained in-house. ACS also improperly fined patrons $159,975 when they parked at broken meters. Overall meter complaints increased over 900 percent. Moreover, ACS inappropriately billed the city for $644,952 in penalties that the city did not owe them for temporary meter closures.

How long would the parking system lease last?

The lease would last fifty years. Provisions that were recently added to the contract for early termination would be extremely expensive to make use of because of crippling hidden fees. After the first ten years, the penalty for the city to terminate the contract is $19.8 million– nearly the entirety of the upfront payment received from ACS. If the city, having lost the in-house capacity to manage its parking system, seeks to contract out to other companies after terminating with ACS, then the city would owe ACS an additional $5 million. With a 50-year contract and these hidden fees, ACS would feel almost no competitive pressure to perform well to renew its contract. Moreover, toward the end of fifty years the private operators will have less and less incentive to properly maintain and invest in the facilities. A reduction in the length of the contract would relieve the numerous types of risks posed by privatization to the city.

What about ACS’ promise to bring 200 jobs to Indianapolis?

As a part of a separate agreement that is not tied to the lease of Indianapolis’ parking system, ACS made this promise. The promise is not dependent upon the parking system contract. Moreover, the separate agreement does not stipulate the quality of jobs that ACS would bring to Indianapolis or even if they would be full time jobs. Nor are there provisions for the city to adequately hold ACS accountable and determine whether they created the promised number of jobs – Indianapolis must rely on reports from ACS itself that can not be easily validated and penalties for noncompliance are relatively small.

Is the Indianapolis privatization proposal being handled better than in Chicago?

There are some improvements from the Chicago meter privatization deal. The simple fact that we have the opportunity to view various versions of the proposed agreement, that both the mayor and council have accepted and requested public comment, and that there have been changes made to the original agreement are improvements in themselves. That said, the Indianapolis proposal still contains many of the same problems as the Chicago deal.

Could the proposed parking lease agreement be improved?

Greatly. Despite the fact that the lease agreement has been improved from its original form, there are major problems and areas of concern. Indianapolis can not be sure that it is the best private deal obtainable because, unlike Pittsburgh, it has not gone back to original bidders to see if they would improve the terms. Moreover, City-County Councilors could demand removal of provisions that require compensation to the companies for actions that indirectly hinder parking revenues. The deal could also be made shorter to better manage unanticipated risks in future decades. All these changes would likely result in an even lower upfront initial payoff on the deal.

Is the proposal process fully transparent and protected against conflicts of interest?

By revising the original contract, posting the contract online, and holding public comment periods, Indianapolis has improved upon the abysmal lack of transparency in the Chicago parking privatization deal. But public disclosure is lacking when it comes to the financial arrangements and assumptions set out between ACS and its financiers. This information is vital to understanding the private partners’ expected costs, profits, and respective legal obligations. If ACS wishes to do business with the city, it should not keep this information secret under the guise of “proprietary” business secrets.

Indianapolis’ earliest mistake was to pay Morgan Stanley as its advisor. The company is one of the primary investors in the Chicago deal and stands to gain from the deals they advise on. That is a clear conflict of interest. Likewise, a senior advisor to the Mayor, Joe Loftus, is a registered lobbyist for ACS. After the apparent conflict was revealed, Mr. Loftus claimed his duties with ACS were unrelated to the parking deal. Regardless, disclosure should have provided upfront.

U.S. PIRG (United Stats Public Interest Research Group) is a non-partisan non-profit organization with thousands of citizen members, 25 state affiliates, and dozens of college campus chapters across the United States. http://www.uspirg.org/ Questions can be directed to Phineas Baxandall, Ph.D. at Phineas@pirg.org or 617-747-4351

Public Meeting on Parking Meter Proposal TONIGHT

Councillor At-Large, Ed Coleman, the sole Libertarian on the Council, has arranged what may be the only off-site, public meeting regarding the revised proposal to lease the City's parking meters for the next 50 years.

The meeting is tonight, November 4th, beginning at 6:00 pm in the Wilkey Blue Room of the Anthenaeum, 401 E. Michigan Street.

Evidently, Deputy Mayor Mike Huber and the (get this) "ParkIndy" team, will be present.

Election Day - Some Fun For After You Vote

I'm writing this up a day early, and setting it to post on election day, as I'll be occupied working a polling site.

Make sure you vote, if you haven't already.

Now, for some fun. My husband was listening to WTTS, out of Bloomington, the other day and they were talking about a YouTube clip that claims to have identified a time traveler in an old Chaplin film.

Take a look - what do you think?

Why I'll Vote "YES" On The Tax Cap Question

There is a public question on the back of this year's ballot. It would put the property tax caps into the Indiana State Constitution. Here is how the question is written:

PUBLIC QUESTION #1

SHALL PROPERTY TAXES BE LIMITED FOR ALL CLASSES OF PROPERTY by amending the Constitution of the State of Indiana to do the following: (1) Limit a taxpayer's annual property tax bill to the following percentages of gross assessed value: (A) 1% for an owner-occupied primary residence (homestead); (B) 2% for residential property, other than an owner-occupied primary residence, including apartments; (C) 2% for agricultural land; (D) 3% for other real property; and (E) 3% for personal property. The above percentages exclude any property taxes imposed after being approved by the voters in a referendum. (2) Specify that the General Assembly may grant a property tax exemption in the form of a deduction or credit and exempt a mobile home used as a primary residence to the same extent as real property?

The main reason I will vote YES, is that the property tax caps do confer significant protection to property owners and posting them in the Constitution would provide protection to the tax caps themselves. To undo the tax caps, the same multi-year, multi-vote, public process would have to be engaged. This increases the likelihood that the tax caps will remain unscathed for years to come.

Another reason is that the State took over many obligations that had previously resided with property tax payers for schools and cities. In return, they increased the sales tax by 1%, and projected the net effect to the State would be an increase in revenue - even after accounting for the increased obligations. Back in 2008, the estimate was for an net extra of $128 million a year. The State should be encouraged to share more of the revenue with local cities, libraries, etc. But that is an independent course that should be taken regardless of whether or not the tax caps become incorporated into the State Constitution.

Some like to say that the tax caps don't stop increases in Assessed Value of your property. And, that is true. But, the assessed value is supposed to reflect market values. I know our house lost assessed value for the past two years running. Again, the tax caps do not exclude any discussion of also limiting assessed values, say for as long as one owner retains the property.

The tax caps may not be the entire solution to the onerous property tax burdens we saw a couple of years ago. But, they are a mighty step forward in assuaging that burden. I shall be voting YES on the public question, as that is the best route for keep the burden as low as possible for the forseeable future.