What Happened?
Indianapolis privatized city parking meters in 2011 and expects to generate $300 to $600 million over the 50-year lease. By altering the lease terms and creating a tiered revenue share structure, Indianapolis has avoided many of the privatization pitfalls Chicago experienced with its parking meters.
The Goal
According to the Reason Foundation, Indianapolis privatized 3,700 city parking meters by selling the parking assets to a private company for $20 million upfront and potentially $600 million by the end of the 50-year lease. Despite selling the responsibility to investment capital into the parking meter technology, Indianapolis still generates revenue from the assets.
Indianapolis benefits from a two-tiered revenue share system that gives the city a 30 percent share of revenues to a specific threshold, and then 60 percent of revenues beyond that point. At the start of the program, Indianapolis received $2.15 million, or 16 percent of the year’s parking meter revenue. By 2013, the city collected $3.1 million in net revenues, which accounted for nearly half of the $6.1 million generated by the meters and an 804 percent increase in revenue from 2011.
As the private company grows revenues from parking meters, the city enjoys increased profits. Here is the breakdown of revenue streams thus far:
Indianapolis Parking Meter Revenues, 2010-2013
| Year | 2010 (before privatization) | 2011 | 2012 | 2013 |
| Total Meter Revenue | $2,149,949 | $2,882,847 | $5,325,041 | $6,079,420 |
| Net Revenue to City | $339,165 | $1,519,295 | $2,530,391 | $3,066,546 |
| Meter Enforcement | $1,276,213 | $1,684,189 | $2,130,663 | $2,019,409 |
| Revenues per Metered Space | $519 | n/a | n/a | $2,817 |
| Sources: City of Indianapolis, ParkIndy. | ||||
- See more at: http://reason.org/news/show/privatized-parking-indianapolis#sthash.cBd0AlDU.dpuf
The Reason Foundation revealed the increase in parking meter revenue can be attributed to several factors:
- Rate increases
- Changes to the hours of operation
- Improved parking meter operability
- Time limit optimization
- Increased parking meter usage due to provider data analytics and predictive enforcement
- Pay-by-phone mobile apps
- Better permitting and meter bagging
Indianapolis opted out of a large upfront payment in favor of a long-term revenue stream, unlike Chicago’s parking meter contract.
Chicago Adjusts, NJ Debates
After privatizing the city’s parking meters and agreeing to a $1.1 billion, 75-year contract, Chicago has decided to review its plan to ensure greater payoff for taxpayers. After renegotiating with the private company, Chicago’s mayor has reportedly saved the city $2.1 million since last summer.
Chicago felt pressured to rework its privatization contract, which only generated a one-time payment to the city for control over its 36,000 parking meters. As a result of the privatization, Chicago has the nation’s most expensive parking meters.
Similarly, the New Jersey Turnpike Authority is under the gun to decide if privatizing its toll collection is right for the state. Since the idea to privatize was introduced three years ago, figures have surfaced that suggest the private company in the deal may cut public employee salaries to save money. This has created a debate over the pros and cons of privatizing the toll system on the New Jersey Turnpike and Garden State Parkway.
Privatizing is the Talk of the Town
Gov1 has covered a wide variety of privatization plans that range from transportation to parks systems.