Poor planning and bickering tainted US parking privatisations. But with the municipal need for cash ever-present, such deals are back centre stage.

Depending on tax bracket, and even in spite of an undercurrent of not-so-quiet desperation, New Jersey is an ideal place for a commuter to call home.

In a state where 75 percent of the population live within a five-mile distance to a transit station and 10 percent of its workforce is reliant on public transportation, the well-heeled, along with the vaguely middle-income (not to mention the flat-out working poor), use New Jersey Transit (NJT). Its train service is a particularly crucial economic buttress, letting an educated, professional class commute daily into New York Penn Station in midtown Manhattan. 

In 2010 NJT, its customer base reeling from a 25 percent rail fare increase, became a would-be adopter of a controversial, much-maligned, and misunderstood infrastructure initiative: parking privatisation.

The plan has not been without criticism (“New Jersey Transit’s stupid parking privatization plan” was the title of a December 2010 Reuters column by Felix Salmon). But with a Request for Proposal (RFP) set to be issued, NJT is plowing ahead with its plan during a time when parking privatisation is coming back into vogue. 

“What we are seeing is what I call a ‘third wave’ of parking privatisation,” says Kent Rowey.

Rowey, a partner and head of the Americas energy and infrastructure practice at law firm Freshfields Bruckhaus Deringer, blames political back-biting and public misperception for giving parking privatisation a bum rap. From its humdrum origins in Chicago, through fierce criticism in Los Angeles and Pittsburgh, to its current Lazarus-like revival in Ohio and elsewhere in the US, Rowey says parking privatisation is a public-private partnership (PPP) concept that has weathered a storm and come out as a budget shortfall darling.

“New Jersey Transit is a potentially sensational asset, if you think about it,” Rowey insists. “Train station parking in New Jersey is an inelastic demand. That can be as good [a deal] as it can get”.

Good for NJT, but what about the political and public sentiment toward parking privatisation today?

“We have kind of come full circle,” says Rowey, his cautiously optimistic tone sounding appropriate.


The politically contentious concept of parking privatisation originated in Chicago. In 2006, the Windy City leased its parking— both garage and off-street varieties – to the Morgan Stanley Infrastructure Fund. The deal was not widely hailed as a masterstroke of municipal economic development. In fact, it was shrugged off with the indifference of a long-suffering Chicago Cubs baseball fan.

What it was, however, was successful. The rewards of that privatisation came in the form of a $560 million windfall that beefed up the city coffers. In the minds of the public and the bile of newspaper ink, however, on-street metered parking was portrayed as a fleecing.

“That led to a lot of incorrect supposition that gained popular currency, in the press and with the public,” Rowey explained, “and there was some teething trouble”.

Local media stoked public outrage. Privatised parking, so the story went, meant that Croesus-rich businessmen were going charge the average man on the street a higher fee to park, or else knee-cap them with a parking ticket and a whopping fine. Want proof of the businessmens’ greed? Look no further than parking fees – up from $0.75 to $2 an hour.

But the cloak-and-dagger story had a major flaw: only city hall can raise the rate on parking – and city hall was going to raise the rate on parking, privatisation or no.

Unfortunately, when the rate did go up, the average-size coin box on an outdated parking meter could not hold $2 worth of change. The other issue was the new, hi-tech, solar-powered kiosk used to replace the scrapped old-school meter. One slight problem: it didn’t seem to recognise debit cards.

“But later, in 2009, after the furor had died, people realised [parking privatisation] led to an improvement in service,” says Rowey.

In Sacramento, a Harvard School of Business graduate hired to help encourage the Sacramento Kings professional basketball franchise from leaving town, realised that too.

Jeremiah Jackson is a project manager for Think BIG Sacramento, a group created to find a method to bankroll a stadium that would appease the National Basketball Association team. In September, Think BIG opined that parking privatisation could result in a multimillion-dollar profit. 

“We were able to watch what happened [in Chicago],” Jackson says.

So were Pittsburgh and Los Angeles. But by then, politicisation had worked itself into the parking privatisation lexicon.

The second wave: ‘political football’

“Pittsburgh and L.A. saw this is a potential source of revenue that we can put to use for more core service,” says Rowey.

In Pittsburgh, Mayor Luke Ravenstahl, was searching for a solution to an underfunded pension. Ravenstahl expected $250 million to $300 million profit that could then be put to use. In L.A., Mayor Antonio Villaraigosa, dealing with a budget shortfall, decided to push ahead with a parking garage concession. 

“In each instance, the mayor lost the city council,” says Rowey. “It made economic sense, and it was the right thing to do, but it became a political football”.

Pittsburg was offered $450 million for its concession (“a homerun,” says Rowey). But city council voted the deal down.

“In L.A., the city council would not even look at a bid,” suggests Rowey. “You could have put a billion-dollar price tag on it.”

“So, in each case, it got turned into a political football, and became [a case of] using political demagoguery to trump economic sensibility,” Rowey laments.

Far from being a process-oriented bureaucratic function, parking privatisation had been transformed into a trap that beckoned private capital closer only to throw a nasty sucker-punch and run away.


But make no mistake: parking privatisation is back. And it’s back for an obvious reason. Namely, a cash-strapped municipality simply has to find funding, and leasing a non-core, plain vanilla service that’s not a vital voter concern can be a useful start in closing budget gaps.

“The problem in Pittsburgh or L.A. is fixable,” according to Rowey, who adds that pre-approval is essential.

NJT, which first put forward its privatised parking plan to help close a $100 million budget gap, has repaired its balance sheet and is going ahead with its plan. 

“New Jersey Transit is in the business of moving people around, not in the business of providing a parking service. Leasing parking can let New Jersey Transit focus on its core business and monetise its non-core business,” reasons Rowey. 

Ohio State University is also being closely watched for its parking privatisation idea.

“With Ohio State University, again, a potentially attractive asset with a captive demand,” Rowey enthuses. “And it has the character of what a deal should have: the university is not in the business of providing parking, and if it can raise capital to use for what it should be doing, then the deal is win-win.”

Despite the negative press coverage of the past, what might help revive parking privatisation is its lack of visceral impact. “There is nothing ideologically-biased about it,” Rowey muses.