Selling off parts of the city may help right now, but is it really a good idea?

• Facing record budget shortfalls, cities and states across the country have come up with a creative solution: privatize. Privatizing means selling off city properties to private companies – parking lots, buildings, airports, even zoos.
• Companies pay governments lump sums for these income-generating properties, but the cities lose that future income and end up losing money on the sale. This raises the question of whether it’s better for a city to pay off its debts now or hold onto its assets to secure income for the future.
• Privatization is not new. America and other nations have been doing it for years. Private companies often have more cash and economic motivation to improve quality and efficiency of public properties like roads and parking lots, but ultimately they only answer to their shareholders – not to the tax-paying populace.

Facts & Figures

• In 2008, Chicago sold the rights to 36,000 of its metered parking spaces for $1.16 billion.
• Selling off public assets can cause rating agencies to downgrade government credit ratings.
• A Pittsburgh deal to lease out its parking system for 50 years for a $300 million lump sum payment is predicted to lose the city $3.5 billion in revenues.

Best Quote

“The investors will make their money back in 20 years and we are stuck for 50 more years making zero dollars.” – Scott Waguespack, an alderman who voted against the 2008 Chicago parking lease