New parking meter plan could yield Indianapolis more cash

Back to TopCommentsE-mailPrintBookmark and Share

Recent changes to the city’s plan to lease its parking meters for 50 years offer a trade-off—the impact of which will depend on whether people continue to park at meters in downtown and Broad Ripple.

If they do in strong numbers, meter revenue will jump, and the city stands to reap a bigger share of the money than under the original lease rolled out in August. If they don’t and revenue lags, the city will get a less lucrative deal than under the initial proposal, which calls for a bigger upfront payment than the revised one.

Money from the deal will be used mostly on street and sidewalk improvements in areas near the meters.

City leaders introduced the revisions Oct. 20 after public outcry over the original plan to lease the roughly 3,650 metered spaces to Dallas-based Affiliated Computer Services Inc. The changes call for greater flexibility in removing meters, options to terminate the 50-year deal every 10 years with penalties, and more favorable terms for the city regarding advertising revenue from the meters.

Among the key differences is how the city would reap revenue. Under the initial plan, Indianapolis would have received $35 million upfront and, according to city estimates, $232.8 million in meter revenue over the life of the deal.

The new contract calls for the city to get $20 million upfront and an estimated $363.2 million over the next 50 years.

The higher share over time is based on a change in the revenue-sharing model, which, under the revised terms, gives the city 30 percent of revenue up to $7 million, and 60 percent above that threshold. That’s compared with 20 percent up to $8.4 million and 55 percent above that amount under the old deal.

That means, according to the city’s calculations using an 8-percent discount rate, the old deal would be worth $67 million today, compared with $73 million for the new deal.

But whether the city hits those projections—and whether the new deal turns out to be better, revenue-wise–depends on future meter payments.

“If traffic utilization turns out to be really good, the new scenario is going to be better,” said Sreenivas Kamma, who has studied public-private partnerships as chairman of the finance department at Indiana University’s Kelley School of Business. “If traffic utilization turns out to be less than expected, you’d prefer the original scenario.”

City officials say their revenue projections, which are based on estimates by financial advisers at New York-based investment bank Morgan Stanley, are conservative. By comparison, ACS projects much higher returns for the city of $400 million under the original plan and $620 million under the revised one.

The ability to increase revenue from the roughly $1 million per year the city currently reaps to as much as $15 million by the end of the contract depends on several factors, said Kurt Fullbeck, a project manager with the Indianapolis Local Public Improvement Bond Bank, who has worked on the financials of the parking deal.
Table comparing the intial and the revised meter deals
Among the factors is adding meters in areas such as Massachusetts Avenue downtown and on Westfield Boulevard in Broad Ripple. Increasing hourly rates from the current 75 cents to $1.50 by 2012 in high-traffic areas and making it easier to pay by installing machines that accept credit cards also are expected to help.

“Indianapolis is poised to expand even more, and with that will come greater need for parking meters in areas that may not be a commercial hub now but will be in the future,” Fullbeck said.

But there are tricky variables involved. Changes in mass transit could decrease the need for downtown parking. For now, raising rates during a tough economic time also could curb usage.

“Whenever you’re estimating in the future, it’s more risk than money today,” said Rachel Smith, a finance professor at the University of Indianapolis. “[But] generally parking meters are a pretty stable investment.”

The city’s Department of Public Works Board approved the changes 5-0 last week. A City-County Council committee will review the revisions at a meeting Nov. 9.

The plan requires approval by the full council.•


Post a comment to this story

We reserve the right to remove any post that we feel is obscene, profane, vulgar, racist, sexually explicit, abusive, or hateful.
You are legally responsible for what you post and your anonymity is not guaranteed.
Posts that insult, defame, threaten, harass or abuse other readers or people mentioned in IBJ editorial content are also subject to removal. Please respect the privacy of individuals and refrain from posting personal information.
No solicitations, spamming or advertisements are allowed. Readers may post links to other informational websites that are relevant to the topic at hand, but please do not link to objectionable material.
We may remove messages that are unrelated to the topic, encourage illegal activity, use all capital letters or are unreadable.

Messages that are flagged by readers as objectionable will be reviewed and may or may not be removed. Please do not flag a post simply because you disagree with it.

Sponsored by

facebook - twitter on Facebook & Twitter

Follow on TwitterFollow IBJ on Facebook:
Follow on TwitterFollow IBJ's Tweets on these topics:
thisissue1-092914.jpg 092914

Subscribe to IBJ
  1. Here are a few candidates for this new group, "ripped from the headlines." First up, that bizzaro State Senator Brent Waltz; secondly, the unethical Todd Huston, and his contractual arrangements scheme; Finally, but not least of all, the dishonorable Eric Turner. What sayeth you Greg Zoeller?

  2. Good day. I can't hide this great testimony that take place in my life I will love everyone to know it and be partaker that is why I always place it on answer, I am Mrs,Natalie Cuttaia by name, I live in Texas, United State Of America, I want to thank (Mr.Bruce Brandon) for his kindness upon my family life. I never knew that there is still nice lender like this on internet and earth here. Just some Months Back, I was in search for a loan of $100,000,00 as I was running out of money for feeding and rent. I was scammed $6,800 Dollars and I decided not to involve my self in such business again but a Friend of my introduced me to a loan firm due to my appearance and doings. And I told him that I am not interested of any loan deal anymore but he told me that there is still a nice lender who he will recommend me to, and I made a trial and I am most grateful lucky am I today, I was given a loan amount of $100,000.00usd, by this great Company (Bruce Brandon Loan Company) managed by (Mr.Bruce Brandon) If you are in need of a genuine or legit loan or financial assistance and you can be reliable and trusted of capable of paying back at the due time of the funds I will advice you to, contact him via: ( bruce.brandon071@gmail.com ) And you will be free from scams in the internet. All thanks to Mr.Bruce Brandon You are the one who remove me and my family out of poverty. The reason why i am doing this is that, i promise Mr.Bruce Brandon that if i truly got my loan, i will advertize his company and bring customers to his company. Contact him via ( bruce.brandon071@gmail.com )for the Loan you have been looking for..

  3. Hello, We are firm Organization formed to help people in needs of helps,such as financial help. So if you are going through financial difficulty or you are in any financial mess,and you need funds to start up your own business,or you need loan to settle your debt or pay off your bills,start a nice business, or you are finding it hard to obtain capital loan from local banks,contact us today via email mrsroseberrywilkinsfunds.usa@gmail.com So do not let these opportunity pass you by because Jesus is the same yesterday, today and forever more. Please these is for serious minded and God fearing People. Your Name: Loan Amount: Loan Duration: Valid Cell Phone Number: Thanks for your understanding to your contact as we Await Regards Management Email:mrsroseberrywilkinsfunds.usa@gmail.com

  4. The question is, where could they build a new stadium? It seems in the past year, all the prime spots have been spoken for with potential projects. Maybe in the industrial wasteland area a block past Lucas Oil? I think it needs to be close to the core, if a new stadium is built.

  5. Aldi is generally a great shopping experience. Still, I'm sure YOU wouldn't want to shop there, which I consider a positive.