January 22, 2010 4:22 PM
P3s Back in Play with Planned Pittsburgh Parking Privatization
Posted by Brian Baxter
Pittsburgh has hired K&L Gates and Katten Muchin Rosenman to advise on a plan to privatize parking assets in order to pump cash into the city's ailing pension fund. Katten advised Chicago on its watershed parking meter privatization in December 2008, which raised $1.16 billion for city coffers.
Proceeds from the public-to-private partnership (P3) were intended to close a half-billion dollar budget gap, but outraged citizens and angry politicians later pilloried the plan as meters malfunctioned citywide and the city's inspector general issued a scathing report calling the sale a "dubious financial deal."
The Am Law Daily covered the fallout from the deal last summer, as firms like Winston & Strawn and Mayer Brown were retained as defense counsel after the state's attorney general launched a consumer fraud probe into the transaction.
In addition to Katten, Chicago was advised by local firm Charity & Associates and Milwaukee's Gonzalez Saggio & Harlan. The consortium acquiring Chicago's parking meter system turned to Kent Rowey, head of the U.S. infrastructure practice at Freshfields Bruckhaus Deringer.
As bad as the P3 deal looked for Chicago last summer, sources say the uproar over the privatization has since abated. The rocky transition has given way to improved parking services for many Windy City residents, as technological advances have given rise to easy credit card access at meters, even though the rates themselves have increased.
By enlisting the services of Katten and K&L as cocounsel, maybe the Pittsburgh Parking Authority is hoping not to repeat the mistakes of Chicago's parking privatization. The two firms' applications were selected from a total of 22 submitted in response to a January 4 request-for-proposal. The city hopes to net $200-$300 million annually from the planned privatization.
According to the Pittsburgh Post-Gazette, Katten lawyers will charge the city between $480 and $625 per hour. K&L has its attorneys billing at hourly rates ranging from $250 to $700. The two firms will receive a minimum payment of at least $350,000, even if no privatization deal is cinched, reports the Pittsburgh Tribune-Review, noting that no city employees will lose their jobs should the deal go through.
A K&L Gates spokesman told The Am Law Daily that the firm will provide expertise on environmental, labor, regulatory compliance, real estate, and tax law to the city. Partners David Ehrenwerth, David Lehman, and Blaine Lamperski in Pittsburgh and partners R. Timothy Weston and Carleton Strouss in Harrisburg are leading the team from the firm.
P3 work has netted lucrative fees for firms that have sought to establish a presence in the growing U.S. market for such deals, which have traditionally been more popular in Europe and Latin America.
Mayer Brown partner John Schmidt, a former chief of staff to Chicago Mayor Richard Daley and a leading P3 dealmaker, told The American Lawyer last year that his firm had reaped up to $3.5 million in fees from the proposed $2.5 billion privatization of Midway Airport. (The economic crisis later scuttled the privatization, but the city scored a $126 million breakup fee, and completion of the deal could still be completed by year's end.)
Other U.S. cities also are kicking the tires on moving forward with their own parking privatizations, which should be music to the ears of public finance and infrastructure lawyers.
The City of Los Angeles has hired DLA Piper as it considers privatizing its parking system as a budget-saving measure. The city already has offered early retirement to 2,400 employees and an additional 1,000 jobs could be cut as part of an attempt to eliminate a $200 million budget shortfall.
Indianapolis is investigating a similar plan to privatize parking meters in order to raise municipal funds.Make a comment