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Los Angeles council proceeds with garage leasing plan

Rejecting opposition from business owners, lawmakers say the alternative is cutting services.

January 13, 2011|By David Zahniser, Los Angeles Times
  • Max Marrufo, left, and Henry Barrons join city workers at Wednesday's meeting in urging the council not to approve more furloughs.
Max Marrufo, left, and Henry Barrons join city workers at Wednesday's… (Brian van der Brug / Los Angeles…)

Despite opposition from business owners who warned of rising parking costs, the Los Angeles City Council voted Wednesday to forge ahead with a plan to lease nine of the city's public garages in the hopes of generating cash to rescue this year's budget.

Confronted by angry residents from Westwood, Hollywood, Sherman Oaks and elsewhere, council members said they faced a choice between making new reductions to parks, public safety and the planning department and continuing to subsidize below-market rates at city-owned garages.

"I don't know about you, but that's a slam-dunk for me," Councilman Richard Alarcon said. "As much as I respect those businesses that have benefited from free parking, we cannot cut services throughout the city."

After a three-hour closed-door meeting on the topic, City Administrative Officer Miguel Santana said the council had voted unanimously to submit a parking garage concession agreement to potential private operators. That vote paves the way for an agreement to be released next week and a company to be selected in March, he said.

Santana said the garage plan had been revised during the closed-door meeting but would not say how. But Council President Eric Garcetti said after the meeting that he had "listened" to complaints of Hollywood business owners and "would not have voted" for an agreement that did not protect its business district.

The city's proposal was inspired by a similar deal in Chicago, where officials patched a budget shortfall by allowing a private company to run four parking garages, 36,000 parking meters and the Chicago Skyway toll road. That company aggressively raised rates, infuriating residents so much that it has become an issue in the city's current mayoral election.

The Los Angeles proposal, which has drawn interest from an array of parking companies and Wall Street investment firms, does not cover meters. A top aide to Mayor Antonio Villaraigosa said privatization of meters cannot be contemplated unless a garage agreement is finalized first.

Wednesday's vote came after Villaraigosa, budget officials and scores of city workers warned that the council would have to lay off more employees if it failed to select a private company to run the garages for the next 50 years. The lease is supposed to generate $53 million for the fiscal year that ends June 30.

Union leaders said they were especially upset that council members were weighing more furloughs, or unpaid days off, at the same time that they were thinking of dropping the garage plan.

"Halfway through the year, with no alternative, is not the time to back out of this deal," said Bob Schoonover, president of Service Employees International Union, Local 721. "City services are at unacceptable lows. Even this building is infested with rats due to cutbacks in janitorial services."

In recent weeks, that plan has put a few council members in a tight spot.

While public employee unions demanded that council members lease out the garages, business leaders have urged them to drop, or dramatically rework, the plan in a way that keeps rates low. Councilman Paul Koretz, a steadfast ally of unions, also has three of the nine garages in his district — and has been barraged with complaints about the plan.

Koretz said he does not want more layoffs. But also he warned that Westwood's business district competes with nearby cities that have free or cheap parking: Santa Monica, Culver City, West Hollywood and Beverly Hills.

"No matter what we decide, we're making the wrong decision," he said.

Council members voted in May to put the garage plan in this year's budget. But they also stated that if the deal did not move forward by October they would need to lay off an additional 1,000 workers.

When that deadline passed, council members gave themselves four more months to put the agreement together. Since then, more than a dozen companies — including investment firms Starwood Capital, Bainbridge ZKS and Kohlberg Kravis Roberts — have expressed interest.

Opponents of the parking garage plan said the council would be foolish to give up control over major assets at the bottom of a real estate market. They also worried that a private company would probably make money off the parking deal by tripling rates over a five-year period.

Hollywood has three garages, or 62%, of the spaces that are at stake in the long-term lease proposal.

In Westwood, the Broxton Avenue garage provides customers with free parking for the first two hours. Losing that, said businessman David Friedman, would be the "final nail in the coffin for Westwood Village."

Santana, the top budget official, said he sympathized but warned that breaks for Hollywood and Westwood would probably make it impossible for the city to attract bidders for the deal.

"We won't know that until we test the market, but that is what we are being told by our advisors," he said.

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