Expert Says Private Parking Arrangement is Similar to Nashville Payday Loans
By Lindsay Frankel
Lobbyists are working hard to garner support for a privatized parking arrangement in Nashville, though council members have indicated there is little support for the deal so far, according to NewsChannel5 Investigates.
Crint Krislov, an attorney who has studied privatized parking deals across the nation, said the revenue that will quickly pour in from the deal comes at a steep cost, and that the arrangement benefits investors, not taxpayers.
Krislov established the Center for Open Government Law Clinic at the Kent College of Law in Chicago, which has scrutinized over 40 U.S. parking privatization deals. And while he believes the deal is better than Chicago’s because the revenue growth will be divided between the city and investors, he compared Nashville’s arrangement to a payday loan.
“This is a payday type deal because it gives the investor a guaranteed 9.75% return,” Krislov said.
Mayor Briley’s plan is to work with a Dallas, Texas, finance company, which will fund the new meters and provide for the city to receive $34 million upfront. A spokesman for the mayor disputed Krislov’s comparison, saying investors will only receive the return if the “parking system meaningfully improves its operating performance above current levels.”
As Mayor Briley runs for re-election, he promises to initiate wage increases for Metro employees and provide money to schools out of $30 million from the parking deal.
The 9.75 percent return may seem minimal compared to what a payday lender would charge in interest and fees. The average APR charged on Tennessee payday loans is 426 percent, according to 2016 data from Pew Charitable Trusts. But Krislov contends that the city could avoid the nearly 10 percent interest rate by upgrading the parking system on its own.
He said Nashville could stop the budget gap by borrowing $40 million at a significantly lower interest rate and hire an operator. The city could use the money to improve the parking infrastructure with plenty leftover for next year’s budget.
“That’s money that could be paying for the municipality’s finances for years to come,” Krislov said.
Metro argued that borrowing would increase the city’s debt, and any risk would be taken up by the private company under the proposed deal. But Krislov’s analysis of similar deals revealed the negative consequences of parking privatization.
“In all these cases there’s a financial entity which puts the deal together and somehow it always winds up that down the road you wish you had done it differently,” Krislov said.
The 30-year parking plan will go to a vote during a Traffic and Parking Commission meeting before a second reading is heard by the council.
Learn more about payday loans, scams, and cash advances by checking out our city and state financial guides, including Tennessee, Chattanooga, Clarksville, Knoxville, Memphis, Murfreesboro, Nashville and Smyrna.