Sunday, March 27, 2011

The Boondoggle Syndrome. It's not just for High-Speed Rail anymore!

Think of this parking garage experience next to Yankee Stadium as a "proof-of-concept."  The New York Daily News article talks about a construction project that cost in the hundreds of millions.  California high-speed rail will be in the hundreds of BILLIONS!  But, there are numerous, informative parallels.

To be sure, it's not a complete and perfect match between this parking garage and the rail project, but you can see what we are in for here in California.  This development and its consequences are what the conservative Republican governors in three states have been trying to avoid.  And, the President has chastised the most recent Governor who rejected the federal seed money offer for not playing along with the 'Vision' political game that is the foundation for the high-speed rail program in the US.

It is important to see the HSR project in California, and elsewhere, not in isolation as a unique situation, but as an example of infrastructure development that appears to follow a corrosive pattern.  That consists of both seduction and coercion.  Voters are lied to about low costs and high 'productivity.'  Costs, once a commitment is made, suddenly climb precipitously.  User and revenue numbers generated are grossly overstated in order to get approval in the first place. 

And then, the shock of recognition, only now it's too late.  Those few of us who are able to say "I told you so" receive no comfort from this; only crushing disappointment. 

Well, it's not too late to stop this monstrous, oversized, overpriced boondoggle in California.  There's no shortage of information about what the dire consequences will be if construction begins in the Central Valley and the Democlean sword will continue to hand over the heads of every Californian forever. The Rail Authority will continue to survive on the State IV drip and continue to lobby for federal dribs and drabs of funding. They won't go away, unless they are made to go away.

In a future blog, we will present more documentation about the impossible financial structure of this project based on the work of William Grindley and his colleagues and their highly detailed analysis of all the numbers.

And, for those who still want to "do it right," here is an example of a parking garage, "done right." 

Yankee Stadium parking garages in financial hot water as spots sit empty even on game days
Friday, March 25th 2011, 4:00 AM
Less than a week before Opening Day, angry bondholders have forced the nearly bankrupt operator of the Yankee Stadium garages to give up some control - and maybe even level some garages.

Parking revenues are so dismal for Bronx Parking Development Company the firm has had to dip into its debt reserves for the second time in a year just to pay the interest on the $237 million it owes in tax-exempt bonds.

On top of that, the firm - a nonprofit the Bloomberg administration selected and the state subsidized to operate the stadium garages - owes the city $17 million in back rent and taxes for the 21 acres of public land it uses.

Ever since it opened under BPDC management two years ago, the 9,000-space parking system has operated at barely 60% capacity, even on game days. Meanwhile, its operating expenses have run twice what was expected.

"The public will never see a dime of rent and taxes from this project as it now exists," said one official close to the garage company.

Company directors agreed in a meeting Monday night to a set of demands from the bondholders in exchange for a one-year "waiver" from a complete default and takeover, a board source said.
They agreed to give the bondholders a seat on the board, to pay the fees of bondholder lawyers and to fire the company's existing parking consultant, Desman Associates.

The board also agreed to furnish weekly financial reports and to refrain from spending any additional money unless approved by the bondholders' designee.

City representatives on the board from the Parks Department and from the Economic Development Corporation voted for the changes.

"The agreement will give BPDC and the bondholders time to evaluate potential remedies to the current shortfall," EDC director Seth Pinsky said.

"Over the next year we will be in discussions with all parties involved to evaluate potential alternatives, and should those parties agree, all options will be considered."

One option that Bronx Borough President Ruben Diaz Jr. has been advocating is to tear down one of the big garages at 153rd St. and build a new hotel.

"That would at least bring in real jobs and development to the Bronx, not just a bunch of garages that sit empty most of the year," an official close to Diaz said.

Bronx Parking has raised the price for stadium parking this year - to $48 for valet parking and $35 for self-parking. The Yankees open the season at The Stadium Thursday against Detroit.

That will obviously lead more Yankees fans to abandon its lots - especially since Gateway Mall Shopping Center a few blocks from the stadium will be charging $23 on game days for parking.

No one should forget that this boondoggle came about because the Yankees - who have no involvement in the garages - put a gun to the city's head. They demanded a 9,000-space parking system from the city and the state as part of agreeing to build a new stadium.

Now, those garages have become a financial swamp for taxpayers.

And right next door, Yankee Stadium raked in $396 million in its first year of operation in 2009 - just from the sale of tickets and luxury suites.

That's more than double the old stadium's revenues in 2007. And it's $140 million more than the Yankees projected.

Yankees Win! City Loses! Again.