March 28 (Bloomberg) -- A Cincinnati plan to privatize parking to close a municipal budget gap must be put to a public referendum, an Ohio state court judge ruled, blocking the initiative.
The proposal calls for the Port of Greater Cincinnati Development Authority to take charge of street spaces for 30 years and those off street for 50 years, with the ability to subcontract their management. In exchange, the authority would pay Cincinnati $92 million now and an estimated $3 million annually for 30 years.
Six Cincinnati residents sued, challenging a city council decision earlier this month to confer “emergency” status on the enabling ordinance, which the lawmakers said exempted it from being put to a public vote.
“The city charter does not specifically exempt emergency legislation from the powers reserved to the people,” Judge Robert C. Winkler of the Hamilton County Court of Common Pleas wrote in a 17-page ruling issued today.
The municipality has already filed papers signaling its intent to appeal and requested an expedited briefing schedule, City Solicitor John Curp said today in a telephone interview.
“We are quite pleased that the judge recognized that the citizens of the city retain the ultimate power and authority by retaining for themselves the right to referendum all ordinances passed by the city council,” plaintiffs’ lawyer Curt Hartman said in a statement e-mailed to Bloomberg News.
“The people of the city of Cincinnati will now have the final say on the long-term leasing of the city’s parking assets in return for a quick and temporary financial gain,” he said.
Similar disputes have arisen elsewhere in the U.S. as state and local governments consider privatizing prisons, lotteries, airports and roadways to raise revenue and balance budgets.
Chicago faces a lawsuit over the 99-year, $563 million lease of four of its downtown parking garages to an entity controlled by two Morgan Stanley investment vehicles.
Earlier this year, a private arbitration panel found the third-largest U.S. city owes the leaseholder, Chicago Loop Parking LLC, almost $58 million for permitting a competing parking facility to be created within the area reserved to Chicago Loop.
Cincinnati’s city council classified the ordinance as an emergency measure needed to close a budget hole and save 344 jobs, including 269 police and fire department positions, according to court papers filed earlier this month.
Absent the lease proceeds, Curp, the Cincinnati solicitor, said the city will need to cut $30 million from the city’s budget for fiscal 2014 and that layoff notices must be issued by May 1.
Should Winkler’s ruling be upheld, the referendum would be voted upon in November, he said.
The case is McQueen v. Dohoney, A1301595, Hamilton County, Ohio, Court of Common Pleas (Cincinnati).
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