March 4, 2004
Testimony of E.J. McMahon before the New York City Council Committee on Waterfronts
Senior Fellow for Tax and Budgetary Studies
Manhattan Institute for Policy Research
Thank you, Council Member Yassky. My name is Edmund J. McMahon, and I am senior fellow for tax and budgetary studies at the Center for Civic Innovation of the Manhattan Institute for Policy Research, based here in New York. The Manhattan Institute is a non-partisan, non-profit organization dedicated to promoting ideas that support individual opportunity, freedom and responsibility.
I am here today to speak in support of the proposed law to privatize operation of city tow pounds (Noo. 434), because I believe it reflects the spirit of civic innovation New York City needs.
Surely there are few challenges more important to this committee than maximizing the value of New York’s waterfront, which is among the city’s most important civic and economic assets. As you and your Council colleagues have pointed out, the space now occupied by the Police Department’s tow pounds at Pier 76 in Manhattan and the Brooklyn Navy Yard could be put to far better use.
The old-fashioned, conventional government approach to freeing up these waterfront properties would involve the laborious process of purchasing and developing substitute city-run car pounds in other locations. But we all know that’s simply not feasible in the current fiscal climate. Moreover, even if fiscal conditions permitted, it would not be the most efficient and sensible way of meeting this challenge.
By contrast, the approach we see in your contracting proposal is consistent with a wider trend among America’s most successful civic innovators -- a shift away from big, centralized government monopolies to decentralized service providers. As the Los Angeles example shows, the function of impounding ticketed motor vehicles can be distributed across a network of lots and parking garages operated by the private sector.
Contracting out the tow pounds is likely to offer greater convenience to people who want to reclaim their impounded vehicles, along with more access to valuable waterfront property for city residents and businesses. There is every reason to believe it also will be a better financial deal for the city in the long run, especially when added tax revenues and commercial activities are taken into consideration.
If approved by the Council and effectively implemented by the relevant mayoral agencies, this would represent yet another successful application of what former Indianapolis Mayor Steve Goldsmith has called “yellow pages test”: If there is something the city government is doing that is also done by at least a handful of private firms listed in the phone book, you are looking at an opportunity for competitive sourcing. In this case, the universe of potential service providers extends to some 1,900 licensed parking lots and garages.
This proposal just scratches the surface of the benefits the city might realize if it is willing to be more open to private sector-based solutions and service providers. For example, let me point out that vehicle towing related to current parking violations is now handled entirely by Police Department civilian employees, at a cost of millions of dollars a year. Meanwhile, there are more than 1,000 private towing companies listed in the Manhattan yellow pages alone. Allowing them to bid for towing work – along with existing city crews – could ultimately drive down the cost of this service.
And speaking of waterfronts, the most visible transportation service still directly run by city government — the Staten Island Ferry – could also be put out for bid by private operators, who already run other ferry services on the city’s major waterways.
The list of potential competitive contracting opportunities could go on and on, but I think you get the drift.
Finally, I would like to stress another policy priority well within the purview of this committee – and that is the need to put as much underused, city-owned waterfront property into productive use and on the tax rolls as possible (consistent, of course, with environmental regulations).
In closing, I want to congratulate the Committee for its vision and creativity in drafting this proposal. Thank you, once again, for allowing me the opportunity to testify.