Reference no: EM132983150

Question - Between restrictions on travel associated with a recent virus, and several weeks of inclement weather, tourism has been down severely at the beachside town of Dolphin Village. With reduced sales tax collections, parking fees and hotel resort tax collections, the town's revenue is down 50% while expenditures have not been significantly reduced. City Council members are anticipating a budget deficit. A group of investors has approached the town council with a proposal to take over operations of the metered parking areas and receive all revenues from the meters for a period of 20 years. In exchange, the group will give the city $1.5 million up-front. The town will retain full ownership of the meters, will continue to make debt payments related to the parking garage construction, and will collect any parking fines assessed. Research into similar situations in nearby towns has revealed some complaints about higher parking fees and frequent meter and parking garage malfunctions.

What questions would you have about the proposal if you were a City Council member? What impact do you think the proposal will have on the short-term and long-term financial status of the city and the city's bond ratings?