PT's Parking Blog

Parking Strikes Out, Maybe Yankee’s Don’t

One more comment on the post below – What will happen in the end is that the city will sell off these garages for probably a quarter of their cost and absorb the loss, or will screw the bondholders (where have we seen that happen before.) The new owner will not have the tremendous debt to retire and will be able to run them profitably. Anyone want to guess who that new owner will be? Can you say pinstripes and Steinbrenner's heirs?

JVH

 

Yankee Stadium Parking Strikes Out…

There is some irony here. Or maybe its point of view. The cover article on the IPI's November issue of the Parking Professional is about the parking at Yankee Stadium. As you read through the article, you find that the 4000 spaces divided between two modern, will designed garages can make a great difference to fans and local residents in the Bronx.

However, if you read this article in today's NY Daily News you find another side of the story. It seems the project is so far in the red that most likely it will default. Yankee fans are staying away in droves. The garages are running at 60% capacity during home games and basically are empty (one is closed) the rest of the year. Money Quote:

"The truth of the matter is, the whole thing's a mess," said one financial adviser to several bondholders. "If the city doesn't step in, there's no way Bronx Parking (the organization who built and runs the garages) can pay back the money it took to build those garages."

Bronx Parking has already failed to pay more than $10 million in back rent and interest to the city for the garage system, which sits on city-owned land. The bondholders have asked for more time to review the company's plans to avoid a total collapse. But anyone who looks at the numbers will realize that this could be one of the most embarrassing defaults of a tax-exempt bond in decades for New York City.

My spies on the scene say that anyone with a minor knowledge of parking could have told them that their business model was doomed to failure. I did the numbers and if the garages were completely full for every home game(80) the money generated would not pay the interest on the mortgage. Operating costs and the rest simply weren't in the cards. When the operating company realized what was happening, they raised the price of parking and simply drove more people to the subway or nearby (less than two blocks) garages that charge less than half what the Yankees charge.

The headline in the Parking Professional is "New Yankee Stadium Parking is Home Run for Bronx." Maybe the design and the rest are pretty and well thought out, but the money side is more like a pop up to the infield.

The garages aren't providing "much needed" parking to the area, since existing garages aren't being used nearly to capacity (the one Yankee fans prefer at a mall down the street is normally less than half full.) The PP article notes that there is now park land and other amenities surrounding the garages which provide recreational activities to the area.

All that is well and good. However who is going to pay for it. I'll tell you who. It will be that taxpayers of New York City. The Yankees I'm sure figured a way to get a garage for their new stadium without having to pony up any money. Whoever provided the funding model should be pretty embarrassed, but they won't have to put up the quarter of a billion dollars to pay off the bonds.

This is another boondoggle that has gotten us, at all levels of government, into the sad fiscal state we are in. I'm in an ongoing argument over at Linked in with some Brits over whether building and owning garages is profitable. I say it isn't unless there is a generator nearby to fill it up. The Yankees don't have enough parkers or enough games to pay for their garages and the neighborhood isn't taking up the slack. I rest my case.

JVH

 

The Stats

It's time to crow a bit - Since I began the blog a few years ago we have had 293,777 page views. I have made over 2000 posts and just a tad over 1300 of you have commented. Taking the last 30 days as representative and removing weekends (It seems parking folks don't read parking stuff much on weekends) nearly 300 of you visit here daily. And the numbers have been going up substantially. For the same period last year, the daily visits were half what they are today.

Many thanks.

JVH

 

Speaking of How much to Charge for Parking Tickets

I commend this article from the LA Times for your perusal. In it Don Shoup discusses his concept of graduated parking fines. I was honored that the Shoup Dog had taken some of my ideas from a few weeks ago in this blog and presented them so well. The lede:

Cities often increase their parking fines when they need more money. Los Angeles, for example, is facing a major budget crisis and increased its fines for all parking tickets by $5, regardless of the violation. This across-the-board hike suggests that the higher fines are more about raising money than about enforcing the law. But a few cities have discovered how to enforce the law and raise money without costing most drivers anything. Cities can achieve these three goals by using graduated parking fines.

And This:

Graduated parking fines are a way to deter chronic violators without unfairly punishing anyone else. Graduated fines are lenient for the cars with only a few tickets but punitive for the few cars with many tickets. In Claremont, Calif., for example, the first ticket for overtime parking in a calendar year is $35, the second $70 and the third $105. For illegally using a disabled parking space, the first ticket is $325, the second $650 and the third $975.

Read the entire article – it will take only a minute. Good Stuff. We now have the technology to make this happen. It makes sense, at least to this parker.

JVH

Charging Market Rates for On street Parking

I am frustrated by so many discussions about "raising" parking rates. Everyone wants to "raise" rates and blames Shoup, and the rest of the Shoupista band of planners for cities raising parking fees. Here's the problem. Shoup only says that rates should be set so that 15% of on street spaces are available at all times. In some cases that might raise the rates, in some lower, but in all cases they would vary by time of day, day of week, and the like.

In many cases does this mean raising rates? Probably. I note that in some city I read about recently, the rates were raised for the first time in 10 years. Well, if they have been underpriced, raising might be a solution. If you ask a Shoupista how much to charge for parking, they will give you a blank stare. The only way to find out is to set the rates, and then raise or lower them to get the desired result. Once you do, then you have your rates. There is no textbook or chart that will give you the right answer. What worked on Wednesday in Bakersfield (the night the local Elks has its bbq and poker party) might not work in Modesto since they roll up the sidewalks on Wednesday, but have a sidewalk fair on Saturday.

Rates need to be "edged" up so they provide the desired result. If you double the rates as they did in Chicago without taking into consideration occupancy or the cost of surrounding parking, you get a lot of resentment.

Shoup also says that you have to return the money to the local area and it must provide a "Visible" result. In other words, there must be new sidewalks, lighting, plantings, a park, and the like. And a sign that says something like "This streetscape brought to you by parking fees paid by you on this street." Invisible results like a new off ramp on a nearby freeway don't work.

JVH

Parking 101

OK, Galveston installed parking meters downtown. Here's what happened:

Now that parking meters have been installed in downtown Galveston, people are just parking down the road in front of other businesses.

 

Mark says this is parking 101. What were they thinking?

I suggest that what seems obvious to us may not be obvious to the average city manager or politician. Often they take certain actions as a compromise (Put meters there but not here) and the law of unintended consequences kicks in. Think of all the organizations, some major banks, who lost fortunes getting into parking with the attitude "how hard can it be?"

Since the IPI membership is underrepresented in the municipal area (what fewer than 150 cities are members out of 4000 of any size in the US), how would a city like Galveston have a clue about parking? They could hire a consultant, but then "how hard can it be?" Or they could just lumber on and flunk parking 101.

I guess we need to do a better job of enticing them to read PT, our Facebook page, and this blog. Andy, call your office.

JVH

System Errors

An off airport parking operation in the UK "rented" out a client's car while he was travelling to Cyprus. Their comment:

"The company responsible has blamed a series of 'highly unusual system errors' for the incident."

 

Yes, I can guess the "system errors" were highly unusual. Read the article here.

JVH

More on Triple “Ps”

My comments on triple 'P's below brought this from reader Mark:

As has been discussed previously on this site, there are some cities out there that are in desperate situations and are grabbing for any life line available; http://www.post-gazette.com/pg/10300/1098253-454.stm ".....Mr. Ardo said the time to act was, in a sense, yesterday. "They needed to address this issue years ago," he said of the city, "and they didn't." As with the case in Harrisburg over the years politicians seem to typically look for the "quick fix" to problems and don't think a lot beyond their term in office. Those easy fixes only delay the issue, they don't resolve them. Now there are a lot of cities that are facing a situation where their options are very limited and they have very little time in which to choose before the choice is made for them either by the banks, bondholders, the Courts or the State.

I don't know of any City in this mix where the problem all of a sudden just snuck up on them, but it seems like most of them are dealing with it like they have only now realized what the situation is. I don't know the answer to their problems, but what I do know is that a solution involving municipalities defaulting in masse on bonds and pension obligations is not acceptable. I also know that covering debt by taking on more debt doesn't solve anything long term, it only makes matters worse. We need to get out of the "crisis" mindset and get into an "opportunity" frame of mind. Someone is going to figure out the right formula for these PPP's, one that is both financially and politically acceptable. From looking at the progression from Chicago to Pittsburgh to LA to Harrisburg to Indianapolis, etc, etc it seems like they are getting closer. I wish I had the "answer" right now, I could be a gazillionaire. I know there's a way to do it, and I'm putting my powers of concentration (limited as they are) on trying to figure it out. These situations aren't going to be resolved by either government or the private sector acting alone, it's going to require a cooperative effort.

Mark has hit the nail – Our city's problems didn't "snuck up on them." When times were flush, and property values were over the top, money was flowing into city coffers and of course they were spending like drunken sailors. The difference is that when sailors are out of money, they go back to the ship and sober up. Cities just keep on spending and set up endless programs that require future funding. Unbelievable salary and pension plans demanded by unions are an example. When the average municipal worker in the country makes over 100K a year (salary and benefits) and the average private sector worker is at what, $60K a year, you know that the future is untenable.

The solution, Mark, is some tough medicine. Cut Cut Cut. It means that promises made will have to be broken. It means that cities have to have a budget that equals income and stick to it. It means that these pensions have to be converted. The private sector does it all the time. One fellow who worked for a major software supplier told me that one day all the employees received a check (for the current value of their pension plan) and were given a number of alternative 401K plans to put it in. The company got out of the pension business.

Maybe the lawns at the park get mowed every three weeks instead of every other week,. Maybe city hall has to get by without so many vice mayors and assistant mayors and committees and the like. Maybe councilpersons will have to limit their staff and reduce the number of neighborhood offices they have. Maybe folks will have to drive their own cars and receive mileage rather than use the city owned fleet. I'll bet that 25% of the staff at city hall could be cut and the residents of my city at least would never know it.

Then once they get spending in order, it might be time to look at privatization and triple P's.

Just saying…

JVH

Thanks NPA

Thanks to the NPA's e newsletter for referring folks to my little corner of the parking universe. Back at ya…

JVH

Public/Private/Passé

Let's review the bidding. A number of desperate cities are looking to sell or lease their on street parking for quick bucks to cover budget shortfalls. Chicago did it and the money was completely used up in a year (promised savings accounts somehow were never opened. Pittsburgh is trying, but the city council is balking as are the learned councilpersons of Indianapolis. My sources tell me that many cities that were looking at the triple "P" are rethinking the process.

What happened?

First there was Chicago. The Mayor pushed the process through and a billion was realized, but what has happened is that a number of whistleblowers are claiming that the city left a bunch on the table. They are also seeing that the private sector can in fact perform and revenue has jumped three times over what it was just a year earlier. Many are saying "Gee, why couldn't we have had all that money, all we had to do was clean up our act or hire the private sector." Plus the changeover in Chicago was shaky. There were lots of initial problems that stuck in the craw of the folks in the windy city.

Then there is Pittsburgh. The mayor said they had learned from the issues in Chicago, but still underestimated the amount that was going to be bid, by what, 40%. Then he didn't have his political ducks in line and an opposing city council killed the deal, after the city and a lot of vendors had spent a bundle to bid the deal. The council says its dead; the mayor is trying lifesaving measures.

Indianapolis is working on a redo of the proposal made by its bidder. They, too, seem concerned that there is a lot of money on the table and are reworking the deal to provide them a higher percentage down the road.

In LA, hizzonner is trying to lease out on and off street parking, but the parking department has just upgraded 10,000 meters and the revenue has skyrocketed. The council it rethinking whether they can stand the political onslaught when voters discover they leased out such a lucrative operation.

What these and other city governments have seen is that parking revenue in their jurisdictions can be substantially more than that it is currently. Someone realized that the private sector doesn't just plop down a billion dollars if it doesn't have a "lock" somewhere. Most of the time, that lock is parking's dirty little secret – a lot of money never gets collected, for a myriad of reasons. They found that putting professionals in charge in Chicago, replacing meters, and some rate adjustments and boy, the money just flowed in. Pittsburgh and Indianapolis saw the handwriting on the wall, and LA got a jolt when only 25 % of their meters were upgraded.

There is something lurking in the background. The voters are beginning to realize that government's troubles can't be solved by more and more money. Time has come to look at the expense side of the ledger. Free spending has got to come to an end. Time to starve the beast. Sell parking today, the city hall and the police may follow tomorrow. Then what's next?

There is another consideration, one dealing with public policy. When you lease out on street parking operations, you also lease out your ability to affect policy decisions in the future. Who knows what a city will look like 50 years down the road. Some streets may need to be closed, others changed to no parking, parks and malls may be needed. However if the spaces are leased, the ability to make these changes can be difficult, if not impossible. No private business is going to pay big bucks to have their future controlled by planning commission or a city council and if they do, the bucks aren't going to be nearly so big.

Cities are realizing that they can hire professional parking operations and get much of the revenue increases they are looking for without resorting to sale or lease of assets. They are realizing that rushing in to sell one of their most visible assets is not necessarily the best possible option.

Is triple P as it relates to parking history? Who knows? But I will tell you that they are realizing that farming out trash collection, or building maintenance, or even a courts system is very different than leasing an asset as potentially revenue generating, personal to the voters, and volatile as parking. Remember, all politics is local, and there is nothing more local than where you park your car.

JVH