Privatize parking meters?

July 13, 2009
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Indianapolis parking meterCity officials are considering several proposals to modernize and even privatize the city's roughly 4,000 parking meters to squeeze out more revenue. They're considering a range of proposals, most of which include multi-space meters and credit card payments. Among the possibilities is a long-term lease of the meters to a private firm. Chicago netted $1.2 billion last year for a 75-year lease of its 36,000 meters, but the deal has generated a firestorm of criticism and a scathing report from that city's inspector general. One estimate pegs the value of a long-term lease of Indianapolis' meters at more than $100 million. The meters already add more than $3 million per year to city coffers, but proposals from private firms responding to a city request for information say that number should be much higher. City officials say any windfall would go toward sewer and road improvements. The full story from IBJ's print edition is here. If the city gives up control of its on-street parking, would projects like the Cultural Trail even be possible? Would the higher rates drive away visitors? Thoughts?

  • Nobody likes the idea of paying more for anything. But given the financial situation in which the city finds itself, and the need to improve infrastructure, I think we have to be looking at and evaluating every option. So I applaud the city for having the courage to do so.

    Leasing parking meters could have the benefit of generating cash, bringing improved services such as pay and display instead of unsightly meters on every street, and more rational pricing of a scare resource.

    However, the devil is in the details. Leasing assets like toll roads is straightforward and has been done for years around the world. Parking meters are a new area and come with significant risk. So it is important to do this right. A few considerations.

    1. First, one major unforeseen consequence of Chicago's meter lease is that the city effective gave up urban planning control of its streets for 75 years. The contract stipulates the quantity, hours, rates, etc. for metered spots, and the city cannot reduce them without paying a hefty financial penalty.

    Imagine, for example, that higher meter rates started hurting the Mass Ave. business district. If the city signed a contract like Chicago's, it would not be able to reduce rates to help those businesses unless it paid a big fee. In the case of Chicago, this was several hundred thousand dollars in one neighborhood business district where an alderman wanted to reduce meter rates and hours to what they were before.

    Clearly, the city should avoid hamstringing its ability to use parking fees as an instrument of urban planning policy or give up control of its ability to design and regulate its streets. If there are large penalties associated with changes, then the city has constructively done this.
  • 2. Termination for convenience. Chicago signed a 75 year lease with no termination clause. This means that if circumstances change, the city cannot get out of the deal. Clearly, if you terminate an outsourcing agreement early, you normally have to pay a breakup fee on some sort of a sliding scale. But this should be built into the deal up front so that the city has the option to terminate, and predictable and reasonable costs for doing so.

    3. Transparency in bidding. I think we should take a page from the toll road lease and try to structure a deal that is as purely financial deal as much as possible. This allows for the widest possible bidder base and gives people confidence in the outcome. Dennison Parking has a meter contract with the city today. I have no complaints about them, but they certainly have an intimate knowledge of parking in the city that no other vendor is likely to have that would give them an advantage in bidding. We should try as hard as possible to make this is a competitive situation.

    4. Market conditions are poor. Indiana leased the toll road at an idea time. As Barron's recently noted, the consortium that leased it probably overpaid by $2 billion or so. Conditions are not so favorable today. We are in a recession with extremely tight credit. It is not an optimum time to be signing deals dependent on long term financing. Chicago's deal to lease Midway airport fell apart. Gov. Daniels recently noted in reference to leasing Gary's airport that the window of opportunity to do so is closed for now.
  • In light of these, perhaps the best approach might be for the city to install pay and display itself, experiment with rate increases, and continue to rely on someone like Dennison to manage the business on the city's behalf. That would boost the city's revenue while letting it experiment with the real world affect of raising rates. The concept of a lease could be revisited when the city has more data and when financial conditions are better. Also there is no reason the city could not capitalize the revenue stream itself if it wanted, without relying on a third party operator to do so.

    Also, I might suggest that for something where experience is new, as with parking meters, that any lease not be for a term like 75 years but rather for a much shorter term like 10 years. Unlike with a toll road, parking meters don't have major capital associated with them. The cost of pay and display boxes could be amortized in a much shorter period of time than the hundreds of millions in improvements the toll road consortium is paying. Therefore, there is much less reason to sign a long term contract.

    Again, great idea to look at this and executed correctly it could be a good deal for the city. The challenges of Chicago should really make sure that focus is put on making sure the right deal, if any, is struck, however.
  • Raise parking fees = less visitors to Indianapolis. I'd suppose Carmel, etc. are hoping that this comes to fruition.
  • I'm apprehensive about any contract that introduces multi-space meters or credit card payments, especially if, as Urbanophile says, the lease lasts an average person's lifetime, or even half that amount. Obviously they would have to adapt to technological upgrades likely to take place over time, but my concern is that the current technology is inadequate. I've seen the metering system in New Orleans (introduced shortly after Katrina) and it is versatile for both parking spaces and payment, but inexplicably rejects credit cards frequently, does not have a simple procedure for adding more time once a user has already paid, and breaks down routinely. Residents of the city have generally been unhappy with the results, and the breakdowns mean lost revenue for the city (coupled with higher maint/op costs). I'm sure these machines have improved even since then, but the bidding process should also include various companies' metering infrastructure with details on exactly how they work, and the City should do its research to see if other cities that have used these services have been happy with the results.

    By the way, I recently learned that Metropolis out in Plainfield has metered parking! This seems like an unbelievable move to me, especially when its at the decidedly non-suburban rate of 25 cents for 15 minutes. I also read that Metropolis has changed its Sunday hours from 12 pm to 6 pm; is this a decrease? Does anyone know how the mall is doing out there? My suspicions are that repeated mismanagement in the past resulted in some significant changes (and new management), many of which might make the facility more profitable but are less inviting to customers. On street parking can have a significant bearing on the success of any retail district--both its availability and cost.
  • Let's start with facts. How many parking meters does the city have downtown? Cory, any data?
  • thundermutt: 3,384. There's a by-the-numbers box with the full story.
  • So who reads print anymore? ;)

    Sorry for overlooking the story.
  • So I guess we shouldn't look foward to a people-mover type thingy that runs into downtown?

    It's already hard enough to get people to come into town for anything other than a game or to handle a dispute in city hall. The public will argue, no doubt, that why should I pay more when there's still plenty of nothing to do?
  • Average Joe:

    There are plenty of people that come downtown on a regular basis for sports games, shopping, festivals, cultural attractions and the like. Downtown would always love more visitors, but I'd say that most people park in a parking garage as opposed to the street. I doubt a minor rise in parking prices is going to force a mass exodus to Plainfield or Carmel..........
  • Why don't they just start charging for weekends?
  • Who's not to say that parking garages would not use the increase in street parking to justify an increase their parking rates and fees? Providing any reason, or excuse, to somebody for not going into the city is not a good idea - especially these days.
  • We don't have a city type tax? Many years ago when I lived back east I seem to recall Manhattan having some type of city tax. i.e. if you lived in NJ, etc. and worked in NYC you paid a nominal amount for the wear and tear you put on the streets, toilets, sidewalks,etc. whatever for the priviledge of working in money-making Manhattan. Is this an option here? Would you good folks in the suburbs be willing to kick in, say .05% from your check? Us cityfolk could sure use it.
  • Let's see if I geet this right. Raising parking meter fees to drive people out of downtown is bad.

    But taxing people who work in the city in order to drive them to suburban jobs is good?

    For my two cents, parking meters are extraordinarily cheap and below what the market would bear. Whether the city raises meter rates on its own or privatizes the whole operation and rates go up, it's not a bad thing. Parking garages have competition and that allow prices to stabalize at what people are willing to pay. But the city has a monopoly on meters, and the prices seem low. There's money to be made.
  • I don't get your second paragraph.
  • Raising meter fees downtown won't drive people out of downtown, because there aren't any people down there anyway.

    You could meter the weekends, raise the prices, etc. and will probably still have the same density of people on any given day. The problem is bodies Bodies are becoming scarce within the city limits. (homeowners, school populations, etc) The city either needs more bodies within its limits or shake down the visiting bodies as much as possible while they are within it's limits. That's how the big boys do it.
  • I find it interesting that people think there's no one downtown, or that a slight parking increase would drive everyone away. Any of you ever been to Mass Ave. on a Friday night? Good luck finding a spot. Same thing with the Wholesale District. Sure plenty of people keeping me from parking.

    And therein lies the problem. From after 5pm Friday until Monday morning the city is giving away a scarce resource. When you underprice something with high demand, you get overconsumption. You get people camping what are intended to be short-term sports. This makes it hard for someone who would *love* to pay $0.25 to run a short-term errand but can't.

    Meanwhile the free streetside parking means large volumes of parking garage space sits empty, essentially wasting large amounts of downtown real estate on weekends. Indianapolis actually has a pretty ridiculous amount of downtown parking for what it is, but the way it is priced is just bizarre.
  • This is messed up. The whole point of parking meters is so people can pop into a store or an office for a few minutes and then get out, instead of having someone hog the parking space all day. Not to raise revenue. If its privatized how are you going to get the operator to reduce rates when it needs to be reduced? What if you wanted to use the space for another lane of traffic or make the sidewalks wider and you're stuck in a long term contract?
  • It is highly unlikely that Indianapolis can get a premium for a long term parking meter securitization in this current equity market.

    I suspect Indianapolis taxpayers would get hosed like Chicago, with some political insider getting a discounted price instead of the city just running the parking operation efficiently with proper pricing and sufficient capital investment.
  • This sounds like a pay day loan scheme, not a wise long term funding solution to the cities infrastructure problems.
  • cwk, I agree with what you are saying. It just seems there really aren't that many people en masse downtown as a ROLLING average. The same is true for BR. Of course these areas (BR, MASS, etc are bustling on the weekend. But what about Mon? Tues?.

    The equlibrium has long been established. We will make this much M-TH and F, SA, SU it will bump up (or down) to this What we need are people filling parking spaces, restaurants, retail, etc. at least five-six strong days a week...this will set the new normal

    But I think that, honestly, this is just a weekend type of city - and there's nothing wrong with that..The smart people that run this place just need to readjust ALL their numbers...
  • The following post has been copied from the full IBJ story. I couldn't have said it better myself. So I didn't. I just copied it:

    Peter Parker
    Saint Petersburg
    FL - US
    2 days ago. # 3 | Report as bad post. | Reply

    The High Cost of Free Parking
    Read the book. Parking fees should be market based. The higher the demand, the higher the cost. To arbitrarily state that metered parking should be $1.50 is a ridiculous proposition. That is exactly what happened in Chicago. The City said the rate shall be X regardless of actual demand and against the basics of economics. A parking meter is not an outdoor piggy bank for a Town or City. It is designed to price the parking at the appropriate level to ensure that cars only park for a short term. Parking garages are constructed to accommodate long term parking.
  • As a follow-up, when you entire blocks of parking meters (typically 1-hour or 2-hour parking) that are empty all day, every day, you know you're doing something wrong. In some of those areas outside of the downtown core, the meters should probably (at this time) allow 8-hour or 10-hour parking at 25 cents per hour to make some revenue, with a few meters reserved for short-term parking. In the downtown core, there should be more 15 or 30-minute meters, with higher rates to prevent people from needing to park in a garage for a very quick errand, while someone else parks on the street for hours.

    More city revenue, and more convenience for parkers.
  • average joe -- I was out in downtown last night on Washington. It was bustling. Not like Fri/Sat evening, obviously, but the typical lower percentage that you'd expect to see on a Monday night in any city in the country. The restaurant I was in had a steady flow of people in and out between 6 and 7:30.

    Your impression of the number of people downtown M-Th leads me to believe that you don't go there on weeknights. I don't know how else you could describe the situation as there aren’t any people down there anyway.
  • CorrND - I won't disagree..maybe things are picking up and I'm happy about it. It's just disappointing when so many good places have an average life of 12 - 18months (maybe a little more, maybe a little less) I'm sure the business owners could take a perspective on either side.

    Average Joe loves his city and just wants to see it thrive - as it can.
    Average Joe would also like to buy beer on a Sunday if he so chooses.
  • Another factor to consider is the high number of parking meter block-outs the city approves. Permits to use lanes and parking are issued daily and in large numbers, many of which have the fees waived (special events, non-profits, etc.). Lots of meters have been effectively removed from use due to security requests from other government agencies. Any agreement would have to either provide for such allowances, or create a situation where they become rarer or much more costly.

    I like the idea of weekend rates, and scaled rates for different times of the day or higher-traffic areas. Good luck getting the powerful Indianapolis Downtown, Inc., to go along with either though.
  • Raise the rates. I actually have coworkers who park at meters and feed it a few times throughout the day, letting it expire and just hope that they don't get ticketed (and some have been doing it for months + and haven't gotten one yet) because it works out to be cheaper per day than a garage parking situation. Meters are cheap in Indy. And they are always full during the workdays.
  • The concept is just crazy....$1.50 hour just to run into a business for a few minutes.....the raise in rates pays for the company to pay themselves and the the city to ding citizens who otherwise pay taxes for access to downtown...if Chicago has problems, then we will also.....10PM? credit cards....cell about quarters.
  • I fully support the use of the new meters. I travel to other cities frequently, and almost all large cities now use the pay-by-card (or coins or cash...the option is still there) and put the sticker in your window method. It isn't quite as quick as just dropping in coins, but it allows easier payment for everyone - I know many people use debit cards for all purchasing these days. It cuts down on the number of meters, plus it automatically adds revenue for the city since new users can't piggyback leftover time from the previous parker and must pay for all of their own time. If we extended the hours to 7pm (currently 6pm in most spots) and added Saturdays, you wouldn't have to raise the rates at all to see a significant increase in parking tolls.

    What I don't agree with is privatizing this function. Leasing the option for this is a bad idea, and I just am not persuaded by the arguments for it in any way (and I supported leasing the Indiana Toll Road). There is too much control given up in leases, and while it makes sense for some things, it doesn't for parking meter management.

    Keep it local but make it modern!
  • Hey Kevin... you don't have to pay for the full hour if it's just a few minutes. That's the purpose of parking meters, to turn over parking spots... not let people sit at them all day. You only have to run in for a few minutes... put only $0.25 in the meter. Under your scenario, that still gets you 10 minutes (or a few minutes).

    And as some other person said, I know people too that will just keep going down to feed the meter all day instead of using a parking garage. Now, in this scenario, who is getting hurt? It's the small business owner at street level because someone has parked in front of their store the whole day and hasn't moved. I think most intelligent, business owners in downtown Indy would welcome raising the meter rates and provide more parking turnover for potential customers.
  • I'm not sure what the law is in Indiana, but typically the limit on metered parking is two hours or the posted time, regardless of how much money you put in. Re-feeding the meter does not allow you to exceed that time in the spot.
  • Urbanophile... you're right in terms of the time limit, but I don't think they mark tires with chalk in Indianapolis to see how long you've been at a meter (like other cities do). So, you can just keep feeding the meter all day here... and unless the meter maid does mark your tires (so that next time they come around, they know you didn't move); they'll never know that you've been at that meter longer than 2 hours because they'll just see the meter isn't expired (and you have just kept coming back down to put more coins in the meter).

    So, yes, technically you're not supposed to stay at a meter for longer than 2 hours or the posted time limit... but I have never heard anyone in Indy get a ticket solely for being at a meter longer than 2 hours or the posted time limit (not getting the ticket because the meter was expired... that one is obvious).
  • No one has brought up that the City constantly gives away parking revenue by bagging meters long in advance of events.
  • Indy Guy's right--it's technically prohibited to camp on meters, but impractical to enforce.

    Another consideration is the effect on lower-income employees who do rely on metered spaces (and camping all day) to work at their jobs downtown. Many can't afford to use the garages or pay for monthly parking. My BF sometimes didn't make enough in tips/wages to cover his parking fees for the day. Even when you do, $10 is a big hit when you only bring home $50 in tips. Same goes for office workers, etc., I'm sure.

    Paul, I alluded to the bagging, but not the problem of doing so far in advance. The problem there lies in staffing and scheduling. You also have to give the people already parked there sufficient notice, so bagging them right at the appointed time doesn't move the vehicle. It's a delicate balance, and I admit the city often errs heavily on the side of the sooner the better.
  • parking meters
    the economny is in bad shape,people are hurting and the city of indpls,wants to increase fees on parking meters,sewer repairs,and what ever they can at a very bad time for indy.people working downtown or seniors who want to make a trip downtown have lunch at the city market,why go you can go to resturant who has free parking,this makes no sense at these thoughts tax-payers do not agree in numbers..
  • parking meters revenue
    where in the budget does it show the income,revenue from parking meters and how is this money spent by the city officials,the tax-payers i am sure would like to see a break-down on this 2 million dollars and where it goes,why can thos money not used foe sewer repairs,i also would like to see the salaries of the top city officials.maybe they should take a pay cut to help out,65,000 to 125,000 dollars per/yr is a great salary for a city worker.they get free parking to and other deals free golf,ect..lets make it fair for all indpls citizens ,just not a few..something is very wrong in this city,it is becoming more like washington dc. come on voters think before voting these people back in including the city=county council members who go along with all this nonsense..think about it..
    ENFORCEMENT PROCEEDINGS - SEC Charges Affiliated Computer Services, Inc. With Stock Options Backdating and False Disclosures: "The SEC's complaint, filed in federal district court in Washington, D.C., alleges that from 1995 to 2006, ACS engaged in a fraudulent and deceptive scheme to provide executives and other employees with undisclosed compensation."

    Above is a part of a recent investigation into ACS.

    Seriously folks let's get real.
    Public officials are supposed to be trustees of the commonweal, not political
    buccaneers seeking their own private gain. But sometimes, in what economists call a
    principal-agent problem, those trustees forsake that obligation and misuse the power
    delegated to them in ways that advance their personal interests rather than those of the
    Corruption distorts the allocation of resources toward projects that
    can generate illicit payoffs. Besides the undesirable efficiency consequences arising
    from this distortion, the effect is likely to aggravate social inequalities, because the poor and powerless suffer, by definition, a comparative disadvantage in securing special favors.
    If the $500,000 has to be paid if the City-County Council will not vote for the ACS deal. Pay ACS's political blackmail scheme and get them out of town. Like all the other commentaries together with articles I've been reading have showed, ACS is not the kind of corporation we want in our town. Political blackmail, special interests, conflict of interests, WHERES THE FBI? WHERES THE FEDS?
    Has anyone ever read ACS Ethical Standards they try to impose on their employees at the welfare office. Their employees aren't allowed to accept even a Christmas card. Yet the CEO's and Directors of this company have done just that.
    ACS is a shameful, unethical, disgraceful hypocrite, not to mention the so called "leaders" of Indianapolis for creating this mess.
    What an embarrassment to our city.

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