On-street metered parking in and near downtown Ann Arbor costs $1.50 an hour. Rates have not been increased since September 2012. By the terms of the contract under which the Ann Arbor Downtown Development Authority (DDA) operates the parking system on behalf of the city, the DDA – not the city council – has the authority to raise rates.
What if on-street metered rates were raised a dime, and rates across other parts of the parking system were also raised by an equivalent percentage?
Although the DDA operates the parking system, that kind of 6.7% rate increase would directly benefit the city’s general fund. By how much?
First, any increase to the city’s general fund revenue is a function of the contract with the city of Ann Arbor, under which the DDA operates the roughly 8,000-space public parking system. The contract stipulates that the city receives 17% of gross parking system revenues.
Total parking system revenues are budgeted by the DDA for the 2015 fiscal year at about $19.3 million. So in ballpark numbers, the 17% equates to a roughly $3.2 million transfer to the city. Of that $3.2 million, about $2.3 million will go to the general fund, while the remaining amount will go to the fund the city uses to maintain downtown streets. That division of the transfer payment by the city has its historical roots in an arrangement between the city and the DDA that predated the existing contract.
So a 6.7% increase in rates across the parking system – assuming no decrease in the use of the system – works out to something like $150,000 more for the city of Ann Arbor’s general fund.
The city council’s role in setting parking rates is one of oversight, not decision-making. But even that oversight role is structurally somewhat weak – because decisions made by the DDA (to raise parking rates) can make the city council’s annual budget decisions somewhat easier.
The next scheduled opportunity for the Ann Arbor city council to exercise oversight of the DDA will be during a fall joint work session – which is stipulated to occur under terms of the city-DDA parking contract. That session is currently planned for Sept. 8.
The contractually stipulated work session would be a good opportunity for councilmembers to ask for metrics on Ann Arbor’s public parking system. Requested information should include stats that indicate how well Ann Arbor’s public parking system supports three different key user groups: (1) downtown employees; (2) retail/transactional customers and visitors; and (3) downtown residents.
Some data is collected routinely by the DDA from Republic Parking – its contractor for day-to-day operations – and shared publicly. That data is limited to revenue figures and numbers of hourly patrons. The routine data does not include hours parked by different categories of users – monthly permit holders and hourly patrons – which makes it difficult to evaluate the system’s support of different user groups.
Still, it’s possible to discern some patterns and to draw some conclusions about Ann Arbor’s parking system, based on the data the DDA does provide. Charts with commentary are presented below.
The most recent rate increases in Ann Arbor’s public parking system were implemented in September 2012.
Rates for the roughly 2,000 on-street metered parking spaces are currently $1.50 an hour. Rates at surface lots straddle that $1.50 hourly rate – at $1.40 for the first three hours and $1.60 for the fourth hour and beyond. Hourly parking at parking structures costs $1.20 per hour. Monthly permits – which don’t guarantee a permit holder a specific space, but are tied to a particular structure – cost $145 a month at most structures.
Some, but not nearly all, of the monthly permits sold in the two-year-old underground parking garage at Library Lane were initially sold at a discounted $95 introductory rate, which reflects a $50 savings over most other structures. The discount was offered to employees of “new-to-downtown businesses” and to permit holders in the Maynard or Liberty Square parking structures who were willing to transfer their permit to Library Lane. The pricing is good through August 2014. Assuming all those discounted Library Lane permit holders retain them after August 2014, revenue per space at Library Lane should show a slight increase.
The most recent revenue data from the Ann Arbor DDA on Ann Arbor’s parking system is through June 30, or the end of the fiscal year 2014. The most recent three fiscal quarters provide the most meaningful year-over-year comparison – because of the rate increase that was implemented in September 2012.
The most recent data is consistent with the parking reports over the last several years, when interpreting the data has required accommodation of rate increases: Revenue has increased even while the number of patrons who pay the hourly rate in structures or on surface lots has decreased. Hourly patrons don’t include those who park at on-street meters. Specifically, comparing the last three quarters of the most recent fiscal year to the last three quarters of the previous fiscal year, revenue has increased 1.20% to $14,647,274, while the number of hourly patrons has decreased by 1.65% to 1,661,256.
In Chart 1 and Chart 2 below, the recently concluded fiscal year 2014 is indicated in dark purple.
Monthly Permits: Are Fewer Hourly Patrons Staying Longer?
The consistent narrative offered by the DDA to account for the increase in revenues – despite a decreased number of hourly patrons – has been told along the following lines: Even though fewer hourly patrons are visiting downtown, they are parking for a longer time.
It’s possible to ask two basic questions about that narrative: (1) Is it meaningful? and (2) Is it accurate?
In order for the narrative to be meaningful, it’s important to understand how hourly patrons are using the parking system. If hourly patrons are exclusively retail shoppers of some stripe, then the fact that retail shoppers are staying in the downtown longer now than they were in the past could be analyzed as good news for downtown retail establishments. On the other hand, if hourly patrons include a significant number of downtown employees – people who would prefer to hold a monthly permit, but who have been languishing on the wait list – then this might indicate that employees are crowding out retail shoppers.
In order test the narrative for accuracy, it’s important to recognize that hourly patrons are not the only source of revenue to the parking system as a whole. For example, on-street metered parking by itself provided about $3 million of revenue in the most recent three fiscal quarters – but that that type of parking does not contribute to the count of hourly patrons. If the revenue from parking meters and bags is subtracted from the total revenue figure, there’s still an increase – in fact, a greater percentage increase than across total revenues. The $11,529,132 collected for the nine months from October 2013 through June 2014 is about 2% more than was collected from October 2012 through June 2013.
Chart 3 below shows clearly that if on-street metered parking is considered as a facility, then it easily generates the highest gross revenue of any facility in the system.
It is not as straightforward to test the DDA narrative for accuracy with respect to facilities that offer monthly permits as well as hourly parking – where those hourly patrons are counted. The revenue division between monthly permits and hourly patrons is not reported and apparently not analyzed by the DDA. So some of the total revenue increase might be attributable to increased optimization of the oversell margin for monthly permits in parking structures. Many structures show more monthly permits sold than they have spaces. The number of monthly permits sold in the entire system, as well as the percentage of the total inventory, shows a slight but clear upward trend over the last three years.
The DDA does not report monthly permit data broken down by permit type – regular, evening/overnight or premium – which might otherwise help to identify how well users of the public parking system are being served.
Monthly permit data is presented in Charts 4, 5 and 6 below.
For some facilities – like the surface lots at Huron/Ashley/First (the Brown Block) and at South Ashley (the Kline Lot) – no monthly permits are sold. So it’s possible to calculate average payments per patron at those facilities. And both of those facilities show evidence that a fewer number of patrons are generating more revenue, and that their average stay has become slightly longer.
Average payments per patron for Huron/Ashley/First and the Kline Lot are presented below in Charts 7 and 8.
Revenue Per Space
The DDA does not calculate revenue-per-space figures. And the DDA has reduced the frequency of its reporting about the number of spaces at a facility – from monthly to quarterly. So the charts below are constructed based on estimates, using previous number spaces. In any case, most facilities have a stable number of spaces and vary at most by a handful, due to special temporary circumstances.
A couple of clear patterns emerge from the plots of revenue-per-space figures. One is that easily the highest revenue per space (though not per acre of land) is generated by the two surface lots on the west edge of downtown – Huron/Ashley/First and the Kline Lot.
Another trend is that the new Library Lane underground parking garage appears to have achieved a kind of equilibrium in its usage. Library Lane has settled in a bit higher than the lowest performing significant facility in the system in terms of the revenue-per-space metric – which is the on-street metered facility. Library Lane achieved what appears to be its current stable level of usage within nine months of opening.
The on-street facility shows a clear bump for April this year. That coincides with the closing of the Fifth and William surface lot, after it was purchased from the city by Dennis Dahlmann. However, it’s not clear what caused the April increase in revenue to the on-street metered system.
Given the kind of parking data currently collected, analyzed and reported by the DDA, it’s not possible to get a very clear understanding of how Ann Arbor’s public parking system is currently supporting three different key user groups: (1) downtown employees; (2) retail/transactional customers and visitors; and (3) downtown residents.
The DDA could improve its understanding of the system by collecting, analyzing and reporting data on hours parked by monthly permit holders as compared to hourly patrons. The hours parked by permit holders should be further broken down by permit type. The DDA could also improve its understanding of the on-street metered system by collecting, analyzing and reporting usage by individual meter – a straightforward possibility at least for those meters that are paid for using the relatively new kiosks.
Certainly there are other fiscal policy issues at stake as the DDA evaluates whether parking rates should be increased. For example, are current revenue levels adequate to pay for existing debt on past construction, the go!pass bus pass program, ongoing maintenance and a possibly $5 million renovation to the Fourth and William Structure? In its oversight role, the city council should certainly include consideration of these basic financial issues.
I’m reasonably confident that the council will exercise appropriate oversight with respect to the purely financial question: Will there be enough money and how much does the city get?
But without a clearer understanding of how the parking system supports different user groups, it will not be possible to measure the impact of a price increase on those user groups.
So at the joint city council-DDA work session on Sept. 8, I hope the city council will include in their oversight role a request for data and metrics that will help answer this question: How does Ann Arbor’s parking system actually work?