Tuesday, August 24, 2010

Taking A Closer Look at the City Parking Agreement

This evening, I spent a few hours flipping through the 170 or so pages of the parking contract and exhibits.

While below I refer repeatedly to "ACS," I would point out that the copy of the contract I have doesn't identify ACS . Rather the vendor is simply referred to as "Concessionaire" and the name of the company that is the "Concessionaire" is left blank. If this was done to leave the impression that the selection of the vendor was not a done deal, the drafters screwed up when they accidentally referred to "Xerox," ACS corporate parent in the document. However, rather than write the lengthy "Concessionaire" every time, I will instead simply identify the "Concessionaire" as ACS to make things simpler.

Here are some interesting things I found in the agreement that haven't necessarily been reported yet:
  • If the City County Council does not approve the deal, ACS can claim up to $500,000 in expenses. I assure you that if that happens, ACS will have $500,000 in expenses. (p. 26)
  • The Agreement is to be considered a "sale" for tax purposes. I'm pretty sure the IRS doesn't have to go along with that. (p. 29)
  • ACS has the "exclusive right and responsibility" to administer parking enforcement. The agreement mentions that ACS will use Dennison and City's designated law enforcement officers, but still makes clear that ACS is calling the shots. (p. 32)
  • City can designate residential parking areas. (p. 33)
  • ACS has exclusive naming rights to the metered parking system. (Not sure how that would work.) ACS is allowed to sell advertisement on meters (or on the back of tickets issued by meters. These are both subject to City approval. (p. 40). Get ready for tacky advertising on meters. I don't think any of the advertising revenue will go to the City. This could be a huge source of revenue for ACS.
  • ACS is protected by competition by a prohibition on the city allowing off-street parking facilities to be built on its property. (p. 41.)
  • The City is going to set up special street parking for City, State and Federal employees. This will allow certain government employees to remain at the meters. The City will pay ACS for these spots. (p. 42.)
  • If the City does not raise the parking rates as provided by the contract schedule, ACS will be entitled to compensation. (p. 46.)
  • If meters have to be blocked for road repairs, ACS will be entitled to a temporary closure fee. (p. 49.)
  • It appears that ACS might be entitled to a temporary closure fee (so much per meter) if the City wants to disallow parking on certain streets during rush hour. (p. 49). (It could also be compensable under the "decreases in hours of operation." - p. 51.) For example, the meters directly in front of my law office on Delaware Street are 9 am to 3 pm...the shortened hours allowing for rush hour. Under the new plan, the meter parking hours will be 7 am to 9 pm. It appears that if the City wants rush hour restrictions on downtown streets, the City, i.e. taxpayers, will have have to pay for them.
  • The City is permitted to look at "audited publicly available financial statements and reports of Xerox Corp. only." (p. 52.) What is interesting is that my copy of the contract never once identifies the company that is the "Concessionaire" The contract appears to be pre-vendor selection, as if it was drafted by the City's attorneys in preparation to fill in the name of the winning vendor. However, the contract specifically mentions Xerox, the parent company of ACS. That makes me wonder if ACS's attorneys and not the City's, drafted the contract and then scrubbed out ACS references overlooking the reference to Xerox.
  • ACS "will provide to the City any calculations, volumes or analysis of revenue necessary to calculate and verify its share of revenue" under the Agreement. (p. 52.) This is the m.o. of the people who negotiate for our City. They will depend on ACS to supply the numbers to do the revenue calculation...not even reserving the right to audit the source of those numbers. It's the Pacers all over again.
  • The City will pay Morgan Stanley for its fees associated with the deal. (p. 58.)
  • ACS is required to "manage and maintain a battery recycling program to help to protect the environment." (Schedule 2, Article XIX)
  • If parking revenue reaches a certain threshold, the amount the City gets increase. (Schedule 2.1). Of course, as previously noted, under the Agreement the City simply has to take the word of ACS regarding revenue generated.


varangianguard said...

Nothing like letting a vendor write its own contract. Uh-huh.

Gary R. Welsh said...

Paul, Can you upload a copy of the contract to the Internet, or is it on the City's website.

Paul K. Ogden said...

AI, I sent it to you via email. I probably should have uploaded it but my computer was working so poorly I didn't attempt it.

I believe it's probably also on the City's website.

Paul K. Ogden said...

What I find obnoxious is the idea this company can innudate residents with advertising and they get to keep all the ad revenue. I've always found it offensive for government entities to allow advertising on public property, but when the City doesn't make a dime off of it that's downright offensive.

I didn't see though where the city gets any ad revenue. I could have been reading the contract wrong, however.

JeffW said...

There are so many things wrong with the document, who would ever agree to it?

What entity reimburses for expenses for bidding a contract? How can that be enforced before it is approved by CCC? If that is the case they should just add, "If the City County Council does not approve the deal, Concessionaire can claim up to $5 billion in expenses" or why not you and I just bid on every contract, lose, and collect the expense reimbursement?

Paying Concessionaire when the meters are not available for use? Will we avoid repaving/fixing streets to avoid paying Concessionaire? Isn't this called the double whammy? Today, you just have opportunity cost with covering the meters, tomorrow actual cash out the door.

"If parking revenue reaches a certain threshold..."; wanna bet the threshold is greater than available meters x available hours x rate

1000 meters x 8 hours x 312 days x 50 years x $1.50/hour = $187 million

Those are the conservative numbers - what are the real numbers? Oh that's right, that $1.50 number above, it is inflation protected, so $187 million is the minimum amount the contractor will get - yipes!

It should be an easy calculation to figure out the present value of the contract given we know all of the variables, and see how bad the City is being flogged.

Who on the CCC would actually think this is a good deal?

dcrutch said...

What- the CIB is the long lost uncle of ACS? I don't understand the "honor system" in contract writing. If the vendor is in business to make money, unless they've taken a public vow of celibacy next to a three-legged calf on a rock, or are trying to sell you a copy of the Bhagavad Gita while wearing tennis shoes- they're probably the typical opportunistic American entity trying to make as much money as possible before the goverment takes it from them.

City contracts are not typically awarded to blushing schoolgirls. What comes next, when I walk on the lot to buy a new car, I tell the salesmen to refer to my "analysis of revenue" to determine how much his commission will be, and don't worry, I'll let him consult my numbers?

Jon said...

Was the contract available for review prior to awarding the contract? Is there an option to terminate the contract by either side?

Blog Admin said...

Jon, the deal still needs council approval. You can view the contract itself and council proposal at http://www.indygov.org/parking

Marycatherine Barton said...

Thank you so much for taking the time to read and evaluate this city parking agreement, Paul. I wonder if even the Mayor has read much of it, or if any of the councilors will, I bewilderingly ponder. Shhhhh.

Downtown Indy said...

Adjusted for inflation means a parking meter should run about $10/minute in 50 years.

If we still have cars and parking meters, that is.

Longhunter said...

This is the responseOn behalf of Mayor Ballard, thank you for sharing your concerns.

The ACS team includes Denison Global Parking and Evens Time and was selected from 16 bids as the proposed operator of the City's meters, garages and lots. The proposal will result in a $35 million upfront payment, with ongoing revenues to the city totaling more than $400 million over the 50 year agreement, in addition to the creation of 200 jobs in Indianapolis.

This collaboration with ACS will enhance our City's already vibrant economic environment and, in addition, create 200 new jobs for our residents. Because of this proposal, significant infrastructure improvements will be completed in the downtown and Broad Ripple areas, but also Rebuilds Indy in another way-through modernizing our parking system and bringing new convenient technology to Indianapolis.

For more information about the public parking system initiative please visit www.indy.gov/parking or call 317-327-4MAC.

Best regards,

Mary Grattan
Constituent Services Assistant
Office of Mayor Greg Ballard - City of Indianapolis
mary.grattan@indy.gov P: (317) 327-2580 I received after voicing my concerns.

Longhunter said...

Sorry for the previous post. It is the response from the mayor after expressing my concerns.

On a popular local radio show 1430 AM, a representative of the mayor said that right now Indianapolis makes about 750K per year from parking. With the ACS deal, they would get 35 million up front, and about 2 million the first year, going up over time. Seems that to raise profits by nearly 200%, and to get another 35 million up front, they will either have to carpet bomb the city with new meters, and/or raise rates substantially. This doesn't even take into account the profit ACS will need to make. Something just doesn't add up.