Thursday, March 8, 2012

Parking Meter Deal Fails to Live Up to Projections; City Only Received 24% of Parking Meter Revenue Last Year While ACS Pocketed Millions

Jon Murray of the Indianapolis Star today pens an excellent review of the ACS 50 year parking meter deal.  Several months ago, the administration spoon fed the media numbers about the deal which suggested it was a resounding success.  The TV stations dutifully reported the administrations numbers, failing to ask pertinent questions regarding their accuracy.  Murray though does some investigative work that results in this story.  He finds the deal has not been as profitable to the City as it was billed:
The first year of Indianapolis' 50-year parking meter lease brought doubled rates in some areas as a tradeoff for a wholesale upgrade of equipment and the convenience of paying by credit card or smartphone.
Was it worth it?
New financial data provided by the city shows its share of revenue from the vendor in 2011 -- nearly $1.4 million, or 30 percent -- fell well short of the city's own projection of $2.1 million.
And the city didn't end up seeing the full amount: After the vendor subtracted $286,000 in charges to compensate for the city closing metered spaces, often for RebuildIndy road construction work, the city pocketed $1.1 million.
The vendor, ParkIndy -- a trio of local and national companies led by Dallas-based ACS, a Xerox company -- kept more than $3.5 million.
The city's $1.1 million in income last year came out of a nearly $4.7 million pie.
That's the total of all meter revenue ($2.9 million) and parking citation payments ($1.7 million), as well as permit fees paid by outside groups to close meters for events ($88,160).
The contract gives the city 30 percent of the first $7 million in total revenue each year. For anything above that amount, the city's take would increase to 60 percent.
But that percentage sets only the starting point. Last year, the city ended up with only 24 percent.  So, why did ParkIndy pocket the extra $286,000?
Those were meter closure fees. The contract allows ParkIndy to charge the city for lost use of any meter the city orders closed for its own use -- including for road construction, certain events or public safety.
To see the rest of the lengthy article, click here.  Definitely worth the read.
Murray points out in the article the option of getting out of the deal every 10 years and mentions that the cost to do so is $20 million, which decreases every 10 years.  But if you look at the details of the opt out provision, it is much, much harsher than that.  A vendor is prohibited from borrowing money to pay the buy out fee, the vendor has to agree to accept the ACS's 2010 revenue from the deal for the first couple years (which is particularly problematic since the deal didn't kick in until late 2010). 

Of all the votes made by my Republican councilors over the past four years, this was the absolute worst vote bar none.  The City could have purchased new meters for $8 million and kept 100% of the revenue for the next 50 years.  As Councilor Mahern said in the article, we could have done shorter term privatization contracts to run the meters.  Instead we gave away 70% of the parking revenue for the next 50 years, for a tiny upfront payment of $20 million and 30% of the revenue.  As reported by Murray this year it was 24%.  We're not even getting 30% due to meter closures, which requires us to pay ACS when things downtown prevent the meters from being used.  And here's a trick there.  When the meters are valued for paying the closed meter fee, they are valued as if they were at full occupancy, which of course, they wouldn't be. Yet another way the city has of putting money into the pocket of politically-connected ACS.

As far as getting to the revenue level to trigger the City's sharing jumping from 30% to 60%, here's the trick there.  They indexed the revenue level to inflation.  Parking meter increases are also indexed to inflation.  Thus, we will never reach the level that would allow the City's share to get to 60%.   

Why might the City enter into such a horrific deal?  Do the math.  The Mayor's attorney and confidant, Joe Loftus, also lobbies for ACS in his role as a partner with Barnes and Thornburg.  Ryan Vaughn is also an attorney at Barnes & Thornburg. Vaughn pushed the ACS deal through the Council and refused to recuse himself, giving his law firm's client the tiebreaking vote on a deal that will make ACS hundreds of millions of dollars.

Every time I feed those parking meters downtown, I am embarrassed about what my Republican councilors have done to the City's parking for the next 50 years.  It was fiscal irresponsibility at its worst.  It is a shame that Republicans, with the notable exception of Councilor Christine Scales,  conceded fiscal responsibility on the issue to Democrats.  I can't help but thank people like Brian Mahern and Zach Adamson who have acted as responsible stewards of the public's money and not been afraid to question the deal.   I wish I could say the same about my Republican Mayor and Republican councilors.
***

See also: Advance Indiana's take on this issue.  Gary Welsh talks about the issuance of invalid parking tickets that weren't justified, possibly triggered by a desire by ACS to increase its profits.   I know that all too well when I walked out to my car one day and found I had a ticket even though I had 20 plus minutes remaining on the meter.

4 comments:

Downtown Indy said...

Seems like an intelligent contract would have been 'city gets their target revenue, then contractor gets whatever excess there might be.'

But I realize we have no one with actual negotiating skills in the city legal department.

marksmall2001 said...

I park in a parking garage. The money goes to the same corporations, there is no mystery about receiving a ticket, and though more expensive, two or three tickets would even everything out. Since the parking meter is nearly unassailable (in the way in which the system of challenges of tickets has been formed), there is little hope of posing a challenge.

Crossed said...

Since the meter sell off, there is a silent population that avoids using the parking meters at all or parks at them and doesnt pay for them. Or they avoid downtown and Broad Ripple alltogeather - hurting businesses of course. These are the same people that stopped going to the Colts and Pacers games when Irsay and the Simons received their extortion money from the city. Its not much but its what we can do right now.

Paul K. Ogden said...

Mark,

Parking in a garage is not a realistic option if you're just going downtown to file something and expect to be there 15 minutes. For hearings though that could last an hour or more, I usually look for a garage.

The raising the rates has really opened up spaces. It's amazing the difference now compared to last year. People aren't parking at the meters like they used to. I think they expected more turnout. But what they got was people avoiding parking at spaces completely.

Mark is right. Parkers have now been driven to garages and the garages have raised there rate. Is there any surprise that the owner of most of the garages downtown, Denison, is a partner with ACS in the parking meter deal?