HomeMy WebLinkAbout05/31/2007, - PARKING ENTERPRISE FUND REVIEW 2007-09 council M°M°
May 31,2007
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C I T Y O F S A N L U I S O B I S P O
FROM: Jay Walter; Director of Public Works
Prepared By: Tim Bochum,Deputy Director of Public Works
Robert Horch,Parking Services Manager
SUBJECT: PARKING ENTERPRISE FUND REVIEW 2007-09
CAO RECOMMENDATION:
1) Review and accept the 2007-09 Parking Enterprise Fund Review.
2) Conceptually approve the proposed operating program changes and capital improvement
plan requests contained in the preliminary 2007-09 Financial Plan pending the June 19,
2007, final budget review and adoption.
DISCUSSION
During the 2006 Parking Enterprise Fund Review, the analysis demonstrated that there were
sufficient revenues to keep the fund healthy and able to afford the planning and debt service for the
next parking structure. After a very successful citizen task force effort, City Council approved fine
increases, higher meter rates, expansion of the higher rate"core"meters, adding meters on Slack and
Pismo Streets, and increasing operational hours at the Marsh Structure. For this year, there have
been a number of changes that result in some uncertainty as to the Parking Fund's ability to pay for
the 4t' structure. This report contains an analysis of approved rate and fine increases, the forecast
impacts of the Chinatown and Garden Street Terraces, and operational data from the 919 Palm
structure.
It is important to remember that due to the nature of the Parking Fund and how revenues are derived,
forecasting has never been an exact science. Parking revenues and associated expenditures are inter-
related and subject to outside forces. Factors such as gasoline prices, tourism, Cal Poly schedules,
downtown construction, and adding or subtracting parking in the downtown change parking habits
and effect revenues. For example, adding the new structure at 919 Palm changed downtown parking
habits in all of our structures. The table below shows how our overall occupancy rates have changed
in the last few years.
Structure 2004-05 2005-06 2006-07
842 Palm 72%. 70% 51%
Marsh 57% 59% 62%
919 Palm n/a n/a 76%
There has been a significant decrease in the occupancy rate at 842 Palm. This was anticipated but
not to the extent as has occurred in the last year. The Marsh structure slightly increased in
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Parking Enterprise Fund Review 2007-09 Page 2
occupancy, which was not anticipated because 919 Palm users were thought to be Court Street
shoppers and tenant customers (Public Works & Planning). The Marsh structure has taken some of
the parking demand for Court Street while the predominant users of 919 Palm are visitors to the
County Courts and City-County Library. The 919 Palm structure has been increasing its monthly
occupancy since it opened. At the beginning of the year occupancy rates were as low as 58% and
have steadily climbed to 93% in the month of April. The occupancy rates are going to balance once
the users adjust their parking habits. However, the occupancies are still subject to the outside forces
discussed earlier.
Recent Rate Increases Approved By Council
In February 2006, City Council adopted several rate and revenue increases that were recommended
to them from a task force group of citizens and business interests. The purpose for these increases
was to provide a funding source for the planning and debt service of the next parking structure.
Some of the increases occurred in the last fiscal year with additional increases spread out over the
next few years. The table below shows what we expected to make as compared to what we are
collecting in 2006-07.
Revenue 2006-07
Increases Forecast Revised
Increase the Top 6 issued fines 136,000 50,500
Higher Meter Rates & Expanded core 302,000 268,800
Increased Marsh Structure Hours 26,200 179,200
Add Meters on Slack/Pismo 47,000 0
511,200 498,500
Some individual revenue sources were more profitable and some were less. Parking citation
issuance is down 6% this year and so fine revenues were less than what than expected. Higher fine
amounts could have deterred violations, which is positive result from a rule compliance perspective.
There were also shortages in our enforcement staffing this year. We replaced one Parking Officer
and another one was out for an extended medical leave. Higher meter rates most likely increased
parking in the structures as well. The Marsh revenues increased more than expected and indicate
more evening users than we thought. The meters on Pismo have not been as profitable with 10-hour
meter permits as anticipated. However, the usage is increasing slowly. Lastly, we have had
difficulties on Slack Street and have not installed meters. We are still working with an outside
contractor to determine where the City Right-of-Way is in relation to Cal Poly. Another issue is
large drain culverts near Grand that make installation and access to meters difficult. The costs to
solve these issues may not make the installation feasible. The remaining future revenue increases
have been programmed into the financial attachment and are reflected in the Assumptions section of
the Fund Analysis.
Bottom Line: The projected revenue increases approved by the Council last year are not enough to
finance a 0 parking structure.
3`�
Parking Enterprise Fund Review 2007-09 Page 3
Requests for Profit and Loss Analysis
There has been a request for staff to provide profit and loss analysis for functions like structures,
parking lots, residential parking districts, and other activities. Our enterprise fund policy does not
require that every speck activity within the fund be fully offset by related revenues. Just as in the
private sector, there are activities within the Parking Fund that generate more revenues than others;
prices are set accordingly based on overall business strategies (in our case, desired policy outcomes)
and market forces. We are using revenue from the street and surface lot meters to offset costs in our
structures. Similarly, it does not cost us any more to maintain parking meters in the "core" area of
downtown,but for very valid business reasons,our hourly rate for them is higher than in the outlying
areas. Also, our overall parking rates and strategies encourage long-term parking in a structure to
"free up" the higher demand street and lot parking. In turn, these higher demand areas serve to
subsidize the higher costing parking structures.
Not every activity within an enterprise can or should be a profit center. As such, in complying with
our enterprise fund policies, it is not necessary for every specific activity within the fund to recover
its cost as long as the fund as a whole is adequately covering its total costs. In short, while our
policies do not preclude full cost recovery they don't require it.
For analysis purposes the table below is helpful to look at the Parking Fund costs and revenues by
certain activity for the 2007-08 preliminary budget.
Residential
Streets& Parking
Structures Surface Lots Districts' Total
Revenues 1,134,400 2,568,700 46,800 3,749,900
Expenditures
Operating Programs 1,004,600 1,103,400 38,000 2,146,000
Capital Improvement Plan 20,300 40,600 60,900
Debt Service 1,463,900 1,463,900
Total Expenditures 2,488,800 1,144,000 38,000 3,670,800
Revenues Over(Under)Expenditures 1 1,354,400 1,424,700_1 8,800 1 79,100
* Based on detailed analysis prepared in 2004
Proposed 4th City Parking Structure
On April 24, 2007, City Council approved the self-park design Alternative D3 and directed staff to
bring back a draft Request for Proposals for architectural design plans. Also, Council directed staff
to look into the possibility of acquiring an alternative location other than the Palm Nipomo location
for the next parking structure. Staff is working on these two items, but the second task makes the
analysis more difficult in this year's fund review. We do not know what the cost to acquire another
location will be. Negotiations will very likely slow down the current project, which will increase the
costs to build it. Since there is no clear time estimate for when construction will begin and certain
Parking Enterprise Fund Review 2007-09 Page 4
costs are not known, the 4t' City Parking Structure is not programmed in the attached Financial
Analysis.
The table below is provided to show how the costs will escalate if we wait to begin construction.
This does not show the total picture with Palm Nipomo programmed into the Parking fund with the
support of other parking funding sources. In developing the financial impact of the Palm Nipomo
parking structure, staff considered the points brought up by Council Member Andrew Carter's
memo of May 1, 2007. The table assumes the D3 self-park structure built on the city-owned
properties at the corner of Palm Nipomo.
2007-08 2008-09 2009-10 2010-11 2011-12 2012-13
BUDGET BUDGET _ BUDGET BUDGET BUDGET BUDGET
Cost of Construction 15,242;500 16,766,800 18,443,400 20,287,800 22,316,500 24,548,200
Annual Debt Service(30 yrs @ 5.5%) 1,049,000 1,154,000 1,269,000 1,396,000 1,535,000 1,689,000
Operational Costs(2.5%per year CPI) 351,500 360,300 369,300 378,500 388,000 397,700
Total Annual Costs 1,400,500 1,514,300 1,638,300 1,774,500 1,923,000 2,086,700
Revenue(455 spaces x$815) 370,800 374,500 501,800 506,800 511,900 517,000
Offset loss of revenue (1,029,700) (1,139,800) (1,136,500) (1,267,700) (1,411,100) (1,569,700)
Note: The table incorporates general revenue increases of 1% annually and in 2009/10 structure rate
increase of 34%.
If we assume that the Palm Nipomo parking structure is built in 2012-13, Council will have to
consider additional revenue increases to bridge the gap needed to fund the debt service and
operational costs of the structure.
2012-13
Net Loss from above chart 1,569,700
Anticipated Net Revenues from attached Exhibit 571,300
New Revenues needed by 2012-13 998,400
To date, Council has approved $300,000 for environmental review and there is approximately
$32,900 left in conceptual design services. Additionally, the City's 2005-07 Financial Plan
appropriates $1.2 million for design in 2006-07.
Other Fiscal Impacts to the Parking Fund
The Old Town Residential Permit Parking District and the Way-Finding Structure Sign projects will
have a financial impact on the Parking Fund in the next few years. The Way-Finding Sign project
has been funded with $340,000 in prior capital improvement appropriations. Signs will be placed on
downtown streets and show our structure's occupancy rates in real time. The signs will assist the
public to find a structure that has available parking. The project will encourage structure parking
and reduce traffic. Therefore, the Way-Finding Sign project should increase structure usage and
increase revenues.
In the next few months the Old Town Residential Permit Parking District will be resurveyed to see if
there is sufficient support to restrict parking for residential use during the day. This area is on the
i
Parking Enterprise Fund Review 2007-09 Page 5
western edge of the downtown and is parked by downtown workers and visitors who do not want to
pay for parking. If approved by Council,there will be direct expenditures and revenues as a result of
the district itself. The indirect financial impact cannot be determined until the district is in place and
parking habits analyzed. For example, displaced vehicles may park in other surrounding
neighborhoods causing more districts to be processed. Some of the displaced vehicles may seek
parking downtown or take advantage of parking alternatives such as bicycling, walking, car pooling
or riding the bus. At this point the full financial impact cannot be determined until the process is
completed and the District up and running.
ALTERNATIVES
The following alternative actions are available to Council:
1. Council can direct staff to establish another Task Force to look at more revenue
enhancements in order to afford Palm Nipomo.
2. Council can decide to pursue another location for the next parking structure.
ATTACIIMENTS
1. 2007 Parking Fund Analysis
TA2007-09 Financial Plan\Enterprise Funds\Parking\CAR 2007-09 Fund Review.DOC
ATTACHMENT 1
2007 Parking Fund Analysis
A
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7.
C
May 31 , 2007
Prepared by the
Public Works Department_
city of san lui s OBISPO
�— Attachment 1
Page 2
city Of Safi Us OBISpO
2007 Parking Fund
TABLE OF CONTENTS
L OVERVIEW
II. 2007-09 FINANCIAL PLAN
A. Summary of Operating Programs
B. Significant Operating Program Change Requests
C. Capital Improvement Plan Requests
D. Debt Service Payments
III. ASSUMPTIONS
IV. LOOKING TO THE FUTURE
A. Electronic Parking Way-finding Signs
B. Old Town Residential Parking Permit District
V. EXHIBIT A—2007-09 FINANCIAL SCHEDULE
- Attachment 1
Page 3
i city of
San lues OBISPO
2007 Parking Fund Report
I. OVERVIEW
This report presents the financial condition of the Parking Fund, based on the draft 2007-09
Financial Plan operating program budgets, and recommends program and capital requests to
address the identified needs in the Parking and Access Plan, capital improvement projects, and
adopted city financial and infrastructure maintenance policies. The Chinatown and Garden
Street Terraces projects have been programmed into this budget cycle, however these projects
may or may not occur in the time frames projected or may change during the approval process
and environmental review stages. The next parking structure has not been programmed into this
budget due to uncertainties of when it will occur and where it will occur.
II. 2007-09 FINANCIAL PLAN
A. Summary of Operating Programs
2007-08 2008-09
Staffing 908,400 958,900
Contract Services 590,900 604,000
Other Operating Expenditures 181,300 166,600
Minor Capital 2,200
Total Parking Services 1,682,800 1,729,500
Note: The program description is provided on pages D-76 to D-78 of the Preliminary Financial Plan.
B. Significant Operating Program Change Requests
2007-08 2008-09
Parking Operations
Citation Writer Replacement 32,200 2,200
Meter Programmer Replacement 14,600 600
Increased Administrative Assistance 29,700 34,300
Total 76,500 37,100
Note: Supporting documentation for each request is provided in Appendix A of the Preliminary
Financial Plan,Pages 96 to 102.
f
- Attachment 1
Page 4
C. Capital Improvement Projects
2007-08 2008-09 2009-10 2010-11 2011-12
BUDGET BUDGET BUDGET BUDGET BUDGET
Fleet Replacement: Truck&Sedan 18,500 19,500
Fleet Replacement: Utility Carts 20,300 67,800
IT Disaster Recovery Plan 1,100
IT Strategic Plan 7,700
Sharepoint Electronic Content Mgmt. 1,500
Voice Over IP 21,000
60,900 0 21,000 75,500 0
Note: Detailed supporting documentation for each project is provided in Appendix B of the
Preliminary Financial Plan,pages 3-323 to 330; and on pages 3-497 to 512 for shared IT
project costs.
D. Debt Service Payments
2007-08 2008-09 2009-10 2010-11 2011-12 2012-13
BUDGET BUDGET BUDGET BUDGET BUDGET BUDGET
842 Palm & Marsh until Jun 2014 498,600 502,300 499,300 502,300 501,600 499,500
Marsh Expansion until Aug 203.1 426,500 425,800 425,200 424,500 423,700 423,000
919 Palm until Jun 2036 538,800 538,000 539,600 538,200 539,300 540,000
Dispatch Center/Radio System 9,000 9,000 9,000 9,000 9,000
1,463,900 1,475,100 1,473,100 1,474,000 1,473,600 1,471,500
Note: Detailed supporting documentation for debt service costs is provided on pages F-1 to 3 of the
Preliminary Financial Plan.
III. ASSUMPTIONS
The following assumptions have. been programmed into the long term forecast of the Parking
Fund. The Chinatown and Garden Street Terraces projects impact three of the City's parking
lots. The dates of when these projects occur are staff s estimate of the soonest they could occur.
If they occur later than projected it will allow for additional revenues to accumulate for the Fund.
1. Revenue from meters, garage fees, passcard sales, meter permits, leases, and fines will
increase by one percent each year due to increased parking demand.
2. Operations and maintenance costs are found in the 2007-09 Financial Plan; operating
costs after that will increase by two and a half percent each year due to C.P.I.
adjustments.
3. The following significant operating program changes will take effect (See detail starting
on page 3):
a. Parking Citation Writer Replacement @ $32;200 in 2007-08 and $2,200 in
2008-09:
-9
Attachment 1
Page 5
b. Parking Meter Programmer Replacement @ $14,600 in 2007-08 and $600 in
2008-09..
c. Increased Administrative Assistance for Parking @ $27,600 in 2007-08 and
$31;900 in 2008-09.
4. Capital project appropriations from fund balance will include (See details on page 4):
a. Fleet Replacement of one Truck @ $18,500 in 2007-08 and one Sedan @ $19,500
in 2009-10.
b. Fleet Replacement of one Utility Cart @ $20,300 in 2007-08 and two Utility
Carts @ $67,800 in 2010-11.
c. The Parking Fund's share of Information Technology Disaster Recovery Plan @
$1,100 in 2007-08.
d. The Parking Fund's share of Information Technology Strategic Plan @ $7,700 in
2010-11.
e. The Parking Fund's portion of the Sharepoint Electronic Content Management @
$1,500 in 2009-10
f. The Parking Fund's portion of the Voice Over IP project @ $21,000 in 2007-08.
5. A reserve equal to the annual debt service plus 20 % of the total Operating Program
expenditures should be maintained by City's fiscal policy.
6. In June 2006 City Council approved several Revenue Enhancements with the goal of
providing increased revenues to afford the next City Parking Structure. The next phase
of these increases are programmed as follows.
a. Overtime parking meter fines will increase annually by $1 each year beginning in
2007-08 until they reach the maximum of$20 in 2011-12.
b. The downtown core parking meter rates will increase from $1 an hour to $1.25 an
hour beginning in 2009-10.
c. The downtown outer parking meter rates will increase from $0.75 an hour to $1
an hour beginning in 2009-10.
d. The parking structure rate will increase from $0.75 and hour to $1 an hour
beginning 2009-10 (the first 60 minutes will remain free).
e. Parking validations (100 free hours of parking) will increase from $45 to $60 in
2009-10 due to the structure per hour increase.
f. Construction parking meter bags will increase from $14 a day to $17 dollars a day
in 2009-10 ($1.25 core meter rate x 9 hours x 150%).
7. Chinatown Project Fiscal Impact:
a. Parking meter revenues will cease for parking lots 3 and 11 beginning January
2009.
Attachment 1
Page 6
b. Parking fines will decrease by approximately 11% due to the loss of parking
meters in lots 3 and 11 beginning January 2009.
c. The Parking fund's share of the sale of parking lots 3, 11, and the 955 lot will be
$1,159,840 in 2008-09.
d. Operating costs will decrease for meter fine collections in parking lots 3 and 11
@ $19,900 in 2009-10, 13,200 from 2010-11 to 2012-13 (citation processing,
collections, etc.).
8. Garden Street Terraces Project Fiscal Impact:
a. Parking meter revenue for parking lot 2 will cease for two years during
construction of the project beginning in 2009-10 to 2010-11.
b. Parking fine revenue will decrease by approximately 9% for the loss of parking
lot 2 during construction of the project beginning in 2009-10 to 2010-11.
c. Operating costs will decrease for meter and fines collections in parking lot 2 @
$7,600 in 2009-10, $7,600 in 2010-11, $3,900 in 2011-12 and 2012-13.
d. Lease revenue of approximately $2000 a year for trash leases in parking lot 2 will
cease in 2009-10.
e. Parking meter revenue for parking lot 2 will resume in 2011-12 with a reduction
for the permanent loss of 22 meters (62 to 40 parking spaces).
f. Parking fine revenues for parking lot 2 will resume in 2011-12 with a reduction of
permanent loss of 22 metered spaces.
.g. Parking In-Lieu for the replacement cost of 22 lost public parking spaces in Lot 2
will be $660,000 in 2010-11 or "upon issuance ... of building permits for the
Project."(MOU page 5, Section 2.5)
h. The Parking Fund will advance $ 2.4 million to the developer to finance the new
parking facility(40 public parking spaces and the 56 hotel spaces below grade) in
2011-12, or"within 30 days following the first date on which the forty(40) public
spaces ... are available for use by the general public." (MOU pages 5-6, Section
3.1)
i. Lease revenues are estimated to increase to $105,000 annually for 30 years
beginning in 2011-12 for the repayment of the $2.4 million advance. According
to page 6, Section 3.2(b)(i) of the MOU, the calculation for the lease is the
amortization payment plus the supplemental parking revenue replacement
payment reduced by the net realized increase in property tax. This has been
estimated as $165,000 + $28,000 - $88,000=$105,000.
Attachment 1
Page 7
VI. LOOIQNG TO THE FUTURE
A. Electronic Parking Way-finding Signs
Staff is currently completing design on the Electronic Parking Way-finding Signs CIP
approved by Council as part of the FY 2003-05 Financial Plan. These dynamic
informational signs are anticipated to go to construction in late 2005 and assist with
access notification for available parking structure capacity during peak season demand.
No additional allocations for this project are necessary.
B. Old Town Residential Parking Permit District
Staff has begun planning for the Old Town Parking District on the western edge of the
downtown. This district was requested on two occasions and Council has postponed
implementation with the hope that certain parking projects would alleviate the demand.
Staff will be responsible for the initial surveys, .hosting Town Hall meetings, and
handling the formal surveys. If the district has sufficient support and if approved by
Council there will be associated expenditures and revenues affecting the Parking Fund.
The size of the district boundaries will not be known until the end of the process.
Another potential issue is that more permit districts may develop around downtown as
densities grow.
Attachment 1
Page 8
EXHIBIT A
2007 PARKING FUND
FINANCIAL SCHEDULES
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