High Overhead & Debt Load Push DDA Parking Space Revenues Well Below National Average

MAYOR JOHN HIEFTJE’S propensity to populate the city’s boards and commissions with what City Council members allege are his political cronies has long irked political insiders.

This, among other reasons, is why there is a quiet movement afoot on City Council to work to rein in the Board of the Ann Arbor Downtown Development Authority (DDA). Readers of local news sites are less politic. There are almost constant calls for the DDA to be “dissolved,” “disbanded,” “fired” and “junked.”

Joan Lowenstein, a libel lawyer and  former City Council member, was appointed by Hieftje to the DDA Board after she lost a bid to sit on the 15th District Court. Lowenstein is mocked in the comment sections of local news sites as politically arrogant. Then again, Ms. Lowenstein has mocked and insulted Ann Arbor residents and voters in videos, at open meetings, as well as in print.

The DDA, as well as several of the organization’s Board members (including John Hieftje and Lowenstein) backed the failed Ann Arbor District Library millage proposal.  Ellie Serras, who headed the “Our New Downtown Library” committee told a local news blog after the millage went down in flames, “I think there were implications that the library was involved with the city and the DDA (Downtown Development Authority) in some way…and the community responded.”

The support of the DDA and endorsement of DDA Board members of the library millage proposal was a serious negative in the eyes of “the community.”

With a couple of exceptions, the DDA Board members are routinely criticized as arrogant, out-of-touch cronies who thumb their noses at the public through profligate spending of tax dollars.

Perhaps as a result of the almost constant public criticism, DDA Board members look for ways to help the public understand that the orgianization and it Board are competently managing the city’s 7,145 parking spaces and the public’s $17 million in parking revenues.

Roger Hewitt (a local restauranteur) has counseled the public “…not to evaluate whether an individual structure is making money but rather whether the parking system as a whole is working.” To whit, Hewitt announced that “the net annual income is nearly $800 per space ($784).”

As it turns out, earning $784 in annual revenue per parking space is notable. That amount is 98 percent below the national per parking space average, according to the data compiled by the National Parking Association.

The National Parking Association represents 2,300 members, 715 Companies and organizations serving the corporate and small business owners/operators of parking operations, as well as institutional, government and educational entities.

When DDA’s revenues and expenses are compared to national averages, it becomes clear that the DDA Board overseeing the city’s parking system is delivering results well below national averages where revenues are concerned, and well above national averages where overhead, debt load and project costs are concerned.

The National Parking Association puts out an annual report titled Parking in America. It includes data from 47 states, 91 cities in the U.S. and Canada. Participants own or operate more than 28,000 parking facilities with more than 10.7 million parking spaces.

Here are some key findings:

• Mean maximum 12-hour daily rates charged in the operator’s facilities cost $13.19 in 2012.

A2 Indy Notes: In Ann Arbor’s attended lots, it costs $17 to park from 8 a.m. to 6 p.m. Monthly permits in Ann Arbor garages cost $140-$195  per month.

• According to the 2012 Collier’s Parking Survey, Ann Arbor monthly parking permits cost more than those sold in much larger cities such as Portland, San Diego, Denver and Minneapolis. Monthly parking permits in Atlanta, Georgia and Columbus, Ohio cost between $75 and $125 in 2012.
• The average on-street metered parking for one hour in the city/metro area is an average of $1.35 cents per hour.

AIndy Notes: Over the past 30 months, the DDA and City Council have doubled the rate of hourly metered parking from $.75 cents to $1.50 per hour.

• The average net revenue per parking space is $1,510.

The DDA’s low revenue per space is primarily due to the organization’s long-term build up of structural debt. The DDA’s fund balance is down, and if the organization’s finances dip into the red, Michigan law would require the DDA to be disbanded, or for the city’s taxpayers to raise revenues sufficient to bail out the organization. The DDA’s per parking spot operating expenses are also significantly higher than the national average, according to the NPA data.

Ward 3 Council member Stephen Kunselman has been taking political swipes at the Ann Arbor Downtown Development Authority Board and its members (including John Hieftje) for over three years. Kunselman has been quoted in the media as saying he has “lost confidence” in the DDA’s Board, and that the DDA is a “shadow government.”

When Kunselman ran for re-election in 2011, at a candidate debate sponsored by the local chapter of the League of Women Voters, Kunselman suggested that John Hieftje’s administration has a serious problem with cronyism.

Prior to 2001, the city’s parking system employed a unionized workforce. Shortly after John Hieftje took office, he pushed to have the DDA control parking. In turn the unelected DDA Board members broke the union, and tossed out the unionized workers. Republic Parking was hired, and under the terms of its current contract is paid a $150,000 management fee, plus the $50,000 “performance-based” fee which DDA Board members have repeatedly referred to as a “tip”—a 30 percent tip, paid for with taxpayer funds. The Ann Arbor DDA Board’s “tips” paid to Republic Parking by the DDA Board members are split among Republic Parking executives. Republic executives take in “tips” from other city’s parking systems they manage, as well.

In 2009, when the DDA Board members were criticized in the Ann Arbor News for giving Republic Parking executives a $45,000 tip, then DDA Chair Roger Hewitt characterized the “tip” as giving the DDA some “clout.”

Republic Parking Systems, Inc. is one of the largest privately held parking management services companies in the country, with revenues of $360 million a year and about 2,600 employees.

The company’s parking attendants average $8-$12 per hour, plus benefits. By law, Republic Parking employees in Ann Arbor must earn an hourly rate at least equal to the living wage ordinance requirement, $12.17 per hour.

Unionized parking lot attendants at the University of Michigan earn $31,824 per year, or $16.57 per hour before taxes, plus benefits. In 2008, the Charleston, South Carolina City Council members slammed Republic Parking for paying its employees “slave wages,” in some cases as low as $5.85 per hour.

The Council members voted to allocate $300,000 to raise the wages of the Republic Parking workers, and when the city’s contract with Republic Parking was next approved those council members instructed Republic to raise the pay of its lowest paid workers by $1.15 per hour.

In Western Washington, where Republic Parking is contracted to handle parking for the cities of Seattle, Tacoma, Spokane and Bellevue, its rating with the Better Business Bureau is a D+, with complaints outstanding and unresolved. The BBB in that state has identified “a pattern of complaints from consumers alleging customer service and credit or billing issues. Consumers allege they pay, but later receive a ticket in the mail stating they have not paid for service, and late fees are incurred.” The new five-year contract between the DDA and Republic Parking calls for Republic to install new automated payment equipment in some of the city’s parking structures.

The new equipment will allow motorists to check themselves out and will allow the use of credit cards for payment. The BBB in Western Washington has warned drivers away from Republic Parking and its automated payment equipment.

In July 2012, DDA officials borrowed $1.3 million from Republic Parking officials at 6 percent interest to fund the installation of new automated pay equipment in the city’s parking garages. This is the same kind of equipment that has led to consumer complaints against Republic Parking in Washington State and elsewhere.

In 2009, Republic Parking  accidentally “reprocessed” the credit cards of Seattle customers who’d used the company’s automated pay equipment. Republic Parking blamed a computer glitch for the overcharging error, but the 12,000 reprocessed transactions topped $100,000, and the company sent out no warnings to consumers that their cards may have been “fraudulently charged,” complained one Seattle resident to a local news station. One question that surfaced during that investigation was why Republic Parking was storing the credit card information of short-term parking customers.

In Denver, Colorado, Republic Parking customers who’d had problems with the automated parking machines took to Yelp.com to voice their complaints. Republic Parking has a 1 star (out of 5) on Yelp.com Denver. One customer writes:

“Stay away from these parking lots – their machines are always broken so you can’t pay for parking – then they never issue a ticket.  Their MO is to send you a letter two months later from some cheesy so called Lawyer (Byron somebody) totaling $55. If you try and dispute it they just don’t respond – even if you call or send written correspondence. I had to search on their website to find someone to talk to about the issue.  They asked me what time I called to report the problem.”

“Why is it my responsibility to report their issue when most of the time the machines are broken?  One time I even got my credit card stuck and had to stand there while my friend went and bought tweezers to get it out.  Seems to me like I’m doing a lot of work to pay them for a crappy service.”

“They don’t maintain their machines and then they are impossible to get anything resolved.”

“Terrible company.”

Some City Council members like the idea of taking parking “in house.” The DDA’s control of parking funds would be eliminated, as would the costs of the  DDA’s Republic Parking contract management.