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High Overhead & Debt Load Push DDA Parking Revenues 98 Percent Below National Average

by P.D. Lesko

Hieftje gives out seats on city boards and commissions at parties, like they were candy,” says a political insider. John Hieftje’s propensity to populate the city’s boards and commissions with yes men (and women) and unqualified political cronies has long irked political insiders and haunted city residents, whose input and feedback Hieftje’s cronies often blatantly ignore. Hieftje’s short-sightedness is now coming back to bite him in the political posterior. Most recently, the Board of the Ann Arbor Transportation Authority (AATA) Board, comprised of political cronies, several of whom don’t live in Ann Arbor, and most of whom never regularly take the bus, wasted millions on a spectacularly embarrassing failed bid to hijack AATA millage money to pay for buses to run to out-county communities, and commuter rail between Howell and Ann Arbor. Hieftje was forced to humiliate himself and sponsor a resolution for the city of Ann Arbor to withdraw from his own transportation scheme after virtually all of the county’s elected leaders failed to sign on.

The comments on AnnArbor.com that call for the Ann Arbor Downtown Development Authority (DDA) to be “dissolved,” “disbanded,” “fired” and “junked,” are strident and virtually non-stop. The DDA’s unelected Board members are treated to equally pointed criticisms by readers of the news site. Joan Lowenstein, a libel lawyer and  former City Council member, was appointed by Hizzoner to the DDA Board after she lost a bid to sit on the 15th District Court. Lowenstein is often mocked by AnnArbor.com readers as politically arrogant. Then again, 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.”  Ouch. 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. The following comments come from recent stories about the DDA on AnnArbor.com:

  • I can’t recall electing any of the members of the DDA. How in the world can the council even consider giving them this kind of power? It’s bad enough that they control the money from PUBLIC parking.
  • These are the same groups of people that want a conference center with no actual business proposal on how to pay without city funding/backing.
  • Abolish the DDA. We don’t need an unelected shadow government.
  • ….I thought the DDAs were city development arms for re-energizing downtowns and were never to be revenue collectors nor service providers. Seems Ann Arbor’s DDA has gotten off its leash and now runs its own little self-financed business club – often at “human value” expense and minority position against voters. The Library lot convention center, the Library, new vamprise funding/discounts, AATA programs including one ugly and unnecessary station, Too much!

As a result of the almost constant public pounding, perhaps, the DDA Board members look for ways to make it appear as though they are competently managing the city’s 7,145 parking spaces and the public’s $17 million in parking revenues. It’s a losing battle. At the most recent DDA Board meeting, Board member Roger Hewitt (a restauranteur) told the public “…not to evaluate whether an individual structure is making money but rather whether the parking system as a whole is working. And the net annual income is nearly $800 per space ($784).” He said it as if bringing in $784 in annual revenue per parking space should be something to write home to mother about.

As it turns out, bringing in $784 in annual revenue per parking space is something to write about, because it’s 98 percent below the national per parking space average, according to the most recent 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.

The AnnArborChronicle.com ”chronicled” the December meeting of the Ann Arbor Downtown Development Authority where Hewitt shared that information. Once again DDA officials took the opportunity to pass off poor performance as an achievement worth noting, and did so unchallenged. It is also worth noting that the DDA is a regular advertiser on AnnArborChronicle.com. Without comparing Hewitt’s (and the DDA’s) annual income per space to the annual income per space generated by other similarly-sized parking systems, Hewitt’s statement is little more than a useless factoid. When DDA’s revenues and expenses are compared to national averages, it becomes clear that the DDA Board overseeing an organization 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.

Perhaps calls to dissolve the DDA aren’t so off base, after all.

After reading Hewitt’s boast, A2Politico contacted the National Parking Association. The group 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.

A2P 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.

A2P Notes: According to the 2012 Collier’s Parking Survey, Ann Arbor monthly parking permits cost more than those 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.

A2P Notes: Over the past 24 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 abysmally 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 to $4 million, and if the organization’s finances dip into the red, state 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 officials.

Ann Arbor’s current Hieftje-appointed DDA Board cronies (including a woman appointed when Barbara Bush was First Lady, an architect, two bar owners, a libel lawyer, a theater director and the owner of a dry cleaning shop) oversee a parking system that takes in 98 percent less net revenue per parking spot managed than other similarly-sized parking systems in the United States surveyed by the NPA.

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 almost two 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 last 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.” Hardly. In a February 2001 study published by Cornell University researchers who studied tipping, the researchers discovered “… that people are poor at identifying the causes of their own actions. (O)ne should regard with skepticism, then, consumer reports that they tip as a reward for good service.” The Cornell researchers conclude that “the tipping- service relationship can only be described as weak.” Thus, people will give, say, a 20 percent tip regardless of service, and a large tip will have little impact on the overall quality of the service provided. Like Wall Street executives who received “tips” even when their “service” resulted a national economic collapse, there is typically little correlation between tips and better-than-average job performance. 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.

It’s possible Republic Parking and the DDA will work together to avoid these pitfalls. Then again, hell could freeze over, pigs could fly, and The DDA’s $784 in revenue per parking space could be “chronicled” so that it appears as though John Hieftje and his DDA cronies are doing a fantastic job running the city’s parking system on behalf of taxpayers footing the bills.

 

  

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Short URL: http://www.a2politico.com/?p=14752

11 Comments for “High Overhead & Debt Load Push DDA Parking Revenues 98 Percent Below National Average”

  1. Like I said before “Mickey Mouse could do a better job that the current mayor”

    • @Dennis, a political insider once predicted to me that John Hieftje will go down in history as Ann Arbor’s worst mayor. Oddly enough, I think the public is coming to that conclusion already, and that is why they are tossing his Council pals out of office, despite his endorsements, door-to-door campaigning, etc….

  2. Joe is understandably confused by your use of the term “revenue” and your use of percentages.

    The article says: “‘And the net annual income is nearly $800 per space ($784).’ He said it as if bringing in $784 in annual revenue per parking space should be something to write home to mother about.” Roger Hewitt referred to net income and then you referred to revenue as if the terms were interchangeable. They are not.

    The article goes on to say “$784 in annual revenue per parking space is … 98 percent below the national per parking space average”. While it may be true that the national average net income is $784 plus 98% of 784, it is not true that the national average is 98% more than $784. That latter calculation would mean that $784 was a mere 2% of the national average, leading to the numbers cited in Joe’s comment.

    There is an important point to be made here – our parking system is generating tiny returns compared to the high rates charged per hour for parking. The $784 amount is less than $2.20 profit per day per space. That point might be made more clear by comparing how much gross revenue each space takes in on average and with the net profit.

    • @Jack, thanks for boiling it down to profit per space per day. The $1,510 number from the NPA is AVERAGE income per space per year as reported by their members. In Ann Arbor, the ACTUAL income per space per year is $784, after expenses, which include the management fees, the cost of paying DDA staffers, and debt payments.

    • Thanks Jack,

      Statistics are tricky, but I think it is worth it to get the numbers right. I didn’t want to imply that there wasn’t a problem with our parking system.

      -Joe

  3. Also, the headline says 93% below national average, and the text says 98%

    • Thanks, Joe. The headline has been corrected.

  4. I’m sorry, but how could debt be impacting revenue? Perhaps you meant profit?

    Also, if Ann Arbor’s revenue per space is 98% lower than the
    national average, then the national average must be 50 times
    higher than Ann Arbor’s, or approximately $40,000 per space.
    There are only 8760 hours in a year, which means a space would
    need to be rented every hour of the year for approximately
    $5 per hour to make the math work.

    As I said, you may be confusing profit and revenue.

    • @Joe, the DDA’s debt load is subtracted from the gross profit per space. As a result, Hewitt’s comments concerning garages that showed net losses per space, and his urging to focus on the overall profit per space $784, averaged across the system.

  5. Right after the November election James Carville was asked on Bill Maher’s Real Time what the Republicans could do to turn away from being puppets for the Tea Party morons who’ve taken over the party and head back in a more sensible, middle of the road direction. To paraphrase, Carville said he didn’t want them to change a thing because they were on the road to self destruction and that was just fine with him. Same thing with the party of Mayor John Hieftje and his DDA. Let Joan Lowenstein and Leah Gunn and other of his appointees keep being the face of art and library millage votes and the voice for downtown ‘development’. It’s working perfectly at clearing City Council of folks who are clueless about what A2 voters want and in the long run will doom the DDA as well. It’s working…letting Hieftje be Hieftje…lol.

    • @Alan you are absolutely right that Leah Gunn and Joan Lowenstein have become political liabilities in the same way Leigh Greden has. While Greden has his hand in the campaigns of his Council pals, donations to candidates and causes now come from his mom and dad, not him. He’s toxic waste, politically. These people are so used to getting what they want without question, they’ve not stopped to realize that the DDA, Lowenstein, Gunn, etc….have become (right or wrong) targets at which the public can aim their vitriol. My prediction is that they are so arrogant they will never learn, and as a result, as you point out, it’s getting easier and easier to knock them out of office.

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