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July 15th, 2013 By German Lopez | News | Posted In: News, Parking, Budget

City Administration Responds to Critical Parking Memo

Previously unreleased memo spurs renewed calls to reject parking lease

city hallCity Hall - Photo: Jesse Fox
The city administration today disputed the findings of a June 20 memo that suggested the city is getting a bad deal from its parking lease agreement with the Greater Cincinnati Port Authority, but it has not said why the memo wasn't passed along to City Council members and Port Authority during the three-plus weeks since the administration received the memo.

In its own memo released today, the city claims that the June 20 memo, which was first reported by WCPO yesterday, is outdated and makes a few technical errors.

The June 20 memo from Walker Parking Cosultants, a parking consultant hired by the city, found it will be 257 percent more expensive for the new private parking operator to run the city’s on-street parking services in comparison to what the city currently spends. It also concludes the city isn’t getting as much revenue as other cities got under their own parking leases.

“The on-street operating expenses shown in the model are projected to grow at a faster rate than operating revenues,” the June 20 memo claims. “The city should expect a private operator to run the parking system more cost effectively than the current operation, not less effectively. Therefore, revenues should be expected to increase at a rate faster than expenses, not slower.”

The memo’s numbers come through estimates provided by ParkCincy, the operating team set to take over the city’s parking meters, lots and garages following a decades-long lease agreement between the city and the Port Authority.

In particular, the memo highlights what it claims are extraordinary payments requested by Xerox under the deal: The private parking operator is asking for a $627,063 fee in 2013, putting about 14.6 percent of projected net operating income to management fees. That’s far higher than the typical 2.1 percent to 2.3 percent found in similar parking deals in other cities, according to the memo.

The city disputed the findings in its own memo this morning.

“The information that Walker used was from an early point in time; the deal was subsequently negotiated from that point to improve the deal,” wrote City Manager Milton Dohoney in his own memo.

“For example, the profit margin used was based on different parking deals in other cities that are not the same as ours. As we know, the Cincinnati model is unique in many ways.”

One such trait: Cincinnati’s parking deal includes modernizing the city’s parking meters to accept credit cards and mobile payment.

The city cited a letter from the Port Authority sent to City Solicitor John Curp during an email exchange on July 12, the same day the Port Authority was given the June 20 memo. The letter contradicted what Port Authority CEO Laura Brunner claims are inaccuracies.

“In its memo, Walker Consulting bases its comparisons on price, yet doesn’t qualify the information with what level of service capabilities are included in the price,” the Port Authority’s letter reads. “The Port Authority is basing its purchasing decisions on price, but also level of enhancement to the on-street system that mirrors the City’s desire to modernize these vital assets and position them to enhance economic development opportunities downtown and in City neighborhoods.”

Besides this “‘apples to oranges’ comparison,” the Port Authority’s letter disputes many of the technical details behind the June 20 memo, particularly questioning some of the measurements used and comparisons that don’t account for differences between Cincinnati’s parking lease and other cities’ agreements. It also emphasizes that contracts with Xerox and other companies are not finalized yet.

Much of the focus is now on why the June 20 memo was kept from City Council, the Port Authority and the public for nearly a month, given the memo’s controversial findings about a controversial deal.

“The city administration misled the public for months on the need for the deal, saying it was needed to avoid laying off cops and firefighters and then they don’t do it. Now it’s keeping vital information from the public and council. It’s a violation of the public trust of the highest order,” Democratic mayoral candidate John Cranley said in a statement. “I am urging the Port to reject this deal that is bad for the City.”

Cranley and other city officials, including several City Council candidates and council members P.G. Sittenfeld, Christopher Smitherman and Charlie Winburn, signed a letter to the Port Authority asking the city-funded agency to reject its agreement with Xerox.

The city manager’s office couldn’t be immediately reached for comment. This story will be updated if further comments become available.

The parking lease was finally signed by the city and Port Authority in June after months of political and court battles. The deal was signed even though a majority of City Council now opposes the lease after the city managed to balance its budget without the parking deal and without laying off cops and firefighters.

City Council approved the parking lease on March 6, more than three months before the June 20 memo was given to the city administration.

In return for the lease, Cincinnati is getting a $92 million lump sum and at least $3 million in annual payments, according to city estimates. The city plans to use that money to pay down future budget gaps and fund development projects, including the I-71/MLK Interchange.

Update: Clarified Port Authority didn’t receive the memo until July 12.

 
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