AGENDA #5b
MEMORANDUM
TO: Mayor and Town Council
FROM: W. Calvin Horton, Town Manager
SUBJECT: Follow-up Report on Smart Cards
DATE: December 6, 2004
The purpose of this memorandum is to report on our analysis of the potential costs and benefits of a Smart Card Program and to recommend that the Council defer the consideration of “Smart Card” parking devices, based on costs of providing such a service and an estimation that the usage would be relatively low.
BACKGROUND
Smart Cards are similar to debit cards, carry magnetically encoded data, and can be used to purchase parking time from specially designed parking meters and pay stations.
At the January 12, 2004 business meeting, the Council received a staff report regarding the use of Smart Cards. The Council asked that we consider the use of Smart Cards and determine whether making them available might be a service valued by parking customers. We also were asked to determine the costs of providing Smart Cards and the potential effect on parking system revenues.
DISCUSSION
How a Smart Card Program Works
A Smart Card Program would require that customers purchase a reusable card at a Smart Card Dispenser or at a staffed location housing a Dispenser. Smart Card Dispensers accept cash only and various dollar amounts could be purchased and credited on a Smart Card. Each time when parked at an on-street meter, customers could insert the card and time would be subtracted from the Smart Card in increments up to the maximum amount allowed. Whenever a user wanted to buy additional time on the Smart Card, he would need to return to a Smart Card Dispenser.
The Town parking meters, automated parking pay stations, and attended lot parking all use different proprietary software acquired at different times from different vendors. As a result, Smart Cards that could work with the meters would not work in either the automated parking pay stations or the attended lot parking system. No single card would work with all these systems.
Survey Results
In order to determine customer interest in a potential Smart Card Program, the parking staff conducted an informal (unscientific) survey of 338 parking customers between August 16, and September 10, 2004. They concluded that most customers did not seem to have a strong preference for using a Smart Card Program. The more accessible the Smart Card Dispensers, the more likely customers would use the cards. Since the Smart Card Dispensers cost $2,000 if managed by an attendant and $8,000 if fully automated, the initial cost of the program increases with the addition of each Smart Card Dispenser. Willingness to consider using Smart Cards increased if the Smart Cards were available in downtown stores. However, based on our experience with parking tokens, sales through local businesses are costly to administer and not well-used. See Attachment 1 for a discussion of Smart Card Survey results.
Costs of a Smart Card Program
In order to make a Smart Card Program work, we believe that we would need at least two on-street, self-serve Smart Card Dispensers and one attended Smart Card Dispenser for the Wallace Deck. We believe that we would need to make an initial cash outlay of approximately $33,000, for the first year of the program including:
|
Item |
Cost |
|
2 On-Street Self-Serve Smart Card Dispensers (2 x $8,000) |
$16,000 |
|
Attended Card Dispensing Machine for Wallace Deck |
2,000 |
|
Meter conversion cost |
650 |
|
Cost of 2,000 rechargeable cards |
10,300 |
|
Signage |
2,000 |
|
First year marketing and promotion |
1,000 |
|
Supplies and maintenance costs (6 months) |
500 |
|
Banking and accounting costs (6months) |
500 |
|
Total First-Year Costs |
$32,950 |
In order to use the same Smart Card Program with parking meters and our automated pay stations, we would have to replace our current pay stations at an additional cost of $45,000 or replace our parking meters with on-street multi-space parking pay stations at a cost of approximately $230,000.
We anticipate that on-going annual costs of a Smart Card Program would be approximately $3,000. There would be an additional cost of $10,300 each time that we needed to order more cards.
Revenues from a Smart Card Program
We do not anticipate that the use of a Smart Card Program would significantly increase the use of Town parking in meters or lots. As a result, we do not anticipate that the availability of Smart Cards would increase parking revenues. Smart Cards offer an alternative method of payment and could be seen as a service, but would not increase revenue, in our opinion.
CONCLUSION
If the Council wants to offer the Smart Card program, it will cost approximately $33,000 in the first year and between $3,000 and $13,300 in each of the following years for a program focused on parking meters.
Because net revenues from on-street parking are transferred to the General Fund, the General Fund would lose approximately $33,000 in revenues in the year that the program is initiated.
Our overall assessment is that Smart Cards would serve a relatively small number of citizens and result in a revenue reduction to the General Fund. We do not believe that this is a good time to expand service options.
RECOMMENDATION
That the Council take no action in regard to a Smart Card Program. If the Council wishes to offer a Smart Card Program, adoption of the attached resolution and budget amendment would direct the manager to take the necessary actions.
ATTACHMENT
1. Memorandum of December 6, 2004 (p. 6).
A RESOLUTION AUTHORIZING THE MANAGER TO ESTABLISH A SMART CARD PROGRAM (2004-12-06/R-8.1)
WHEREAS, the Council desires to establish a Smart Card Program;
NOW, THEREFORE, BE IT RESOLVED by the Council of the Town of Chapel Hill that the Council authorizes the Manager to establish a Smart Card Program.
This the 6th day of December, 2004.
AN ORDINANCE TO AMEND “THE ORDINANCE CONCERNING APPROPRIATIONS AND THE RAISING OF REVENUE FOR THE FISCAL YEAR BEGINNING JULY 1, 2004” (2004-12-06/O-5.1)
BE IT ORDAINED by the Council of the Town of Chapel Hill that the Budget Ordinance entitled “An Ordinance Concerning Appropriations and the Raising of Revenue for the Fiscal Year Beginning July 1, 2004” as duly adopted on June 14, 2004 and the same is hereby amended as follows:
This the 6th day of December, 2004.
MEMORANDUM
TO: W. Calvin Horton, Town Manager
FROM: Kay Johnson, Finance Director
SUBJECT: Parking Survey Results
DATE: December 6, 2004
We conducted an informal (unscientific) survey of parking customers between August 16 and September 10, 2004. Parking Services employees asked customers to complete a brief questionnaire intended to gauge interest in the potential use of Smart Cards. Customers’ opinions were solicited at parking lots, the Wallace Parking Deck, and by on-street meters. A total of 338 provided responses.
Although the survey was neither scientific nor detailed, we believe that the information obtained is useful. Survey respondents were made up of the following:
· Students 141
· Faculty 21
· Business 50
· Other 126
Over half the respondents parked between one and five times in a 2-week period. Predictably, respondents said that the less frequently they parked, the less likely they were to use a Smart Card. Infrequent system users made up 65% of the sample and said that they were not likely to use a Card Program. Users who said that they parked three or more times in a 2-week period were about equally likely to use or not use a Smart Card and made up about 35% of our sample. Forty percent of the total sample said that they would not use a Smart Card under any circumstances; fifty-two percent of the total sample said that they were not likely to use a Card Program.
Of those who would possibly use a Smart Card, 44% said that they would be more likely to use a $5 card if it worked for both meters and for the automatic pay system in Lot 5. Unfortunately, the systems for meters and for the automated pay stations in Lot 5 do not support the same kind of Smart Card.
Of particular interest to us were the respondents who said that they came downtown to eat or shop. About 20% of the respondents who said that they come to downtown Chapel Hill to eat said that they would use the card frequently or always. Among those who come downtown to shop, about 25% said that they would use a Smart Card frequently or always.
Those who work downtown made up about 15% of our respondents. Just over 40% of them said that they would use a Smart Card always or frequently.
The cost to a user of a Smart Card includes both the actual cost of the card and the cost of obtaining and increasing the available balance on the Card. Demand for Smart Cards decreases as the costs of using the Card increases. For example, of the respondents who said they would consider using a Smart Card, only about 50% would still consider using a Smart Card, if Smart Cards were only available at the Wallace Deck. Alternatively, willingness to consider using Smart Cards increased to 52% if Smart Cards were available in downtown stores. However, based on our experience with tokens, sales through local businesses are costly to administer and not well-used, in part because of the cost of distributing information about the program.
Overall, within each of the categories of users above, more respondents said that they were never or only sometimes likely to use a Smart Card.
Attachment A is a copy of the survey form designed to determine parking habits and to determine whether there is sufficient interest in a Card program to absorb the costs of the program. Attachment B gives the actual survey results.
ATTACHMENTS
1. Parking Card Survey (p. 8).
2. Parking Card Survey Data (p.11).
ATTACHMENT A
Parking Card Survey
The Town of Chapel Hill is considering a parking card program. The parking card could be used in the Town’s parking meters as an alternative to coins. The system works by inserting a pre-paid card into the parking meter. The desired amount of time would be subtracted from the card.
Your opinions and comments are important to help the Town evaluate this program. Your answers will be kept strictly confidential. It should take less than 5 minutes to answer our questions. Thank you for your help.
Please check ONE box for each question.
1.
Including today, how many times did you park in the downtown area in the
last two weeks?
Did not park o
1-2 times o
3-5 times o
5-10 times o
More than 10 times o
2.
Including today, how many times did you use the parking meter system in
the downtown area in the last two weeks?
Did not use a parking meter o
1-2 times o
3-5 times o
5-10 times o
More than 10 times o
3.
If a parking card system were available, about how often do you think
you would use it?
Never o
Sometimes (less than half the time) o
About half the time o
Frequently (more than half the time) o
Always o
4.
If you had to pay a $5.00 fee for a re-usable parking card, how might it
affect your use of the system?
I would not use it o
I would use it less often o
It would not affect how often I use it o
I would use it more often o
5.
If the card worked for both the meters and the automatic pay station
system in Lot 5, how might it affect your use of the system?
I would not use it o
I would use it less often o
It would not affect how often I use it o
I would use it more often o
6. Please tell us how the location of card sales would affect your use of the system.
I
would not I would use it It
would not affect how I would use it
use it less
often often I would use it more often
Only Rosemary St.
parking garage o o o o
Rosemary St. parking
garage and Town Hall o o o o
Shops, banks, and
restaurants o o o o
Please tell us about yourself.
7.
What are you doing downtown today? Check ALL that apply.
Visiting a restaurant o
Shopping o
Working o
Other o
8.
Where do you live?
Chapel Hill o
Carrboro o
Orange County, not Chapel Hill or Carrboro o
Outside Orange County o
9.
What is your occupation?
Student o
Faculty o
Employee or owner of downtown business o
Other o
10.
What is your age?
Less than 20 o
20-29 o
30-39 o
40-49 o
50-65 o
Over 65 o
Thank you for answering our
questions. Please tell us what other reactions or suggestions you may have
about this proposal.
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