AGENDA #5g

 

MEMORANDUM

 

TO:                  Mayor and Town Council

 

FROM:            W. Calvin Horton, Town Manager

 

SUBJECT:       Report on Smart Cards

 

DATE:             February 14, 2005

 

 

The purpose of this memorandum is to provide information on disposable Smart Cards as a supplement to the information on reusable Smart Cards presented at the December 6, 2004 business meeting.  In an effort to explore the available alternatives to using cash to pay for parking, we have included information on credit card payment methods for parking.

 

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.  We prepared a report on a reusable Smart Card program for December 6, 2004.  This memorandum reviews the material in the December 6, 2004 report and expands the discussion to include the possible use of a disposable Smart Card program. 

 

DISCUSSION

 

How a Smart Card Program Works

 

A Smart Card Program would require that customers purchase either a disposable or a reusable card.  Reusable cards could be purchased at a Smart Card dispenser or at a staffed location.  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 users wanted to buy additional time on Smart Cards, they would need to return to a Smart Card dispenser.   Disposable cards could only be purchased at a staffed location and could be discarded when the card ceased to have value. 

 

Alternative Service Delivery Using Credit Cards

 

The objective of a Smart Card is to allow patrons to use parking facilities without carrying cash.  We have installed pay stations at Lot 5 that will accept credit cards, but not Smart Cards that are compatible with Town meters.  Unfortunately, because there are different proprietary systems for parking meters, automated parking pay stations, and attended lot parking, each system would use a different Smart Card.  The vendor that we use for meters also provides pay stations; however, their pay stations could not give back change for overpayments.  When we selected the pay stations for Lot 5, we used a different vendor from the one we have used for meters because we felt that the inability to provide change would offer an unsatisfactory level of service. 

 

As an alternative to Smart Cards, we have considered expanding our program allowing the use of credit card payments for parking at attended lots and on-street in addition to allowing credit cards at Lot 5.  Allowing the use of credit card payments would require additional costs above the base budget for next year.  The costs of this alternative are discussed below.

 

Credit cards cannot be used for meters; however, they can be used in on-street pay stations.  The base cost of an on-street pay station that could cover eight parking places is approximately $10,000.  In order to replace all the Town meters, we would need 25 on-street pay stations.  The total cost of on-street pay stations is affected by several factors in addition to the actual cost of the station, including installation costs and training ($8,000).  (Typically vendors show staff how to do a few installations, and staff do the remaining installations.)  The costs that we have included assume the use of solar units.  These units do not require electricity and they cannot give change or accept bills.  We could investigate the cost of supplying electricity to 25 on-street pay stations.  With electricity the units could accept bills for payment, but still would be unable to give change.

 

On-street pay stations would require us to remove the current meters.  Town staff could remove the actual meters from the poles.  While the meter poles could be left up, we believe that they would be unsightly.  We could cut off the poles at the base, but a small piece would be left above the surface of the sidewalk, and that piece could be a tripping hazard.  Alternatively, we could remove the poles and repair the sidewalk.  We estimate the cost of repairing the sidewalks for the Town’s 90 meter poles to be approximately $6,000.  The total cost to change on-street meters to pay stations would be approximately $264,500.

 

Costs of Smart Card and Credit Card Programs for Parking

 

The cost of disposable and reusable Smart Cards for parking meters is determined by our meter vendor, because the meters use proprietary software.  The vendor uses a pricing system in which the costs of the individual cards decreases as the quantity of cards purchased at a single time increases.  However, the vendor uses the same pricing formula for reusable cards and for disposable cards, so there is no price reduction for disposable cards. 

 

A generic card would cost approximately $5 per card if we purchase of 2,000 to 5,000 at one time.  The smallest quantity that could be ordered is 500 cards, for a cost of almost $10 per card.  If we wanted a logo or other graphics on the card, there would be a one-time set-up fee of $500 for the graphics and the price per card would increase to just over $7 per card for 2,000 to 5,000 cards (almost $12 per card for the smallest quantity).

 

 


 

1. Disposable Cards

 

Disposable cards come in preloaded denominations, for example $10 and $20.   The primary advantages of disposable cards are that there are no additional costs for dispensing machines and no requirement for collecting and distributing cash to the machines.  We would still need to provide signage ($2,000) and  promotion ($1,000) in the first year.

 

2. Reusable Cards

 

In order to make a reusable 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 generic 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 (6 months)

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 $50,000 or replace our parking meters with on-street multi-space parking pay stations at a cost of approximately $265,000.

 

We anticipate that on-going annual costs of a reusable 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.

 

As an alternative to Smart Cards, we could consider expanding the ability to use credit cards at the attended lots.  We could also consider replacing our parking meters with on-street multi-space parking pay stations at a cost of approximately $230,000.

 

We have summarized the alternative program costs below:

 

 

Smart Cards

 

Description

Level of Service

Cost

Generic Disposable Smart Cards (500)

Usable in meters only

Cards - $4,790

Meter conversion - 650

Signage – 2,000

Marketing – 1,000

Total - $8,440

 

Disposable Smart Cards with logo (500)

Usable in meters only

Cards - $6,290

Meter conversion - 650

Signage – 2,000

Marketing – 1,000

Total - $9,940

 

Generic Reusable Smart Cards (2,000)

Usable in meters only

Per above $32,960

 

 

 

Pay Stations

 

Description

Level of Service

Cost

Replacement of all meters with pay stations for Smart Cards (25 stations x $10,000 per station)

In combination with a Smart Card program above, would allow use of Smart Cards for on-street parking and for unattended lots.  (Does not accept bills or give change).

Pay stations -$250,000

Installation/training -7,500

Sidewalk repair - 6,000

Software, annual fee - 1,000

Total - $264,500

Replacement of all meters with pay stations for credit cards ($25 stations x $10,000 per station)

Would allow the use of credit cards for on-street parking.  (Does not accept bills or give change).

Pay stations -$250,000

Installation/training -7,500

Sidewalk repair - 6,000

Software, annual fee - 1,000

Total - $264,500

Replacement of 2 current pay stations in Lot 5 with pay stations that are compatible with our meters.

Would allow the use of the same Smart Cards at pay stations and current meters.  Unlike our current pay stations, would not be able to give change back.

Pay stations - $40,000

Communications 2,500

Installation - 7,500

Total $50,000

 

 

Attended Lots

 

Description

Level of Service

Cost

Modify attended lots to accept credit cards

Would allow the use of credit cards at attended lots 

Cost of upgrade - $10,050

Installation – 500

Annual phone service 1,450

Total - $12,000

 

 

Revenues from a Smart Card Program

 

We do not anticipate that the use of a Smart Card Program or the ability to use credit cards for on-street parking or at attended lots would significantly increase the use of Town parking.  As a result, we do not anticipate that the availability of Smart Cards or credit cards would increase parking revenues.  Both types of cards offer an alternative method of payment and could be seen as a service, but would not increase revenue, in our opinion.

 

CONCLUSION

 

Because net revenues from on-street parking are transferred to the General Fund, the General Fund would lose the total cost of the program in the year that it was initiated.  The budgeted transfer from On-Street Parking to the General Fund is approximately $160,000 in 2004-05.

 

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 or reduce revenues.  We are evaluating a proposal for 2005-06 to enable accepting credit cards at attended lots.

 

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 would direct the manager to take the necessary actions.

 

ATTACHMENT

 

1.      Memorandum of January 12, 2004 (p. 8).

2.      Memorandum of December 6, 2004 (p. 13).

 

A RESOLUTION AUTHORIZING THE MANAGER TO ESTABLISH A PARKING SMART CARD PROGRAM (2005-02-14/R-8)

 

WHEREAS, the Council desires to establish a parking 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 parking Smart Card Program at a cost not to exceed $                           in 2005-06 using the following approach: (insert description desired by the Council).

 

This the 14th day of February, 2005.