TO: Mayor and Town Council
FROM: W. Calvin Horton, Town Manager
SUBJECT: Report on Parking Rate Revenues
DATE: June 23, 2003
At the Council meeting of June 9, the Council asked that we re-issue the attached memorandum, sent electronically to the Council on June 4. We have provided it for your information.
ATTACHMENT
1. June 4, 2003 Memorandum (p. 2).
MEMORANDUM
TO: W. Calvin Horton, Town Manager
FROM: Brenda L. Jones, Parking Superintendent
Kay Johnson, Assistant Finance Director
SUBJECT: Response to Manager’s Request regarding Parking Revenues based on Old Rate
DATE: June 4, 2003
This memorandum provides information on the Town’s off-street parking operations and revenues generated since implementation of the off-street parking rate increase.
The staff was asked to determine the number of additional leased spaces required to maintain current revenue if the parking rate in the Wallace Parking Deck and Lot #2 were to be returned to $1.00 per hour from the current base rate of $1.30 with an additional peak rate fee of $2.00.
In each of the scenarios below, we assume that general economic conditions in the Chapel Hill downtown area have remained approximately the same for the last year and will continue to remain about the same for a year to come. A general economic dip for the downtown area would negatively affect revenues under any rate structure. We have taken into account the addition of fare-free bus service.
The number of cars parking in the Wallace Parking Deck has decreased from fiscal year 2002 to fiscal year 2003 while the number of cars parking in Lot 2 has remained approximately the same. The Town currently rents 51 parking places in the Wallace Parking Deck.
Scenario I
Assumption: The average number of cars parked at an average duration remains the same as in the current year and parking fees are reduced from $1.30 per hour to $1.00 per hour.
Parking revenues from the Wallace Parking Deck and Lot 2 would decrease by 23% or $212,000. At $80 per month, a rental space can bring in a maximum of $960 per year. It would require 221 rental spaces to make up the revenue difference under this scenario. The Town only has approximately 50 additional spaces which are available for rental spaces without decreasing the number of spaces available to people who want short-term parking. If the Town were able to rent out a full fifty additional spaces, the total revenue under this scenario would drop by approximately $164,000 from current year revenues. More likely, the Town could only rent about 25 additional spaces for a total revenue loss of approximately $188,000.
Scenario II
Assumption: The average number of cars parked at an average duration remains the same as in the current year, parking fees are reduced from $1.30 per hour to $1.00 per hour and the peak rate fee is eliminated. (The peak rate fee is the surcharge for parking from before 10 am until after 2 pm on a weekday.)
Parking revenues from the Wallace Parking Deck and Lot 2 would decrease by 23% plus about $8,000 for the peak rate fee or $220,000. At $80 per month, a rental space can bring in a maximum of $960 per year. It would require 229 rental spaces to make up the revenue difference under this scenario. The Town only has approximately 50 additional spaces which are available for rental spaces without decreasing the number of spaces available to people who want short-term parking. If the Town were able to rent out a full fifty additional spaces, the total revenue under this scenario would drop by approximately $172,000 from current year revenues. More likely, the Town could only rent about 25 additional spaces for a total revenue loss of approximately $196,000.
Scenario III
Assumption: The average number of cars parked at an average duration would increase if the parking rate dropped from $1.30 to $1.00.
In comparing parking volume during the period when the Town charged $1.00 with the volume at the current $1.30 charge, we note that the average number of cars parked at an average duration increases at the lower rate. In the case of the Wallace Parking Deck, actual revenues for the first eleven months of the fiscal year remained flat when the rate increased and the average number of cars parked at an average duration decreased with the increased fee.
Because the average number of cars parked at an average duration increases when the price per hour in the deck drops from $1.30 to $1.00, there may be little or no decrease in revenues when the rate drops. Rental spaces would not be needed to offset the lowered rate for parking in the Wallace Parking Deck.
Since Lot 2 is virtually at capacity, revenue would drop if the Town decreased the rate per hour from $1.30 to $1.00. The decrease in revenue in Lot 2 between the $1.30 rate per hour and $1.00 per hour is approximately $105,000 or the equivalent of 109 rental spaces.
Because we have no rental spaces in Lot 2 we would need to use spaces in the Wallace Parking Deck. When the Deck is at full capacity there are only approximately 50 spaces available. Assuming we could and did rent 50 additional spaces, the combined revenue would drop by $57,000. If we could only rent 25 spaces, as we anticipate, revenue would drop by $81,000.
Scenario IV
Assumption: Many people prefer to park in Lot 2 rather than the Wallace Garage.
The demand for parking in Lot 2 remains largely the same whether the Town charges $1.00 per hour or $1.30 per hour. The demand pattern at Lot 2 differs from the demand pattern at the Wallace Parking garage where more people park when the rate is at $1.00 per hour than when the rate is $1.30 per hour. The Town could offer the spaces at Lot 2 at $1.30 per hour to meet the demand of the people who really want to park in an open lot. At the same time, the Town could lower the price at the Wallace Parking Deck to $1.00 per hour, since the Deck has the available spaces. If the Town did use the rate of $1.00 for the Deck and the rate of $1.30 at Lot 2, the Town could still rent approximately 25 spaces in the deck and retain 25 more spaces than the Town has used when the rate in both locations was $1.00/per hour. Some who currently park in Lot 2 would begin to park in the deck. Under this scenario we anticipate that revenues would remain even or possibly increase.
A potential disadvantage to this scenario is that some members of the public might be confused by the two different rate systems.
cc: Mary Lou Kuschatka
James Baker