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CATEGORY H: Operational Enhancements H.1 Parking Facility Operation Options, 121 H.2 Privatized Facility Development, 124 H.3 Automated Overnight License Plate Inventory, 125 120

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CATEGORY H Operational Enhancements H.1 Parking Facility Self Operation. All staff responsible for the day-to-day Operation Options operation of the airport parking facilities are employees of the airport operator, including cashiers, shift supervisors, audit Purpose and office staff, and the parking manager(s). On a day-to-day Improve or maintain customer service and net revenues basis, airport staff define and directly manage customer ser- by selecting a parking operations method that reflects the vice standards, monthly and annual budgets, revenue control airport operator's tolerance of financial risk and available procedures, and all other aspects of the parking operation. staff expertise. Airport operator policies and procedures, as well as local ordi- nances, are used to govern daily operations. Use by Customers The airport enterprise retains all revenues, but pays all cap- ital and operating costs. Since all parking staff are employees Customers do not "use" the parking facility operation of the airport operator, their salaries and benefits, and work options, but the level of service they are provided can be rules (e.g., grounds for dismissal) are the same as those of affected by the operations method used. other airport employees. Overview of Options Parking Management Agreement. All staff responsible Public parking facilities at airports are generally operated for the day-to-day operations of the airport parking facilities using one of three methods: (1) self-operation, (2) management are employees of a professional parking management com- agreement, or (3) concession contract. Airport parking opera- pany. The management company's responsibilities are defined tional elements include fiscal oversight/accounting, and audit; by a management agreement with the airport. Airport policies parking lot operations/customer service; revenue control sys- and local ordinances are augmented by the agreement, which tems operation and maintenance; shuttle bus/transportation may include standard operating procedures governing daily operations; and employee parking. At some airports, these ele- parking operations. ments are operated using a single method (e.g., parking man- The management company may provide every element of agement agreement), while at other airports, multiple methods parking management--including shuttle bus operations--or are used (e.g., shuttle buses are operated using a management just one element. Companies are generally competitively agreement, while parking lots are operated using a concession selected based on their qualifications and designated parking contract, and the revenue control equipment is maintained by manager and key staff. airport staff). The airport enterprise retains all revenues less the approved Overview of Methods of Operation direct costs of the management company and the agreed- An overview of the three most commonly used operating upon management fee. Direct costs include staff salaries and methods and a comparison of their advantages and disadvan- benefits, approved overhead, and the costs of uniforms, office tages is provided in this section. Although there are many furniture and supplies, and required vehicles. Management hybrids and variations of these methods, for simplicity pur- agreements may include incentives and penalty clauses to poses, only the three most commonly used or basic methods encourage the desired levels of customer service, safety, and are described here. revenue control. 121

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122 Guidebook for Evaluating Airport Parking Strategies and Supporting Technologies The appropriate airport staff review and approve the man- ances. Each element may present an opportunity to involve agement company's annual budget, staff assignments, and small or disadvantaged business enterprises (S/DBEs). labor schedule and establish standards for operation and rev- The five operational elements are described as follows: enue collection procedures. Agreements also define an airport operator's right to regularly audit revenues and revenue col- 1. Fiscal Oversight, Accounting, and Audit may range lection procedures. from daily oversight of cash handling/credit card process- ing to annual audits. Oversight may be retained by airport A management agreement requires that the airport opera- tor oversee the contractor's compliance with the established staff or contracted to an independent third-party firm. standards and procedures, instruct the contractor to modify 2. Parking Lot Operations/Customer Service represents the staff schedules or hours (e.g., in response to anticipated changes largest portion of daily operations. Tasks include fee col- in customer activity), and assure that the contractor is operat- lection, traffic direction, customer service and assistance, ing efficiently. As such, airport operators using management signage, safety and security, and facility cleaning and agreements typically employ one or more full-time staff with maintenance. experience in parking operations to oversee the management 3. Revenue Control Systems Operation and Maintenance contractor. components include daily system hardware and software repair, programming, and maintenance of ticket-issuing Parking Concession Contract. All staff responsible for the machines, ticket readers, gate arms, and other equipment; day-to-day operation of the airport parking facilities are ticket control and stocking; and license plate inventory. employees of a qualified parking company (or concessionaire). Some of these components may be retained in-house or The concessionaire's responsibilities are defined by a contract provided by revenue control system manufacturers and with the airport operator. Airport policies and local ordinances installers. Separation of the maintenance, repair, and pro- are augmented by the contract, which typically defines the gramming of the revenue control systems from the daily minimum customer service standards and other aspects of operations adds a desirable revenue control check and parking operations. balance. The concessionaire may provide just one element of the 4. Shuttle Bus/Transportation Operations include trans- parking operation, but frequently provides every element. portation of customers to and from public parking lots, Companies are generally competitively selected using a bid employee parking lots, and special event or holiday lots. process based on a minimum annual guarantee (MAG) Transportation operations may be subdivided into sepa- amount bid, with the percentage to be retained by the airport rate elements of bus driving operations and bus main- enterprise stated in the bid documents. tenance and repair operations. Key decisions include assignment of the responsibilities for bus maintenance, The concessionaire retains a percentage of total gross rev- bus acquisition, and fuel purchase. Some airport operators enues (e.g., 5% to 15%) and agrees to pay the airport opera- that have qualified bus mechanics prefer to perform main- tor a MAG. The concession contracts include the airport tenance in-house, while others prefer to use outside re- operator's right to audit the concession revenues and revenue sources. Often cost savings can be realized by the airport collection procedures. operator purchasing shuttle buses and fuel directly rather A concession contract requires that the airport operator than requiring a contractor do so, but these cost savings audit the reported revenues and enforce compliance with the may be offset by the lead time an airport operator requires customer service standards and other contract provisions. As to purchase a bus. such, airport operators using concessions contracts require 5. Employee Parking facilities are for a different customer fewer staff resources and less experienced staff then a self base than public parking lots. They are operated differently operation or a management agreement because the conces- to meet the needs of these customers (e.g., employees use sionaire frequently is responsible for every element of the permits or access cards, not cash or credit cards). This dif- parking operation. ferent style of parking operation may present an opportu- nity to use a separate operational contract for this service. Overview of Operational Elements Some airport operators manage all elements of a parking Advantages and Disadvantages operation under a single contract to achieve economies of of Alternative Operational Methods scale, while others prefer using multiple contracts to allow for Self Operation. Although this operational method clearly specialization and to provide a system of cross checks and bal- provides the airport operator with the highest level of control,

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Category H: Operational Enhancements 123 revenue retention, and oversight of daily operations, it also As noted, experienced airport staff are required to oversee the results in the highest costs and risk exposure. The majority of parking management company. daily parking operation costs are related to staffing. Employee recruitment, training, retention, and benefits costs are generally Parking Concession Contract. This management method higher for municipalities or public agencies than for profes- allows an airport operator to maximize the experience and sional management companies. With self operation of the park- financial strength of a professional parking concessionaire. ing facilities, all costs are borne directly by the airport operator While providing all of the benefits of a professional parking instead of being "fronted" by a management company or con- management company described previously, a concession con- cessionaire and then partially or wholly reimbursed by the air- tract provides a MAG, minimizes the airport operator's risk port enterprise. Self operation also presents the airport operator exposure, and requires the lowest number of airport staff posi- with the highest level of risk exposure from unsatisfactory or tions and level of parking expertise. Concession contracts may improper revenue collection and controls, customer service lev- minimize the airport operator's level of direct control of daily els, or facility operations and maintenance. Self operation operations, but they maximize the entrepreneurial expertise of requires the highest number of airport staff positions. the private concession contractor. Parking Management Agreement. These agreements Implementation Costs allow an airport operator to take advantage of the professional The costs of implementation are limited to preparation of services of a specialized company and reduce the number of the bid/RFP document and review of bids/proposals. airport staff dedicated to parking. These companies frequently have experience gained through operating airport facilities nationwide as well as operating other publicly and privately Ongoing O&M Costs owned parking facilities. This experience, combined with the Ongoing O&M costs are the responsibility of the private "private employer" status (i.e., lower salary/benefit costs than concessionaire, except with self operation. parking staff employed by an airport or other public agency) often translates to lower costs and thus higher net revenues (compared to the other two operational methods, depend- Implementation Schedule ing on the salary cost differentials). With this management It is estimated that the total time required to implement and method, a high degree of risk is contractually shifted away from award a contract, including obtaining management approval, the airport enterprise to the management company. While can range from 6 to 18 months or more depending on the time reducing costs and shifting risk, this method also lowers the required for management approval of key decisions, the extent airport operator's level of direct control over daily operations. of the changes to be made to an existing contract or the time The airport enterprise retains all revenues less expenses, but required to develop a new contract, and the level of "political" receives no income guarantee from the management company. interest in the contract award. Converting an airport parking Source: Jacobs Consultancy. Figure H.1. How parking operations affect risk/net revenues, operating costs, and customer service.

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124 Guidebook for Evaluating Airport Parking Strategies and Supporting Technologies facility from a management agreement or concessions contract cession contract, the private entity has greater latitude in mak- to self operation is estimated to require the same length of ing decisions affecting revenues and customer service. time--if not longer--to allow for the recruitment and hiring of the necessary management staff. Benefits Potential benefits reported by private developers and the Examples of Application airport operators that have retained them are as follows: Airports where all or portions of the parking facilities are Allows the construction of the parking structure(s) without managed under self operation include those serving Dallas/ Fort Worth (DFW), Grand Rapids, Norfolk, and Seattle- obligating airport revenues or requiring airline (majority in Tacoma. Airports where management agreements are used interest) approvals. Allows airport funds to be used to sup- include those serving Denver, Los Angeles, Salt Lake City, and port other capital investments and operating needs. Preserves San Francisco. Airports where concession contracts are used future debt capacity of the airport operator. include those serving Baltimore, Honolulu, and San Jose. Private companies can be more creative and act more quickly Many airport operators use multiple operational methods. For when responding to customer needs. They do not need to example, at DFW, a variety of methods are used--self opera- obtain prior approval from multiple layers of airport manage- tion for all public parking facilities, except a lot offering trunk- ment, or from an airport board or commission. to-trunk service (which is operated using a management Private companies can typically design and build a new agreement), a concession contract for valet parking, and a structure or purchase and install new parking revenue con- management agreement for employee parking. See Figure H.1. trol equipment faster than an airport operator can because of procurement regulations and bidding procedures most airport operators must follow. H.2 Privatized Facility It is easier for private companies than airport staff to offer Development discounts to volume customers and sell the parking prod- ucts to travel agents and corporate travel planners. Purpose Guarantees that the airport operator will receive a specified Improve net revenues and preserve airport capital by annual fee (a MAG) or lease payment plus a percentage of developing new parking facilities without using airport funds. gross revenues. Receive large upfront payment. Reduce airport staff time Minimizes or eliminates the risk to airport operators result- required to oversee or manage the parking operation. Reduce ing from a decrease in parking customers, airline traffic, or risks associated with funding new parking facilities using other causes. For example, after the terrorist attacks in 2001, airport-supported bonds. the consortium operating the parking facility at one airport was obligated to continue to pay the MAG despite a drastic Use by Customers decrease in airline traffic. Most often, airport parking facilities are financed using air- Implementation Actions port funds or general airport revenue bonds. Alternatively, some airport operators "privatize" their public parking facil- Implementation actions were reported to include ities (i.e., award a long-term contract to a private entity for 1. Evaluate whether to privatize a new (or existing) park- the development and operation of airport parking facilities). ing facility. Among the key concerns or disadvantages of Under the terms of these contracts, the private entity may be privatization are that the airport operator would responsible for designing, building, operating, and main- Forego future revenue, as the private entity would taining the public parking facilities, or some combination of retain a larger share of the revenue than would a con- these tasks. cessionaire or parking management contractor, and Although the specific contract terms differ among the air- may benefit more from unanticipated increases in air- ports where parking facilities have been privatized, the private line traffic or parking demand than would the airport entity is generally responsible for all aspects of the parking operator. operation and related business decisions. The private entity Be unable to approve or disapprove changes to rates, can--without obtaining the approval of the airport operator-- customer services, or the introduction of new technolo- modify parking rates, introduce new services and products, gies or services, as these decisions become the responsi- and establish operating standards. Thus, compared to a con- bility of the developer/operator under privatization.

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Category H: Operational Enhancements 125 Need to enter into a business agreement with a much decides that higher hourly parking rates will optimize its longer term than a concession contract or management revenue, some patrons may choose to use the airport agreement. curbsides instead. 2. Prepare requests for bids (or proposals)--key aspects 5. Responsibilities of the airport operator for areas inside include the following: and outside of the lease line (e.g., utilities, roadway main- Length of term (see Key Considerations), tenance, security). Fees to be paid to the airport enterprise (see Key Con- 6. Limitations on the airport operator, including building siderations), competing facilities, parking for employees, and other Developer obligations (see Key Considerations), topics. Limitations on the use of the property, 7. Ability of the private company to enter into agreements Ownership of the structure upon expiration of the with third parties (such as rental car concessionaires) lease (typically ownership reverts to the airport oper- that may have existing agreements with the airport oper- ator), and ator or that may compete with entities that have existing Careful preparation of the bid or RFP documents agreements with the airport operator. because comparison of the resulting bids or proposals 8. Extent of controls retained by the airport operator. is more complex than those for parking concessions or 9. Extent of risk assumed by the private entity/investor. management agreements. 10. Amount of off-airport competition and current market 3. Evaluate and award bids. shares of the competition. Key Considerations Implementation Costs Those identified by airport operators include The costs of implementation are limited to those for assess- ment of the benefits and costs of privatization, preparation of 1. Term of lease--A key determinant of the lease term is the the bid/RFP document, and review of bids/proposals. amount of investment required by the private entity. At Bradley International Airport, a private consortium was awarded a 25-year lease with two 5-year extensions. At Ongoing O&M Costs Gulfport-Biloxi International Airport, a 32-year lease Ongoing O&M costs are the responsibility of the private was awarded. At Oakland International Airport, a 50- to concessionaire. 99-year lease was considered and at Luis Munoz Marin International Airport in San Juan, a 50- to 75-year lease was considered. Implementation Schedule 2. Fees paid to the airport enterprise--Typically, these fees It is estimated that the total time required to implement include a minimum annual guaranteed lease payment, a and privatize a parking facility (i.e., award a contract to a pri- percent of annual gross revenues (e.g., 6%), and ground vate entity), including the time required to obtain manage- rent, and may also include a one-time up-front payment. ment approval can be 12 to 18 months or more depending on 3. Developer obligations--The obligations of the private the time required for management approval. entity should be clearly defined to assure that the parking facilities are operated and maintained in accordance with Examples of Application the performance or functional specifications established by the airport operator. At some airports, contractors Airports with privatized public parking operations include are obligated to build an initial parking structure plus those serving Gulfport-Biloxi, Hartford, New Orleans, Prov- construct a second structure or extension when certain idence, and Brussels (Belgium). demand triggers occur. In these situations, the airport operator must also clearly define the development stan- dards for new construction. H.3 Automated Overnight License One airport operator noted that increased specificity Plate Inventory of developer obligations would likely lead to lower bid Purpose amounts. 4. The potential effects that the decisions of the private com- Improve accuracy of overnight license plate inventory pany may have on areas of the airport not under the com- (LPI) count. Reduce staff time and costs to perform overnight pany's responsibility. For example, if the private company inventory count.

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126 Guidebook for Evaluating Airport Parking Strategies and Supporting Technologies Use by Customers 2. Determine requirements for integration of mobile LPR devices with existing or planned parking revenue control License plate inventory is a key component of an overall system. parking revenue control system. LPI data are used to confirm 3. Prepare a benefit-cost analysis for purchasing mobile LPR the parking duration of exiting vehicles when, for example, the devices. customers have lost their parking tickets. Vehicle parking dura- 4. Purchase mobile LPR devices and integrate with existing tion is determined by inventorying/recording the license plate LPI/revenue control system. number of each vehicle on a daily basis (usually at midnight or 5. Conduct in-field testing to determine optimal locations early morning hours when there is little activity). Additionally, for cameras and lighting fixtures. LPI data provide useful information for customer service (e.g., finding lost vehicles), law enforcement, and operations. Traditionally, LPI is conducted by airport or parking oper- Key Considerations ator staff walking or driving through a lot along a fixed route Those identified by airport operators include and manually recording the license plate numbers of parked vehicles. A significant number of staff hours is required to 1. Accuracy goals. An airport operator will need to deter- conduct this inventory. Manually recording or entering the mine the level of accuracy required of the LPR devices to plate numbers provides opportunities for error. meet its needs. Currently, accuracy of entry/exit plaza LPR installations in the United States varies and is often 90% LPI can be conducted using vehicle-mounted or mobile or lower. Some airport operators have elected to use staff license plate recognition (LPR) readers. These systems use optical character recognition (OCR) software, which takes a to monitor the LPR system and, as needed, enter license digital image of a license plate, then "reads" the license plate plate numbers if the LPR device cannot successfully read number and automatically adds it to the inventory. A mobile a license plate. LPR reader enables LPIs to be conducted more quickly and 2. License plate variety. In Europe, there is less variety accurately while reducing the required staff hours. among vehicle license plates than in the United States. Most European plates consist of black text on a solid background color and have similar fonts and font sizes. Benefits This consistency allows for very high accuracy by LPR Benefits include systems. In the United States, many states issue several varieties of license plates that may use different fonts and LPI systems support more efficient operations and reduce colors, incorporate non-alpha-numeric symbols, have the opportunity for fraud or theft. words (e.g., Pearl Harbor Survivor), or have varying back- LPI data include the exact location of each parked vehicle, ground images. In addition, many airports accommodate which can be used to help customers, who know their patrons from nearby states. This wide variety of potential license plate numbers, find lost vehicles. license plate styles reduces an LPR system's ability to read The LPI can be cross-referenced against lists for wanted/ accurately. stolen vehicles, vehicles that are associated with unpaid 3. Lighting. The intensity and angle of light illuminating a parking fines, and vehicles in the process of being repos- license plate can affect LPR accuracy. Since LPI is most sessed. often taken at night, devices should be tested under low- Inventory data can be used to identify rental cars and aban- light conditions. doned vehicles left by customers in the paid parking lot. Automated LPI systems can potentially increase the accu- 4. Obscured plates. Often, license plates may be obscured by racy of LPI records by eliminating human error, if LPR trailer hitches, mud, snow, salt, or other road grime, all of read rates are sufficiently high. which reduce the ability of an LPR system to successfully Automated LPI systems reduce required staff time. read license plates. Implementation Actions Implementation Costs Implementation actions include The primary implementation cost would be for the pur- 1. Identify potential deficiencies with the current LPI system chase of mobile LPR devices. Appendix A provides the esti- and collection method(s). mated costs of these devices.

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Category H: Operational Enhancements 127 Ongoing O&M Costs The primary O&M costs are for maintenance of the mobile LPR devices. Net operating costs may be reduced if staff time required to conduct the nightly LPI is sufficiently decreased. No data are available. Implementation Schedule Depending on the time required for airport management approval and device ordering and delivery, implementation could take less than 2 months. Supporting and Complementary Strategies and Technologies in This Guidebook License Plate Recognition (E.6). Examples of Application Source: www.parktrack.com. No airport applications of these systems were identified, Figure H.3. Handheld license plate reader for but they are used in other industries. See Figure H.3. conducting license plate inventories.