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41 SFMTA has proposed that meter hours be extended into the well as credit and debit cards. These new meters are not space- evening in some areas and on Sundays. A preliminary estimate specific, so there is no finite number of spaces along each curb. suggests that this could generate an additional $17.2 million This change may effectively create more parking capacity, in annual revenues. It is estimated that roughly $8.4 million depending on parallel parking behavior and the size of vehi- would be spent annually on enforcement, meter maintenance, cles parked. and coin collection systems. Start-up costs would include a Parking rates vary by location, and rates will gradually one-time implementation cost of around $2.5 million (San increase over the first 5 years of the concession. While under Francisco Municipal Transportation Agency, 2009). the city's control, parking meters in Chicago were organized into six zones. With the change in management, these zones were consolidated into three zones. Figure 15 identifies the 2.5.3 Chicago Parking System: metered regions. Zones include the Loop, Central Business Chicago Parking Meters, LLC District, and Outer Chicago. As of January 4, 2010, these zones Overview of the Chicago Parking System began transitioning to new rates of $4.25 per hour (Loop), $2.50 per hour (CBD), and $1.25 per hour (Outer Chicago). Beginning in February 2009, the operations and mainte- Future rate increases will take place in 2011, 2012, and 2013, nance of roughly 36,000 metered parking spaces in Chicago with final rates as high as $6.50 per hour in the Loop region. were transferred to a private investment company, Chicago Current and future parking rates are shown in Table 15. Parking Meters, LLC (CPM), through a concession agreement As previously noted, CPM is replacing old single-space with the City of Chicago. CPM is a consortium led by Morgan meters with centrally located pay boxes. These pay boxes will Stanley Infrastructure Partners. Within this consortium, park- accept multiple forms of payment, including major credit ing operations are handled by the concessionaire, LAZ Park- cards, debit cards, and coins (quarters and dollars only). The ing. The earlier concession of several Chicago parking garages pay boxes are not space-specific--a customer is given a receipt was also to a division of Morgan Stanley (Dumke and Joravsky, that is displayed on the vehicle dashboard. Additionally, the 2009). This was the first private concession for a publicly owned pay boxes are solar powered and are connected to a wireless U.S. parking system (Martin, 2008). network. Through this network, the pay boxes are able to communicate with a central server and alert personnel when Operations and Enforcement of the maintenance is needed. Furthermore, information regarding Chicago Parking System meter malfunctions is shared with the City of Chicago, allow- ing for the automatic dismissal of some parking tickets. The Per the concession agreement, approximately 36,000 metered CPM website provides links explaining how to use the park- parking spaces (34,000 on-street and 1,240 spaces in 18 metered ing meters and an interactive map to help find parking lots) have been leased to CPM for a term of 75 years in ex- locations. There is also an around-the-clock customer service change of a one-time payment of $1.157 billion (Waguespack, hotline available for reporting issues regarding the meters. In Piwinski, and Sajovec, 2008). During the term of the contract, conjunction with the automatic alerts provided directly from CPM is allowed to keep parking meter revenues but is respon- the meters to the central server, repairs are often completed sible for all operating and maintenance activities as well as sys- within a matter of hours. tem upgrades. The City of Chicago will continue to determine Improvements that have been made since the system opened meter rates, locations, and hours of operation. Additionally, include the addition of portable time, in which parking receipts the City of Chicago retains the right to add new or remove are transferrable to other spaces with the same or lower hourly existing on-street parking spaces in the future as well as restrict rate until the receipt expires. This allows for greater convenience parking for special events or for safety reasons. However, if the to users as well as making prepayment less daunting since the concessionaire's revenues are negatively impacted by any of remaining time can be used elsewhere. Rather than only offer- these decisions, the city will be responsible for the loss of ing parking with 2-hour limits, many of the new meters offer revenues (Waguespack, Piwinski, and Sajovec, 2008). payment options for varying time periods. Pay boxes also offer Chicago also remains responsible for the enforcement of prepayment options. Other new programs provided by CPM parking regulations and will continue to receive all enforce- include monthly discounts and the retrofitting of parking ment-related revenues. One of the key terms of the concession meters to provide protected parking for bicycles. agreement was that CPM would upgrade all meters to accept credit cards by mid-2011, which is faster than the city would Impact of the Chicago Parking System on Traffic have been able to do on its own (Martin, 2008). Since the con- cession contract was executed, CPM has been replacing older Immediate impacts of the change in control of the Chicago meters with centrally located pay boxes that accept coins as parking meter system were two-fold. The $1.157 billion

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42 Source: CPM website, 2009 Figure 15. Map of Chicago parking zones. payment to the city significantly freed up cash flow for the city. For more than two-thirds of the city's meters, the hourly rate However, the transition to private operations has been some- at the time of the concession had been fixed at $0.25 for over what turbulent due to several operational and political chal- 20 years. By early 2010, parking rates increased to $1.25 per lenges, including broken meters, inadequate signage, poor hour, representing a 400% rate increase. Although the rate public outreach, and a large number of parking tickets being increases were approved by the city and are on par with other issued. These problems, combined with a surge in the number cities, the change has been viewed negatively. However, a of vandalism incidents, resulted in negative media coverage potential benefit to users is that the rate increase may increase with respect to the transfer to private operations. the supply of available parking spots. To date, a lawsuit has

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43 Table 15. Parking meter rates by zone (prior to the concession agreement with CPM). Parking Meter Rates per Hour Current Future Rates Old New Rate Spaces 2009 2010 2011 2012 2013 Zone Zone 6 Outer $ 0.25 23,877 $1.00 $1.25 $1.50 $1.75 $2.00 Chicago 5 Outer $ 0.50 6,280 $1.00 $1.25 $1.50 $1.75 $2.00 Chicago 4 Outer $ 0.75 588 $1.00 $1.25 $1.50 $1.75 $2.00 Chicago 3 CBD $ 1.00 3,992 $2.00 $2.50 $3.00 $3.50 $4.00 2 CBD $ 1.50 12 $2.00 $2.50 $3.00 $3.50 $4.00 1 Loop $ 3.00 895 $3.50 $4.25 $5.00 $5.75 $6.50 Source: Waguespack, Piwinski, and Sajovec, 2008 been filed regarding the legality of the concession, including was estimated that technical upgrades to the system would one alleging that the agreement violates the state constitution cost around $30 million. With the transfer to private opera- by using public funds to enforce regulations on a private sys- tions and the increase in rates, independent estimates have tem. The lawsuit also suggests that it is illegal for the city to lease concluded that the parking system may generate more than out assets for a period of time that is long enough to deprive $1.1 million per week. According to an article in The New future councils of control over the parking system. York Times, based on draft 2010 pro-forma numbers, CPM One less obvious impact of the new system has been that projects total revenues of more than $75 million and a net inclement weather has presented some issues with the new pay income of about $58 million in 2010 (Mihalopoulos, 2009). boxes. Credit card swipe slots have been known to fill with For the first 10 and a half months of operation under the snow or ice, requiring clearing for the swipe to function prop- concessionaire, it was projected that CPM's net income erly. Additionally, some of the buttons and the credit card would be slightly over $32 million. However, it is unclear readers have been known to freeze over in extreme cold. In an whether capital or costs were included in this calculation. effort to prevent snow and moisture from getting into the (Chicago CFO Gene Saffold stated that replacement costs, credit card reader, CPM has installed new covers on some pay such as $40$50 million, would be required roughly every boxes. Snow or ice accumulation can obstruct parking receipts 7 years for replacement pay boxes.) from being displayed on dashboards. As a result, enforcement personnel have been instructed to refrain from issuing citations Other Issues when they are not able to determine whether a receipt has been purchased. The Inspector General Office (IGO) of Chicago has gener- ally been critical of this transaction. Specifically, the IGO pre- pared a report in June 2009 (City of Chicago IGO, 2009) that Financial Performance of the cited lack of information in the city's due diligence review, Chicago Parking System insufficient consideration of other alternatives (such as raising Records show that the 36,000 metered parking spaces gen- parking rates), and contract length as issues of concern. Addi- erated roughly $19 million in 2007. Although the city had tionally, the IGO estimated that the City of Chicago was paid added roughly 5,000 meters in the previous 5 years, many an estimated $997 billion less than what would have been col- meters are outdated (Mihalopoulos and Dardick, 2009). It lected had the parking-meter system been retained by the city.