Not So Wise

The city's parking-management program moves to stop oozing red ink

Items placed on the Tucson City Council consent agenda are typically routine matters lumped together and adopted simultaneously without discussio

Therefore, it was somewhat unusual when on May 5, an issue concerning ParkWise, the city's financially troubled parking-management program, was pulled off the consent agenda and postponed for two weeks.

The delayed item involves a proposed agreement between ParkWise and the Downtown Tucson Partnership, the group promoting downtown while providing security and maintenance services.

Under the agreement, the partnership was slated to receive $458,540 to supply staffing for city parking facilities. Another $66,450 was to be devoted to marketing and management-consulting services.

Chris Leighton leads ParkWise and observes of the consultant portion of the agreement: "We now pay $65,000 for outside marketing, so we'll get more services for the same amount."

If the agreement is approved, Downtown Tucson Partnership CEO Glenn Lyons would be paid $125 per hour for about three hours a week of consulting services. One topic he'll work on, Lyons says, is how "to sustain negative cash flow until it turns positive" in planned city parking garages.

"We'd be hired to provide strategic marketing and advertising, which would be an opportunity to operate ParkWise more like a business," Lyons continues.

When ParkWise was instituted in 1997, city officials intended for it to be run like a business: ParkWise would use revenues from parking meters downtown and around the UA, as well as money from neighborhood parking-permit program fees, to operate in the black. But ParkWise soon ran into stark financial and political realities.

One reality hit when the Pennington Street parking garage opened several years ago.

"It's around 75 percent occupied now," Leighton says of the garage, "and we'd like it to be 85 percent."

The debt service on the facility has been a financial drag on the ParkWise budget.

"We built the garage based on 30-year financing," Leighton recalls, with estimated annual construction payments of $800,000. But when the city sold certificates of participation to pay for the structure along with several other projects in 2004, they were set up as 20-year notes. That raised the annual ParkWise debt service to more than $1 million.

"We knew there was no way we could make (those payments)," Leighton explains, "but were told (by city finance staff members) not to worry about it."

On top of that, Leighton says, the city has provided 250 free parking spaces within a few blocks of the Pennington facility to satisfy other downtown demands. "That sort of undercuts the garage business," he observes.

Another money-loser for ParkWise was TICET, a free downtown shuttle; the financial foundation for the service was shaky from the start. Monetary assistance for TICET was promised by other governmental agencies, although most of that money never materialized. Nonetheless, the service was expanded, and its losses quickly grew.

"TICET started as a parking circulator," Leighton remembers, "but it turned into a transit service."

By last year, TICET was losing close to $800,000 annually.

That loss, combined with the red ink from the parking garage, helped drive ParkWise's overall budget into deficit territory two years ago. In response, the agency was moved out of the Transportation Department in 2008 and placed under the direct responsibility of the City Manager's Office.

According to a financial analysis prepared last September, ParkWise lost more than $1.2 million in the previous fiscal year. It borrowed $1.1 million from the city's general fund to offset that loss, an amount which is being repaid with interest.

A lack of parking enforcement has also harmed ParkWise's bottom line. ParkWise officials recommended adding more staff to generate additional revenue—a suggestion apparently not heeded in the city budget proposed for the coming fiscal year.

To reduce the growing ParkWise deficit, the TICET service was eliminated last November. Leighton also hopes to refinance the debt on the Pennington Street garage next year, but admits that due to financial conditions, that may not be possible.

Looking back over the last few troubled years, Leighton concludes: "Our financial problems weren't caused by decisions we made, but by decisions others made for us."

Leighton also points out that despite its budgetary difficulties, ParkWise pumps more than $800,000 annually into city coffers. Because of the way parking-meter collections are structured, some of that money goes directly into the general fund and not to ParkWise.

Leighton says ParkWise has "done restructuring and belt-tightening." He hopes that as of July 1, the agency will be a separate city department.

"I think that will help," he says of this proposed change. "The mayor and council will have a more direct view" of what's going on.

Leighton adds that he wants ParkWise to be in the black in no more than three years.

"I'm hoping to beat that," he says. "But I don't want to over promise."

City Manager Mike Letcher has told the council in writing that he expects the ParkWise debt to be eliminated by the middle of 2010.

Meanwhile, the agreements between ParkWise and the Downtown Tucson Partnership are now scheduled to be discussed in a study session on May 19.