EDITORIAL: Eight-Point Plan for Fixing Cincinnati’s Broken Parking System

Cincinnati Parking Meter

Broken and malfunctioning meters plague Cincinnati’s parking system. Photograph by Randy Simes for UrbanCincy.

We are continuing to look at opportunities inside City Hall that could help alleviate Cincinnati’s budget and pension liabilities, while also maintaining and improving service delivery.

In addition to the waste collection reforms that include a shift to a Pay As You Throw system, we will be making other specific policy recommendations that we feel will improve the quality of service delivery while also improving the City’s finances – ultimately working toward a long-term, structurally balanced budget.

Back in June 2010, UrbanCincy examined the finances of the city’s parking system. In this analysis, and comparison with cities from around the country, we discovered a broken system that was not performing the functions it needed to perform, and was not financially solvent.

As a result, we recommended a seven-year lease of all 5,700 of the city’s on-street parking meters. We estimated that such a deal could yield just over $3 million in annual payments, while also ridding the city of the associated financial liabilities. We did not estimate what an upfront payment could be due to the infinite number of variables that could affect that.

While much has changed politically since that time, the facts remain the same. Cincinnati’s parking system is broken, and is in need of immediate upgrades and reforms.

One of the first actions by the newly elected Mayor John Cranley (D), however, was to halt the signed Parking Lease & Modernization agreement, executed by former City Manager Milton Dohoney, which was structured to solve these exact problems. Under that deal the City would have leased four parking garages, one parking lot and all of the City’s on-street parking meters to the Port of Greater Cincinnati Development Authority.

The Port then agreed to work with Xerox to manage the system and implement comprehensive upgrades to the deteriorating and outdated system. This would have included electronic parking meters that accept credit cards, real-time parking availability data systems and the rehabilitation of existing lots and garages.

The deal would have also provided the City of Cincinnati with an upfront payment of $85 million, generated approximately $3 million in annual installment payments over the life of the agreement, and guaranteed approximately $98 million in capital investments into the system. For better or worse, that agreement has been jeopardized and we are essentially back at square one.

So where and what exactly is square one?

The City has been experiencing declining revenues from its parking assets for several years now. Revenue collections peaked years ago, but have been declining recently due to inadequate enforcement and the parking system’s poor state of repair. These assets require constant and expensive maintenance and upgrades, so virtually all of the money generated by the Parking System is spent maintaining the Parking System.

This is important. The Parking System does not generate any excess revenue for the city to use on other basic services.

In most years the Parking System is revenue neutral, meaning that the revenues it generates cover its expenses. This is acceptable, unless you are deferring maintenance costs in order to make the numbers match. This has been the case in Cincinnati for years, and has left the Parking System in terrible condition.

The situation has gotten worse in recent years as council has worked to balance the budget without laying off employees. In both 2010 and 2011, the city spent considerably more on the Parking System than it collected in an effort to keep it up to snuff. We are talking $3.6 million more in 2010 and $1.1 million more in 2011. This stopped in 2012 when the city cut its annual investments in the Parking System by several million dollars.

Cincinnati's Broken Parking System

For reference, investments in the Parking System today are approximately 38% lower than they were when the City invested $13.3 million into the Parking System in 2010. Over that same period, the parking fund balance has dropped from $12.5 million to $7.8 million.

Simply put: revenues are down, maintenance is being deferred and the parking fund is being depleted. This is not sustainable.

The recent proposal from the Cranley Administration, which was immediately and thoroughly rejected by just about everyone except five council members, does not address what the problems are, and therefore does not propose appropriate solutions for those problems.

The situation and trajectory is dire and UrbanCincy recommends that the City of Cincinnati move forward with upgrades to its Parking System immediately. Absent the previously agreed upon Parking Lease & Modernization deal or some other public-private partnership; here is how we suggest doing so:

  1. Issue bonds to upgrade all parking meters in the city to use the latest electronic payment collection and occupancy tracking technology. This would include pay-by-phone capabilities.
  2. Utilize the new technology to implement variable pricing structures that reflect real-time market demand. If there is a Bengals game downtown and meters near the stadium are packed, then the rates on those meters would increase, while meters further away would maintain lower rates. In neighborhood business districts the same would be true. When demand is high so should be prices. When demand is low, prices should drop accordingly to make it a more attractive option for those visiting our neighborhood business districts.
  3. Release a new application, website and text alert system that notifies drivers of parking space availability and informs them of the associated rates.
  4. Sell the city-owned parking lot at Third Street and Central Avenue so that it can be repurposed into a tax-producing property.
  5. Create a special lease agreement for city-owned parking garages and lots, so that the separate authority could manage advertising at these locations. The Ohio Revised Code currently does not grant cities authority to sell advertising in such a manner, but not allowing for advertisements is unnecessarily cutting off much-needed revenue. Let’s get creative so that we can maximize revenues without burdening our residents, businesses or visitors.
  6. Tear down the Garfield Garage, which is in greatest need of repair, and market the site to developers interested in building on it. Such a development agreement could include the provision of the same or greater number of parking spaces to be replaced – similar to the deal signed for the new residential tower to be built at Fourth and Race Streets in the place of the Pogue’s Garage. This will free the city from a major capital expense that would further deplete the parking fund in the near future.
  7. Tear down the Seventh & Sycamore Garage, which is the only thing blocking the construction of a $14.2 million, 115-room hotel and 725-space garage from being built in its place. The existing 450-space garage is also in poor condition and its removal would be another major liability coming off the City’s books.
  8. Conduct a citywide study to determine appropriate adjustments to the hours of operation for on-street parking meters on a neighborhood-by-neighborhood level.

Following through on these eight recommendations will allow the city to maintain ownership and control of its Parking System while also allowing it to make the necessary upgrades and improve the balance sheets for this portion of the budget. These changes will make the Parking System a revenue generating asset not just in rhetoric, but in reality.

The increased revenues will allow for the City to replenish the parking fund, make its upgrades and take additional revenue and use it to support other essential but non-revenue generating public services.

  • Matt Jacob

    Gotta say this was a well written article from top to bottom. Bravo.

    Variable pricing is the solution that’s not bring talked about, but is the best answer to the concerns about the price changes. Let the market decide and parking could become even cheaper in some areas and rightfully higher for times like Reds games etc. Hours could be left unchanged while people adjust and then expanded later after studies and reevaluation. Upgrading the technology so that the meters have the capabilities is a must though.

    As far as garages and lots, I agree they need to look at each one individually and ask the question of which to sell off, which to fix/renovate, and which to work deals with for economic development. Your suggestions are headed in the right direction but I’m not sure they’re all there yet and practical in the near-term, but they need this kind of creatively and the right partners.

    One thing that you didn’t include was enforcement and fines. I say survey the fine rates in nearby markets and raise them inline. They’re way too low and a big contributor to the free-rider problem we have now. We need more bite if we want people to pay. Not sure about how many more meter maids are needed, but if the right technology gets put in place with occupancy tracking we could probably hire less and have them cover more area if they know when and where meters will expire.

    • Thanks! We thought specific rates, hours of enforcement and fines should be discussed, debated and decided in a public forum. These are the things that seem to concern most people, so we should be making sure the public has a say before these specifics are determined and put into a contract.

      Higher rates, longer hours and more stringent enforcement could all drive revenue up, but we have to determine what the goal is first. Is it to modernize the system? Reduce long-term liabilities? Grow revenues to use for other parts of the budget? Spur economic development? Increase turnover and thus increase traffic for local businesses? These questions can all be determined through a public engagement process. Once we have those answers, deciding these details will be easy.

    • Matt Jacob

      The problem is this is a public parking business, not a charity giving out free subisidies for parking (although it’s been run that way to its detriment for far too long). The public, which is mostly uninformed in the matter other than their personal self-interests, really isn’t the best place to go for making business decisions. There are plenty of real world examples to survey in order to come up with market rates, hours, and fines and then adjust accordingly over a long enough time period for people to adapt.

      Variable pricing does this in real-time, which is the beauty, and it could actually lower prices in some areas if the minimums are reduced, which would also spread the demand out. It would take at least one of the specifics out of the contract, and fines could also be tied to a basket of peer cities to take the human decisionmaking out of the picture. Then there’s no way that public or even private management could game the system to take advantage of the public; it’s a free-market approach.

      The overall goal should be a parking system that sustains itself (ie doesn’t present a long-term liability to the city and is at least modern enough to pay for its own expenses) and supports business growth at the same time. Any additional profit (not just revenue) that the system generates should be used to grow the system for additional economic development, which will feed the rest of the general budget indirectly.

  • David Mann

    Thank you for this, Randy. It does look like a lot of thought has gone into it.

    Could you provide more info on the Cranley proposal and why it was rejected by nearly everyone?

    – The other David Mann

    • Mayor Cranley’s original proposal called for expanded hours of enforcement in Uptown surrounding the University of Cincinnati. It also called for higher parking rates for virtually all neighborhoods. Furthermore, it called for adding 10 enforcement officers to dole out more tickets.

      UC and the Uptown Consortium immediately fired back about the increased hours and rates there. Neighborhoods were not happy about the higher rates in their parts of town. The Port Authority saw far less revenue for them than the previously signed deal. Xerox claimed that there was no way the city could generate anywhere close the revenue that they desired.

      You can read more about Mayor Cranley’s original proposal here: http://www.bizjournals.com/cincinnati/news/2014/02/12/new-parking-deal-all-of-the-pain.html.

      So almost as soon as proposing his plan, Mayor Cranley gutted his own plan. It turned out that it wasn’t the lease that necessarily upset people as much as it was the higher costs and increased enforcement. It was a major miscalculation. And now that City Council has officially voided the previously signed contract with Xerox, I am worried that Xerox may sue the city for breach of contract. I guess we’ll learn about that very soon.

      If we’re going to spend millions of taxpayer dollars, then we need to be thinking holistically about the problems and their solutions. The haphazard approach to governance we have seen thus far in Cranley’s Administration is not working.

    • Eric Douglas

      Much smaller college towns generate more revenue than the entire Cincinnati system currently does. I think that’s why Uptown was targeted, but it’s good to know UC isn’t hesitant to get political when it comes to parking but not transit.

  • Jeramey Jannene

    Hard to believe Cincy gets nothing from parking. Milwaukee returns over $20 million annually to the budget. Definitely time to reform.

    I might have missed it in the article, but does this include tickets?

    • So Milwaukee’s system generates $20 million in profit annually? The system definitely generates revenue here. It’s just not enough to cover all of its costs and then also pour money elsewhere in the budget. It’s the same story with the Planning/Buildings Department. They generate a significant amount of revenue, but it helps to simply offset the costs of that department…not pour cash elsewhere.

    • Jeramey Jannene

      Way late on this, but Milwaukee returns millions upon millions to its budget in profit. Alderman and the mayor are able to use the excess cash to budget for all kinds of things (the proposed streetcar would be funded in part with excess cash from the parking fund).

      Here is a look at revenues, my brief scan showed nothing abou expenses. http://city.milwaukee.gov/ImageLibrary/User/pmensa/DPWParkingRevenueRecognition5-.pdf

  • John Schneider

    With respect to John’s Item No. 7 — the 7th and Sycamore Garage — that’s coming down, and it’s coming down very soon. The plans for a new 700 car garage to serve the new hotel and other neighborhood uses have been complete for at least a year but have been on hold awaiting resolution of the parking plan. It’s a great design which captures a lot of the architecutual detailing seen in nearby buildings. It will have charging spaces and spaces for car-sharing operations.

    • Eric Douglas

      Cincinnati epitomizes a neoliberal approach to downtown parking going back to the peripheral parking plan of the 1980’s up to today’s policy of building hundreds of underground and above ground spaces with each new development.

    • Matt Jacob

      Does the decision yesterday to end the old parking lease give this project the green light now or is there still more that must be resolved before they can get to work?

    • I don’t think there has been any resolution as to whether or not this breach of contract, because that’s what this is, by the city will prompt Xerox to sue the city. I guess we’ll find out soon.

    • Matt Jacob

      So it’s greenlighted unless Xerox sues, then it’ll stop again until a final resolution if they do? I guess I just don’t understand how the parking lease was holding this development up in the first place. The demo/rebuild was planned to happen regardless of who manages/controls it when it’s done, right? So why can’t they move forward with it and resolve that issue down the road? Lenders holding it back until it’s settled or something is my only guess. Anyone know?

    • These new ordinances will move forward no matter what. It’s important to realize that the deal with the Port and Xerox was an actual comprehensive plan of management, construction and more. What council approved this week was nothing more than authorizing more debt to buy some new meters and build a new parking garage. Nothing has changed in terms of how the system is managed or operated. Expect nothing to change.

    • The 7th/Sycamore garage was included in the ordinance passed on Weds.

      To Randy’s point, lawsuits or other technical issues could always hold it up, but otherwise it has the green light. Don’t forget, though, that Xerox was NOT to be in charge of the garages.

  • Eric Douglas

    The bottom line is that City Council isn’t equipped to manage the parking system, but that’s what people want. Interesting to see 3CDC take the lead on OTR parking.

    • Matt Jacob

      Glad 3CDC is being proactive in forming an overall parking plan for OTR. The same thing is needed in the CBD and in a few other areas of the city, but like you said the management isn’t there to plan these sort of things.

      Making the Port the parking authority for all these areas by give them control of the lots, the garages, the meters, and the enforcement seems like the best answer to me. Public control is great in theory (and the Port is still semi-public) but in practice it’s messy and inefficient and leads to the disrepair we’re seeing now.

    • Eric Douglas

      I agree, seems like they’ve put a lot of thought and effort into their OTR parking parking plan. Downtown seems to be the opposite. Dunnhumby ended up with 7 floors of parking because it’s on route to Fountain Square from 75, and 3CDC is the only reason Gensler included expensive underground parking.

    • I have a theory that 3CDC, and now the Port, are pursuing these parking assets like crazy for a financial reason. The revenue generating asset is probably great to have on their books as a development corporation when it comes to getting loans. This is something I’ve been following for awhile and will look into with greater detail soon.

    • Matt Jacob

      Parking garages are almost pure money machines until you let them get to the state of some of the city’s so they provide great collateral for bonding or loans. In the Port’s case it’s to leverage into more development eventually from very little resources. They don’t have the assets to do what 3CDC did because they didn’t start with a private equity fund filled with a big pot of money from corporations. Even if they get the garages with some burden already attached, they’ll eventually turn into the assets and clout they need once it burns off or they have a big enough quantity. They’re building their base still.

      In 3CDC’s case it provides debt service money while they continue to milk tax credits and existing funds, while at the same time creating a market for a type of higher income housing that wouldn’t be possible in OTR on this scale without the ability to bring cars with them. 3CDC’s garages have been the bulkheads of their development in otherwise rough areas. The streetcar should make the garage density more dispersed, but still necessary in a neighborhood that’s been functionality obsolete since the auto came to town. It’ll allow each new garage to spread development farther as well.

  • Great article. Only two things I want to add:

    – It’s mentioned below, but we REALLY need to change the ordinance to allow neighborhoods to create residential parking plans. Yes, Pendleton has one and Clifton has a small one (which I believe they’d like to grow but can’t), but CUF, Corryville, and possibly other neighborhoods have been rejected because of the outdated ordinance on the issue. In too many communities–Uptown neighborhoods, Northside, Hyde Park, Over-the-Rhine, etc., etc.–it’s too easy to avoid the meters by parking a block away in front of someone’s house, and walking. I am glad to see Council will be taking this up soon in regards to OTR, and I hope they offer an adequate solution to address ALL parking spaces in the city.

    – The elephant in the room, completely ignored by Council thus far, is the $6 million + in deferred maintenance on city garages. The great thing about the privatization plan (which I otherwise had mixed feelings on) was it largely took these garage liabilities off the city’s books. I understand if Council wants the city to hold onto its parking meters. But what’s the point in maintaining and keeping these garages? Why can’t they be leased or sold to the Port or other entities? Too much money is being wasted letting the garages rot, and it’s time for Council to do something about it.