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HomeMy WebLinkAbout1997-06-03 City Council (10)BUDGET 1997-98 City of Palo Alto City Manager’s Summary Report TO:HONORABLE CITY COUNCIL ATTENTION: FROM: FINANCE COMMITTEE CITY MANAGER DEPARTMENT: ADMINISTRATIVE SERVICES AGENDA DATE: JUNE 3, 1997 CMR:257:97 SUBJECT:PARKING PERMIT FUND STATUS AND PROPOSED FEE INCREASE REOUEST: The purpose of this report is to provide information to the City Council on the status of the Parking Permit Funds and.to request approval of an increase in the parking permit fees within the University Avenue Parking District. RECOMMENDATION: Staff recommends that Council increase the annual parking permit fees by $80 in the University Avenue Parking District to a level of $280 per year, and adjust other permit parking fees within the District proportionately. The increase would be effective September 1, 1997. No change is proposed for the California Avenue Parking District permit fees. These changes are included inthe proposed Municipal Fee Schedule, which will be reviewed as part of the 1997-98 budget discussions, This report has been prepared to provide the Council with more information regarding the proposed fee increases. _POLICY IMPLICATIONS: This report does not recommend any change to existing City policies. EXECUTIVE SUMMARY: An increase in the University Avenue Parking District permit fees is recommended to cover an ongoing operating deficit in the Parking Permit Fund. This results from parking lot maintenance costs which exceed the revenues generated by permit fees. The proposed fee CMR:257:97 Page 1 of 6 would increase the current annual parking permit fee from $200 to $280 per year. The fee increase would become effective September 1, 1997, to allow staff the time to notify permit holders of the increase prior to their next renewal date. The last time fees were increased was in 1984-85. This fee increase should provide sufficient funds to cover projected expenses for the next five years. Staff has worked with the Downtown Parking Committee of the Palo Alto Chamber of Commerce in developing a maintenance budget and defining the structure of the permit, increase. The-Parking Committee--approved theoption which was recommended at a meeting on March 4, 1997. FISCAL IMPACT: The permit fee increase will result in an estimated revenue increase of $128,000 per year in the University Avenue Parking Permit Fund. ENVIRONMENTAL ASSESSMENT: This is not a project for the purposes of the Califomia Environmental Quality Act (CEQA); therefore, no environmental assessment is required. ATTACHMENTS: Attachment 1 - University Avenue Parking District Budget Worksheet Attachment 2 - University Avenue Parking District Assumptions for Five-Year Estimates Attachment 3 - University Avenue Parking District Options for Fee Increase, Attachment 4 - California Avenue Parking District Budget Estimates PREPARED BY: Linda Craig, Senior Financial Analyst DEPARTMENT HEAD APPROVAL:~~. ~ Em~y Harrison Assistant City 1V~a.~ge.r, t ~ing Director, ~]rninistrative Services ~ityMana~eg: - ~ CC:Susan Frank, Palo Alto Chamber of Commerce Charles J. Keenan III, Downtown Parking Committee, Palo Alto Chamber of Commerce CMR:257:97 Page 2 of 6 City of Palo Alto City Manager’s Report PARKING PERMIT FUND STATUS AND PROPOSED FEE INCREASE RECOMMENDATION: Staff recommends that Council increase the annual parking permit fees by $80 in the University Avenue Parking District to $280 per year, and adjust other permit fees within the district proportionately. The increase would be effective September 1, 1997. This will provide time for staffto notify permit holders of the increase before their next renewal date. No change is proposed for the California Avenue Parking District permit fees. These changes are included in the proposed Municipal Fee Schedule Changes, which will be reviewed as part of the 1997-98 budget discussions. This report has been prepared to provide the Council with more information regarding the proposed fee increases. BACKGROUND: The Parking Permit Funds funded from revenues for permits issued for parking in the surface lots and garages owned by the University Avenue and California Avenue Parking Districts. The University Avenue Permit Fund also receives revenues from the attendant lot in Lot S. These revenues are used to reimburse the City’s General Fund and Refuse Fund for the actual costs of operating and maintaining the District parking facilities. The rationale for this is that parking lot maintenance costs should be paid by parking lot users, not by City taxpayers. The costs for operating and maintaining the District include: the sale of parking permits; maintenance of wait lists for permits; allocation of available permit spaces (as compared to three-hour free parking spaces); paving and sign maintenance; landscaping and tree .maintenance; mechanical sweeping of the lots; security guard at Cowper-Webster Garage and Lot Q; and utility costs and elevator maintenance in the garage structures. (The exception to this is the operating and maintenance costs of the Cowper- Webster garage, which are paid for by Premier Parking Management Corporation as a condition of a development agreement with the City. The term of the agreement will expire in October 2005.) Parking permit fees .in the University Avenue Parking District have remained the same for more than a decade. The last increase was in 1984-85, when the annual permit fee was increased from $100 to $200 per year. Staff informed the Council in March 1994 (CMR:190:94) that the University Avenue Parking District operating and maintenance CMR:257:97 Page 3 of 6 expenses exceeded revenues, and recommended that annual permit fees be increased from $200 to $275 per year. At that time Council decided to delay an increase in permit fees, because a number of other programs were being implemented downtown, including the downtown color zone and attendant lot parking, which might affect the parking patterns and resultant revenues. The University Avenue Parking Permit Fund reserves grew-during the years prior to 1994-95. As a result, there have been sufficient funds available in the reserve to cover the annual operating deficits that have occurred since 1994-95. During the last two years, in addition to covering the deficits, the permit funds have been used for several one-time projects. These include: the "white and bright" painting and improved lighting of the Civic Center, Cowper- Webster and Q Garages; the paving of surface lots; and interim signage and an information brochure for color-zone parking. In addition, the attendant lot parking has not generated sufficient revenues to cover the cost of the operating the lot. Therefore, the net costs of operating the attendant lot are borne by permit holders. The California Avenue Parking Permit fund receives about $94,000 in annual revenue, compared to expenses of around $66,350. Therefore, no permit increase is proposed at this time. POLICY IMPLICATIONS: This report does not recommend any change to existing City policies. DISCUSSION: Five-Year Projection Staff prepared a five-year budget projection (Attachment 1) to determine the required permit increase. It is expected that the fee increase will be sufficient to cover the next five years of projected expenditures, including: the continuation of attendant parking at Lot S, with its. resulting net deficit; completion of the "white and bright" painting and lighting at Cowper- Webster Garage; annual cleaning and washing of the Civic Center and Cowper-Webster Garages; annual publication of brochures containing information on parking in the downtown area; and maintaining the current level of surface lot sweeping -- once a week -- plus extra trash cleanup. The proposed budget does not include any repaving or restriping during this period. The attendant lot is assumed to operate at a deficit of $20,000 to $30,000 per year. However, in March and April this year, revenues exceeded expenses. Staff will be providing a status report on the attendant lot in June, and up-to-date information on the lot’s financial status will be included in that report. The assumptions for the five-year projection are shown on Attachment 2. CMR:257:97 Page 4 of 6 At the conclusion of the five-year period, the budget and revenue requirements will again be reviewed. By that time, two new parking structures, which will provide 729 new spaces, are anticipated to have been constructed in the downtown area. The operating and maintenance costs of these structures will need to be incorporated into the University Avenue Parking District budget, as well as projected revenue from the additional permit spaces. The proposed fee increases result in annual-endingfund balances of between $70,000 and $115,000. This allows a cushion in case revenues or expenditures fluctuate, and will provide flexibility for changing needs. The California Avenue Parking District permit revenues continue to cover operating and maintenance expenses (Attachment 3). The California Avenue Parking Permit Fund reserve is expected to remain at approximately $296,000, and no increase in the permit fees is proposed. Permit Fee Changes The following changes to the University Avenue Parking Permit fees are included in the proposed changes to the 1997-98 Municipal Fee Schedule: University Avenue Parking District Proposed Parking Permit Fees 1996-97 FEE 1997-98 FEE All Lots $65/quarter, $200/year $90/quarter, $280/year Lot X (Holiday Inn Parking Lot)$20/quarter, $50/year $25/quarter, $70/year Lot U (JPB, Caltrain Parking Lot)$20/quarter $25/quarter One-Day Parking Permit $10/day $13/day The daily charge for Attendant Parking will remain at $8 per day. The quarterly charge of $25 for Lot X and Lot U provides a favorable alternative to the charge of 50 cents per day at the nearby Caltrain parking lots on Alma. Downtown Parking Committee Involvement Staff has met twice with the Downtown Parking Committee of the Palo Alto Chamber of Commerce regarding the need to increase the annual parking permit fee from $200 to $280 per year with the !997-98 budget. The Parking Committee reviewed the proposed five-year CMR:257:97 Page 5 of 6 budget and recommended the addition of $75,000 to complete the full scale "white and bright" painting and lighting of the Cowper-Webster Garage, and annual power washing after the project is complete. This project was incorporated into the proposed budget. Staff will continue to meet with the Downtown Parking Committee of the Chamber on an annual basis to review the operations, maintenance and budget for the district, and to discuss any adjustments which need to be made. " ALTERNATIVE FEE SCENARIOS: Alternate fee scenarios (Attachment 4) were discussed with the Chamber’s Downtown Parking Committee on March 4, 1997. Each scenario was designed to generate $428,000 in permit revenue. Options included: an across-the-board uniform increase; a two-tier approach which would have resulted in a greater increase in fees for the Civic Center Garage; and one which would result in a higher fee at all of the parking structures (Civic Center, Cowper-Webster and Q Garages), while leaving the permit fee increase lower on the surface lots. The Downtown Parking Committee recommended Option 1, to retain a unified permit. structure, with an across-the-board increase. Members of the Downtown Parking Committee felt that the alternative fee structures had disadvantages. A higher fee at the parking structures, to cover the higher costs of maintenance and operations, would discourage people from using the structures. In addition, there might be administrative problems with the two-tier system in pro-rating the permit fees if people shift from a surface lot to a garage. The general preference of the Committee was for the permit fee increase to be made only once, to cover the next five-year period. Phasing in the increase in two or more adjustments was not desirable. FISCAL IMPACT: In the 1996-97 Budget Issues (CMR:210:96) it was projected that parking district expenses would exceed revenues by $160,912. This would bring the reserve level down to approximately $187,000. Current projections indicate the reserve will be about $142,000 as of June 30, 1997, due to the increase in costs of the Civic Center signage program. The permit fee increase will result in an estimated increase in revenues of $128,000 per year in the University Avenue Permit Fund, after the first year, when the increase is being delayed by two months. ENVIRONMENTAL ASSESSMENT: This is not a project for the purposes of the California Environmental Quality Act (CEQA); therefore, no environmental assessment is required. CMR:257:97 Page 6 of 6 ATTACHMENT 1 oo~-(DO(X) oo~O000 oo~ ~0~000000~00~000000~ ~0~0000000 ~0~000000~~0~000000~0~~0~ ~0~0000 ~ oo ~ OO~ooOooo D~ Attachment 2 University Avenue Parking District Assumptions for Five-Year Estimates The fee increase will cover five years of projected expenditures. Another increase would be needed in 2003. o o Permit revenue in 1996-97 will be at the same level ($300,000) as in 1995-96. This is higher than in previous years. Attendant parking will be continued. The cost will be supported by permit revenue, but a deficit of $20-30,000 per year is assumed until the program stabilizes. Annual cleaning and washing of the Civic Center garage will continue at a cost of $20,000 per year. The current level of once/week surface lot sweeping plus extra trash cleanup will continue. There will be not repaying or restriping until the sixth year. Completion of the "white and bright" painting and lighting at Cowper-Webster Garage’at . a cost of $75,000 is budgeted in 1997-98. Annual Cleaning is budgeted each year after the project completion. Employee related costs are increased at 3% per year, non-salary costs remain Stable. The total maintenance cost for the district is offset by the share of City used spaces: City owned spaces 139 Other spaces used at Civic Center 149 City spaces used at Cowper-Webster 25 313 10. Total District spaces 2,257 District share of total cost (1944/2257)86% The District’s share of the Civic Center debt has been recalculated on the basis of the number of spaces used by City and City-employee vehicles, and will be $80,000 per year. Attachment 3 California Avenue Parking District Budget Estimates Actual 1995-96 Beginning Fund Balance Permit Revenues Interest Earnings Total Revenues 245,217 78,427 14,921 93,348 Budget 1996-97 268,162 84,000 10,000 94,000 Permit Sales Parking Space Admin. Public Works Operations Landscape Maintenance Garage Operations Utilities General Fund Sub Total Lot Sweeping 14,831 284 4,957 6,800 6,768 3,944 37,584 32,819 13,250 9,000 12,700 6,400 12,000 2,000 55,350 11,000 Total Expenses 70,403 66,350 Ending Fund Balance 268,162 295,812 05/06/97 Attachment 4 University Avenue Parking District Options for Fee Increase Option 1 Option 2 Option 3 ........ Recommended ,-w/.higher w/higher Permit Current General Rate for Rates for ~Fee Increase Civic Center All Garages Annual Civic Center $200 $280 $395 $295 Cowper-Webster $200 $280 $250 $295 Lot Q (Abitare)$200 $280 $250 $295 Surface Lots $200 $280 $250 $250 Holiday Inn (Lot X)$ 50 $ 70 $ 70 $ 70 Quarterly Civic Center $ 65 $ 90 $125 $ 95 Cowper-Webster $ 65 $ 90 $ 80 $ 95 Lot Q (Abitare)$ 65 $ 90 $ 80 $ 95 Surface Lots $ 65 $ 90 $ 80 $ 80 Lots X and U $ 20 $ 25 $ 25 $ 25 Daily $10 $13 $13 $13 A~tendant Parking Maximum Fee $ 8 $ 8 $ 8 $ 8 Assumptions 1.New rate structure needs to generate $428,000 in annual permit revenue. 2.60% of permits are assumed to be annual, 40% quarterly 3.Allocation of permit sales is based on the number of permit spaces in that category to the total number of permit spaces within the District. 4.Proposed fee for Civic Center permit reflect the calculated cost per permit space at the Civic Center garage.