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Study Says City Should Move Forward on Privatizing Garage Operations

By Eric Richardson
Published: Monday, February 01, 2010, at 02:21PM
Pershing Square Garage Eric Richardson [Flickr]

Pershing Square's 1,590 space garage is one of ten proposed for a private concessions contract that could generate the city short-term cash.

Could turning over Pershing Square's 1,590 space garage to a private operator increase revenues for the city? The facility is one of ten that the city hopes to package up in a concessions agreement designed to bolster its dwindling reserve fund and shed non-core services.

While those who use the facility likely wouldn't see much change, the study done for the deal provides an interesting look at operations inside the 58-year-old garage.

A study conducted by Desman Associates says that the garage is currently only at 64% utilization, with a peak occupancy of just over 1,000 cars on weekday afternoons. Desman thinks that number can go much higher, though, and says that the facility has the "greatest potential for future growth" of the ten studied.

The facility generated a net revenue of $3 million in 2009. Roughly $1.6 million came from monthly parkers, with just under $1.4 million coming from daily parking.

Operating expenses were $930,270, or $585 per parking space.

A big piece of those costs is labor, and Desman estimates that a move to "pay-on-foot" pay stations would allow a 44% reduction in that area.

Of the $2 million in profit from the garage, $1.5 million goes to Recreation and Parks, while the remaining $500,000 goes into the city's general fund. The City Attorney's office has determined that any private concessions deal would still require the department to receive a similar revenue share.

The study does propose some minor changes to the facility's rate structure. It is currently $7.70 per hour to park, with a daily max rate of $14.40. Desman suggests that the industry tends to use $0.25 increments for rates, and proposes that rates go to $8 with a $16 max in year one. That would raise to $9 / $18 and $10 / $20 in years three and five.

The $6.60 rate for parking after 5pm would actually drop from $6.60 to $6 in year one, rising to $8 and $10 in years three and five.

The City Council's budget committee will consider the privatization proposal this afternoon in closed session, and the item is scheduled to go to the full City Council on Tuesday. The city has so far spent $630,000 on studies and planning for the concept, and implementation is expected to cost an additional $510,000. Under the plan, the city would turn over operations of the facilities under a 50-year contract.

Interestingly, it was only a decade ago that the Pershing garage emerged from its first 50-year operations contract. The facility was built by City Park Garages, Inc., under a deal that started in 1950.

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