Update: After we wrote the entry below, we found that in the same Dec 6 paper, the Orlando Sentinel had an editorial section that provided more information. It seems that indeed, Orlando politicians were the ones that delayed increasing very low parking rates, so they are the ones that should be slapped around for ignoring good business practices and economics. Right now, the op-ed isn't on the website yet, but here is where it should appear later for the Dec. 6th edition. This supports our opinion that NO candidate should be allowed to run for political office without passing courses in business management and economics. The political parties that continue to support and allow such amateurs in economics to control business decisions of billion dollar government agencies funded by taxpayers should also be chastised.
Our Opinion:
It seems the City of Orlando staff is whining that the Parking division is running short of funds and needs to drastically increase parking fees charged to the public for parking in downtown Orlando.
So, we have some comments on that issue, plus a discussion about the Lake County parking structure fiscal fiasco.
But, according to the Orlando Sentinel article below, the City caused its own problems through greed and mis-management. It seemed the city sold off many parking lots that reduced income while apparently not reducing overhead. They even used parking lots as incentives to get businesses to relocate to downtown, then sold one or more lots to developers to build more buildings.
My first internal audit position was with the County of Los Angeles, and we used to do surprise cash and ticket counts of parking lots to ensure that the parking lot attendants weren't skimming revenues, which is easy to do. Later, I saw where the Orange County, CA parking lots for jurors and visitors to the County office complex had lax controls and reported possible skimming to them.
But, this issue isn't about revenue controls, but that if the city sold off the lots, they should have reduced overhead and staff to meet the reduced revenue stream. Someone in accounting clearly didn't calculate the projections and effects of lost revenues when they sold some of the lots, or they DID provide the info to some managers or elected officials and were ignored. Either way, more investigation might turn up who allowed the disposal of the lots without also requiring reduced spending in the staff and budget items counting on the prior levels of revenue. Thus, if City management or elected officials resisted raising fees incrementally to cover operational costs, they should be blamed for the losses and current problems. Or, if someone in accounting or whoever approved the disposition of lots without asking about future cash flow, then they need to be slapped around for bad management. The city approach of selling parking lots to make up for operating losses indicates a clear inability to manage assets. Imagine if you owned five rental apartment complexes and the manager was not breaking even, so his approach was to sell one of the buildings to provide cash to make up for losses without fixing the underlying problem
The article says that the losses are operating losses where they can't cover mortgage costs, staff, etc. I bet that a review of the parking collection system might find some skimming going on, and WHY can't they renegotiate the lot mortgages or refinance at lower interest rates? There was no mention of that. It would be nice if there was an investigation of earlier requests from the parking division to raise fees to break even to see IF that was done, and if so, who prevented the increases that forced the sale of the lots? What elected officials got contributions from the developers who constructed the buildings after getting approval to buy the lots?
Finally, it would be interesting to see a study of spaces to see if any have been given to officials, agencies or favored consituents for free or reduced rates. Again, if there are fewer income generating parking spaces, any "free" or discounted spaces should be reduced or all should be eliminated first.
Thus, the big solution is the city should SELL every single lot to a parking lot operator and get out of the parking business, since they haven't been focused on maintaining adequate parking coverage in the downtown area. Or, the city needs to come up with a standard number of parking spaces per office square footage and enforce that standard. I am sure there are industry standards for parking availability. Did the city violate any parking level standards by selling the lots? Is it possible in Orlando that buildings can be approved that provide required parking levels, but then sell off or use the spaces for non-parking purposes AFTER the building is finished?
Any aggressive, investigative reporter wanting more insight on what to investigate can send me an email... [email protected] .
Then, maybe they will investigate the excess costs for the new Lake County parking structure in Tavares, like discussed on a local radio show. Recent local news articles indicate the County may not have the funds to complete the project. The reporter could verify funds exist to complete the construction, AND whether the contractor is only using American citizen labor vs non citizen labor to build it! Was that a condition in the contract? Could the County have agreed to pay high rates to get "American workers" but then the contractor didn't, and is increasing profits while the County doesn't investigate???
vj
Parking shrank as downtown Orlando grew
If
administrators at Orlando City Hall are looking for someone to blame
for the city parking system's budget mess, they might want to look in
the mirror.
The city's surface-parking lots -- with low
maintenance and cheap operating cost -- have always subsidized the cost
of running its garages. But for the past several years, the city has
been selling off these lots, often to private developers, as a way to
spur growth downtown. Some garages have gone, too, and every lost space
downtown means less income for the city.
City commissioners,
who will be asked Monday to double downtown-parking rates to raise an
extra $4 million a year, say it's an example of poor planning.
"The plan was supposed to be that the city would buy outlying lots as
we lost these spaces, and they haven't done that," said Commissioner Patty Sheehan,
whose district includes part of downtown. "Are we really evaluating how
much of an asset these lots are before we bargain them away?"
A few examples:
*The city used a small 172-space garage at Magnolia Avenue and
Washington Street as a bargaining chip to attract private development.
In 2004, the city sold it for $2.2 million to make way for the 30-story
Dynetech Centre.
*The Lynx bus terminal was built on one of the
city's largest public lots, causing the loss of 875 spaces. The city
also lost the 69 spaces in an old Lynx station on Central Boulevard
when construction began on a new Fire Department headquarters a few
months ago.
*CNL built an office tower atop a City Hall parking lot, a loss of 146 spaces.
*Two lots with a combined 307 spaces were demolished to make way for
the Florida A&M University law school, which opened in 2006.
*The 380-space Market Street Garage was demolished to build the 55 West
condominium tower on Church Street. A new garage is on the way but not
yet open.
Lack of cash for new lots
Administrators say there's no money to replace the lots because
commissioners have repeatedly rejected staff requests to raise rates.
Though monthly rental rates in city garages have been periodically
adjusted through the years, there has been no across-the-board rate
increase since 1989 -- and even then, the council only allowed the
first part of a three-year phased increase. Two years ago,
commissioners fought off a smaller increase than the one now under
discussion.
"We did our part to run it as inexpensively as we
think we could reasonably do it," Transportation Director Roger
Neiswender said. "We have come to the end of the line."
$4M loss expected in '08
Records show that since at least 2003, the Parking Division has
collected less money in parking fees and fines than it has spent paying
its workers, maintaining its facilities and covering the mortgage on
its garages. The parking system does not receive tax dollars, so the
city has avoided red ink by using the money it made selling its
surface-parking lots.
City officials say that won't work
anymore. Making matters worse, Orlando's new agreement with the state
to operate downtown-parking lots under Interstate 4
requires the city to put profits into transit and pedestrian projects
rather than into the parking system -- a loss of about $900,000 a year.
All told, the city is projecting a $4 million loss on parking this year.
"We are bleeding $300,000 a month out of the parking-garage system. You
can put a Band-Aid on it, but that's not going to stop the hemorrhaging
we're experiencing right now," Deputy Chief Financial Officer Ray
Elwell said.
'Creative solutions'?
Even so, it's not clear the rate hike will get the votes needed to pass Monday.
"We know we're in a recession, headed for a depression," Commissioner
Daisy Lynum said. "Why would we raise parking rates right now? I would
never support raising the rates until we try some creative solutions."
Patrick Whalen, president of Community Resource Systems, hopes those
solutions include cutting expenses. If the proposed increase goes
through, his company will pay an extra $300 for the dozen spaces its
employees use in a city garage.
"It's going to be an extra cost
we incur that takes away money we could be using to pay higher wages,"
Whalen said. "In our business, we can't just say we're going to pass
our costs on to customers and expect them to take it."
Mark Schlueb can be reached at [email protected] or 407-420-5417.
