What’s the perfect business?
Wouldn’t it be one that’s immune to competition, inexpensive to operate, simple to manage and cash-based? Wouldn’t it have few employees, inexpensive capital equipment and an absolute monopoly in its geographical region?
Wouldn’t it have 100 percent market penetration in its operational sphere, and a product or service that customers couldn’t do without? Wouldn’t its capital equipment last for decades, with little need for repair, replacement or updating? And wouldn’t it enlist the full force of government to deal with uncollectable accounts, even if they’re as small as 25 cents?
And if such a business were on the market, wouldn’t you like to buy it?
Welcome to the Colorado Springs Parking System Enterprise, a thriving municipally owned business.
Is it on the market? Probably not, but the Downtown Partnership would love to take it off the city’s hands.
“This is something we’ve been interested in for 15 years,” said DP board member Les Gruen of Urban Strategies. “We’ve been taxing folks quite heavily (in central downtown) through the DDA (Downtown Development Authority) and the BID (business improvement district). The parking system takes a lot of money from downtown, and we’d like to dedicate those revenues to downtown.”
Downtown Partnership executive director Ron Butlin also confirmed the group’s interest.
“We look upon (paid parking) as a tax paid by visitors to downtown,” he said. “Free parking is seen as an advantage to suburban business. We’d like to see that money reinvested for the benefit of downtown.”
Mayor Steve Bach isn’t interested.
“Any lease or sale of the Parking Enterprise would need to be at market price,” Bach said, “plus pay off our existing debt. I am not certain I could support that but am certainly willing to listen to ideas. We’re going to need more parking downtown — why would we turn over such an important amenity to a third party? We need to understand why that would be appropriate.”
The enterprise, wholly funded by revenue from parking meters and municipally owned parking garages, is one of the city’s cash cows — or would be, if it weren’t a stand-alone enterprise. As such, its surplus revenue doesn’t flow directly into the coffers of the city.
“Public parking,” according to the enterprise’s 2012 budget summary, “is an economic development tool used to attract private investment into the community and manage urban growth. All proceeds from these operations are reinvested back into the community in the form of increasing the Parking System’s capacity and funding parking and pedestrian projects aimed at improving the health, safety and welfare of the community.”
Providing parking spaces, the budget summary continues, is “a key element in maintaining the economic vitality of the downtown and surrounding activity centers.”
The numbers are interesting. On the good side of the ledger, there’s a fund balance of $5.9 million and a forecasted annual revenue stream of $4.1 million. On the bad side, there’s $15.4 million in debt and forecasted annual expenditures of $3.4 million.
Three factors disproportionately influence the enterprise’s bottom line.
As of the end of this year, the system will have approximately $15.4 million in medium- and long-term debt. Annual P&I payments of $1.05 million will continue until 2027, when the 2006 bonds will finally be paid off.
Can the bonds be refunded at a lower rate?
That’s doubtful, since Moody’s rates them Caa2. Securities so rated, according to Moody’s, “are judged to be speculative, of poor standing, and are subject to very high credit risk.” That’s the second-lowest junk bond rating, just above Ca, which “are highly speculative and are likely in, or very near, default, with some prospect of recovery of principal and interest.”
Curiously, the securities last traded at par, yielding 4.75 percent. According to Allan Roth of WealthLogic, similar Caa2 securities would be expected to trade at a steep discount.
Labor and operational costs
The enterprise’s 7.5 FTEs will cost an average $71,653 each in wages, salaries and benefits in 2012. Employees include a manager, an administrative assistant, three parking enforcement officers, and 3 parking meter mechanics.
A private parking operator is responsible for the parking garages; 2012 operating expenses were forecast at $955,000.
Capital improvement projects
Extensive downtown curb and gutter improvements, including bump-outs and flower planters, have been funded this year as part of the downtown streetscape project. Total CIP spending this year is projected at $860,000.
Proceeds from 1999 and 2006 bond issues were largely used to fund construction of parking garages in central downtown. Surplus revenues from operations, if any, also appear to have been used to fund other downtown improvements.
Approximately 90 percent of system revenue flows from parking meters ($1.85 million) and garages ($1.93 million). The enterprise deploys 2,432 meters, many far from central downtown.
Meters on Tejon Street extend nearly a mile and a half, from Cache la Poudre Street to Moreno Avenue. Meters also lie in wait for the unwary motorist along Cascade, Nevada, and Weber, as well as guarding the curbs along the side streets.
The historic commercial district of Old Colorado City is heavily metered. Colorado Avenue is metered between 23rd and 27th streets, as are the side streets and several city-owned parking lots.
The parking enterprise hasn’t funded any significant streetscape improvements in Old Colorado City in the recent past.
“We continue to evaluate maintenance needs within the district,” said City Parking Administrator and enterprise manager Greg Warnke, “and when possible we will fund those needs. However, to date, they have not brought forward a funding request for consideration.”
The average annual income per meter is a robust $740. The enterprise doesn’t plan to add or subtract any meters in the foreseeable future.
“Meters are installed based on demand for parking, need for turnover and a request from the businesses being served,” said Warnke. “On an annual basis, the total number of metered spaces may fluctuate up or down by five to seven spaces due to construction.”
Those irritating $20 parking violation fines don’t go to the Parking Enterprise, however. Even though the enterprise pays the parking enforcement officers, ticket revenue flows to the general fund, where it’s used (at least in theory) to help fund the operations of the municipal court.
Despite the vigilance of the enterprise, there are a few unmetered spaces close to central downtown where you can park for free as long as you please. You can find those spaces at … wait a minute — that’s information you’ll need to find elsewhere.