The City Council may:
1.  Accept the recommend changes approved by the Parking Advisory Board and City staff and approve the attached rate resolution.  This alternative will increase revenue by $122,745/year.  More details are available in the "Financial Impact" and "Background" sections of this report.
2.  Do not approve the rate resolution and leave rates unchanged.  More details are available in the "Financial Impact" and "Background" sections of this report
3.  Make other changes to the Parking Division's rate structure to generate the same amount of revenue as alternative 1. This alternative would leave the on-street meter rate at $.35/hour and the parking lot monthly rate unchanged at $50 per month. 

 Increase Garage Rates at Park 2 and Park 3 only:
   1.  Monthly Roof Rates increase from $25 to $30:             =          $14,709  
   2.  Monthly Covered Rates increase from $50 to $60        =          $67,800
   3.  Monthly Assigned Rates increase from $100 to $105  =          $  8,130
   4.  Garage Hourly Rate increase                                            =          $36,242
        a. Current Hourly Garage Rate:
            $.25/hour for 1st 2 hours
            $1.00/hour for each add. hour to $5 daily max.
        b. Proposed Hourly Garage Rate:
            $.25/hour for 1st 2 hours
            $1.25/hour for each add. hour to $7 daily max.
                                                       
            Total Additional Garage Revenue                           =           $126,881

The last parking rate increase was in 2006.  Staff recommended that rates be increased to produce about $700,000 per year but Council ultimately approved rates that were projected to generate about half of that amount.  The approved amount was about seventy percent (70%) of the estimated annual cost of the debt payment for the Park 2 Garage expansion.  Prior to this expansion, all parking garages had been built with tax increment from the downtown Tax Increment District.  The Park 2 expansion could not be financed with increment, so Parking Revenue Bonds were issued to pay for the construction.   The Parking Fund had reserves, which were used over the past six (6) years to balance the annual operating and capital budget.  The Parking Fund has expended almost all of its reserves, so financial changes must occur. 

The Parking Advisory Board and City staff have been working together for several months to determine the best solutions to balance the FY2013 budget. The elements that create the recommended, balanced budget are:
1. Eliminate 3 FTE positions in the Parking Division. These reductions are possible due to the impending sale of the Park 4 garage, by converting the Park 1 garage to "Monthly Parking Only", and by reducing the number of Parking Enforcement Officers from 4 to 3 in anticipation of a smaller enforcement area to be patrolled.
2. Pre-pay a portion and refinance the remaining Park 2 Expansion debt. Staff proposes to use the Park 4 sale proceeds to pay a portion of the Park 2 Expansion debt and to issue new bonds at a lower interest rate in order to reduce the annual debt service payment paid by the Parking Division.  This action should save at least $195,000/year.
3. Transfer $100,000 from the Expanded N. 27th Street Urban Renewal Area to the Parking Fund to pay for a portion of the refinanced Park 2 Expansion debt.
4. Use one-time lighting rebates of approximately $160,000, paid by Northwestern Energy, from lighting upgrades in two of the parking garages.
5. Eliminate the $233,308/yr transfer from the Parking Fund to the General Fund.

A critical element of the balanced budget is refinancing the Park 2 debt.  The Parking Fund has to generate considerably  more revenue than it has in expenses in order to reassure prospective bond purchasers that the Parking Fund can and will repay the debt.  This amount of revenue over expenses is called "coverage."  Staff and the City's financial adviser believe that it will be necessary to generate about 2X coverage, or double the estimated annual debt payment of $300,000.  Current rates and fines do not generate this amount of net revenue.  Given the expense reductions and revenue increases that are described above, the only way to increase Parking Fund net revenue is to increase the rates and fines collected by the Parking Division. 

Fines are increased by Administrative Order but rates must be approved by the City Council.  Staff and the Parking Advisory Board are recommending a modest, 15¢ per hour increase in the short term parking meter rate.  This has been portrayed by some as a 40% increase, which exaggerates the impact of the change.  Most core downtown meters zones have a 2 hour limit, so the proposed meter rate increase will cost an additional 30¢ for those two hours.  30¢ is:  equal to a 15% tip on a $2 cup of coffee; less than the price of a 5 stick pack of gum; about 1/3 of a doughnut; the price of 1 photocopy; less than the cost of adding cheese to a burger.

The City owns and operates two parking lots on N. 27th Street, located between 1st and 2nd Avenue North.  31 spaces are metered and 28 are rented by the month.  These spaces are considerably more convenient than garage spaces and each space is assigned, which guarantees that the renter will be able to park in  the same spot each day.  The current rental rate is $50/month and the proposal is to increase that amount to $75. 

The Parking Advisory Board is composed of downtown business owners and property owners or their representatives.  They advise the City Council about all matters dealing with downtown parking.  Their meetings are open to the public  and rates have been discussed at each monthly board meeting since March.  Staff presented the PAB approved rate and fine proposal at three (3) public forums and a Downtown Business Association Merchants Meeting.  The City Council will conduct a public hearing when it considers the rate changes.