Consideration and Adoption of Resolution No. 2020-04:  A resolution of the City Council of the City of Flagstaff, Arizona, amending the Comprehensive Parking Management Program Pay-to-Park and Permit Parking Fees, and establishing an effective date.

The ParkFlag Parking Management Program (ParkFlag) has been in place for two years. Its primary tasks are to manage the limited supply of parking in the Downtown and Southside areas and to generate revenue for the creation of additional parking with a focus on ambassadorship and customer service.  The purpose behind those tasks is a vibrant and prosperous downtown and an improved residential experience in the Southside. This discussion and action item is an annual update on the program operations and a discussion of potential changes to be considered for implementation. As the City now has two years of data to work with there are a number of potential changes for the Council to consider.

The ParkFlag Program has exceeded revenue projections in both years of its operation. As visualized in the attached PowerPoint and Annual Report, for fiscal year 19-20 ParkFlag had revenues of $1,518,725 and expenses of $788,543.  Revenues increased by $80,000 over the first year of operation.  The 20% of revenue reserved for the creation of new parking, by ordinance, was $303,745, which brings the total for the program since inception to $509,269 as of June 30, 2019. The additional balance between revenues and expenses can be used to generate inventory or for other parking-related purposes such as the program adjustments discussed further below.

Pay-to-Park sales are by far the majority of the revenue at $1,389,997. The remainder is collected through the permit programs or as interest on the reserves. Expenses also have been below the budgeted amounts in each of the two years of operations.  The staff has been careful to manage the program economically.  Also, the program had lower staffing expenses, due to incremental program rollout, staff turnover, and longer hiring processes due to background checks. 

ParkFlag revenues may only be used for parking management purposes, per City ordinance. Parking violation fines are paid to the Municipal Court and ParkFlag does not receive these funds.

The proposed adjustments to ParkFlag program will reduce annual revenues.  Possible adjustments include reducing the geographic scope of the pay-to-park area, thus providing more free, time-limited parking instead, or by reducing the hours of parking management, thus providing more periods where parking is free to the customer. Any reduction of annual revenue will result in extending the amount of time needed to collect financial reserves to provide long term parking solutions. 

The proposed adjustments will also enable some operational cost savings. It is possible ParkFlag may be able to reduce the hours, or eliminate a full-time parking aide position, which currently costs $56,000 annually including full burden. Additionally, reducing the pay-to-park geography can save on costs associated with the meters and software required for enforcement. 

The proposed adjustments would also require ParkFlag to incur one-time costs associated with updating signs, removing kiosks, updating software and other logistical items associated. 

The program implements the policy that managed parking, and a revenue source to develop parking, are both a benefit to the community given the current dynamics.  This was intended to benefit both the Downtown businesses and Southside residents.  In fact, the program was developed at the request of the Downtown and the Southside. Making some of the potential adjustments will work to shift the program parameters to manage parking where and when most needed. Many of the changes outlined have been received through conversations with residents, owners and partner organizations in the affected areas. The decision regarding what level of change is best seeks to find the ideal balance between reducing the scope of the program's management and revenue while still maintaining the ability of the program to manage supply when needed, self-fund, and generate resources to be used in the development of parking.

There have been numerous Council decisions that have led to the program implementation and to previous changes and amendments. 

1) Hear the presentation and choose to direct staff to leave the program as it currently is;
2) Hear the presentation and direct staff to make selected adjustments to the program which will result in different program dynamics and pro-forma function;
3) Hear the presentation and direct staff to research the impacts of additional ideas and options for future consideration.

The ParkFlag program was developed with significant public outreach, public comment, and input from the Downtown Business Alliance (DBA), multiple business owners, and many Southside residents requesting management of parking. 

ParkFlag program prioritizes ambassadorship above enforcement.  Last year ParkFlag issued 12,995 warnings and 4,308 citations. Put another way, over 75% of the time, ParkFlag issued warnings only for parking violations.  The intention is to encourage behavior change. ParkFlag has also made substantial progress towards reimbursing the City's General Fund for the original loan used for the purchase and installation of the parking kiosks.  ParkFlag also has reserved over $500,000 towards creating new parking inventory.  Thirteen residential areas have chosen to have ParkFlag manage their parking, and there have been inter-divisional efforts to identify ways to address nuisance parking behavior on the Southside beyond the general management process. We have also received numerous compliments for the staff's ambassadorship.

The program was originally developed with the intention that it would adapt to meet the shifting needs of the community. Currently, numerous businesses in the downtown feel that adjusting the program could support their prosperity as they manage changing conditions in the retail and regulatory environment.  Additionally, with two years of data, it is now more clear where adjustments could help make the program best reflect the current parking occupancy conditions. With this in mind, the Staff has reviewed a variety of potential program adjustments.  Many of them are being presented as a part of this discussion, with the additional items intended to be brought forward after there is a deeper understanding of the repercussions and required process involved. 

It is also exciting that two new parking areas will be provided by the Fall of the current year. The City is in the process of obtaining a license to use the parking area owned by the Foundation for Senior Living at the former St. Mary's School. These spaces will provide parking for the new City Municipal Court and also be available for the Downtown guests and employees.  A minimum of 88 spaces is anticipated.  Also, once the current courthouse is demolished, funds from ParkFlag will be used to improve the parcel and to provide a surface parking lot accessible to both Downtown and the Southside.  Both parking lots will be managed by ParkFlag and both will be temporary, but with the clear intention of integrating permanent inventory on the same parcels as a part of future development on the lots.

ParkFlag is a self-funded program, is reimbursing the General Fund for the original loan amount used to for purchase and installation of parking kiosks, and saving towards the development of new parking spaces. 

The possible adjustments will reduce annual revenues, as estimated below. These are unaudited amounts, exact numbers are not known.

Options:
Adjust the time that parking is managed in the downtown (some options overlap each other):

1. Adjust the start of parking management from 7 AM back to 9 AM on all days (-$47,000)
2. End parking management on Sunday - Wednesday at 5 PM instead of 7 PM (-$86,000)
3. End parking management on Thursday - Sat at 8 PM instead of 10 PM (-$31,000)
4. End parking management at 5 PM throughout the entire week (-$330,000)

Reduce the cost of employee permits:
      A.  From $45 to $20 (-$41,000)
      B.  From $45 to $10 (-$57,000)

Adjust the geography of the Pay-to-Park area by converting Elden Street, Verde Street, and the corresponding cross streets to time-limited parking (-$5,700)

We anticipate there will be one-time costs for a new cash kiosk located at Superior Court, for sign replacement to adjust the program hours, for better signage of cash kiosks from a distance, and for a marketing campaign. The fund balance has enough resources to cover these anticipated costs.

ParkFlag could implement multiple with corresponding impacts to the speed of the lockbox growth and the program reserves, but without preventing the program from self-funding base operations. There may be little leftover in some scenarios. Adjusting the hours to end at 5 PM on all evenings would not be possible if ParkFlag is to be self-funding, pay back the City, and generate reserve funds for development of parking inventory as prescribed by the ordinance.

ParkFlag has been effective in achieving the general tasks of managing parking and generating revenue for creating inventory.  Continuing to provide that function will lead in the near term, and then to a greater extent in the medium term, to additional parking inventory while managing limited supply.  The benefits to the community of some combination of the proposed changes include:

• reducing the out-of-pocket expenses of employees and businesses for employee permits,
• adjusting hours to better reflect the times there is a great need for parking to be managed,
• providing a greater level of convenience for cash users at Superior Court,
• providing more free, time-limited parking, and
• providing additional parking inventory.

Many of the adjustments proposed have been received from either the DBA, business owners directly, vendors, or residents. The DBA has been a significant part of the assessment of the adjustments as well.  There have also been consistent outreach to Southside residents in partnership with the Southside Specific Plan process and in partnership with the Community Development Division.