Encouraging patronage of downtown merchants is more important than parking revenues

By Seth Richardson

Cities exist to facilitate commerce. Commerce does not exist to facilitate cities. This is worth remembering when contemplating any policy that inhibits patronage of downtown businesses.

Reports that the Downtown Partnership and the City Council are contemplating extending parking meter hours from 8 a.m. through 10 p.m. have raised the hackles of downtown business people, and rightfully so. Doing so will very likely impact downtown visits and harm the economic vitality of downtown.

The common fiction used to justify parking meters in the first place is that it is a way to encourage parking space turnover, which enhances patronage at businesses. So far so good, but like any slippery slope, parking meters have morphed from time clocks to revenue generators. In the good old days, the city posted a sign saying parking was limited to one hour, and a meter maid walked around chalking tires and writing citations for over-limit parking. As technology advanced, the parking meter came into being. Originally designed as a method of accounting for the time someone parked in a space, they cost a penny and you got the full legal amount of time for that space.

But very quickly the bean-counters at the budget department discovered that a lot of pennies add up, and if you up the rate, you can generate some real money. Last year the Colorado Springs Parking System received about $2.5 million in parking meter revenue alone.

Unlike most cities, where parking revenues go into the general fund, Colorado Springs turned the parking system an enterprise back in the 1970s, which means that it is self-supporting and funded by user fees rather than taxes. This allows the system to continue to improve parking so long as they can collect the revenue to do so, which is an entirely reasonable proposition. But it does depend on people coming downtown and using the parking system.

This system has advantages, but it also has disadvantages. The primary disadvantage is that user fees, while an attractive notion from the anti-tax perspective, can drive customers away from downtown to places where the extra expense and hassle of feeding a meter aren’t a consideration. That’s why malls don’t charge for parking. They don’t want to do anything to inhibit customer visits.

The Parking System needs to take a page from the private sector in this regard. Get the customer in the door, no matter what, because if they don’t come through the door, nobody makes a dime. If you have to recover the costs of access, then for pity’s sake recover them at the back end, don’t dissuade the customer from showing up in the first place. Charging for parking is like standing at the door of the shop and demanding a dollar to enter the store. Customers simply won’t put up with it, nor should they.

It costs about $244 in annual operating costs per on-street space, and those spaces are the highest revenue generators, generating about $1090 per space, or more than five times the operating expense. These meters are the cash cows for the Parking System, and comprise more than half of the $4.6 million in parking revenue collected. Off-street parking, which is mostly longer term, costs about $354 per space and generate about $756 each.

We have to distinguish between transient customer parking and long-term employee parking however, because there is a significant difference in use and utility. While user fees for employees don’t directly impact sales, user fees for consumers do. Raise the on-street and short-term parking rates too much and people will go elsewhere. This is a simple fact of human behavior. In this tight economy, anything that discourages people from patronizing downtown businesses must be eliminated.

If the intent is to facilitate patronage at downtown businesses by providing short-term parking, thereby increasing commerce and city tax revenues, which it should be, then it seems reasonable to provide those spaces at a subsidized price, to attract and encourage visitors and patrons to downtown. The revenue generation equation seems to be upside down at the moment. Let’s flip it on its head and make the long-term off-street parking significantly more expensive, and the short-term transient parking, both on and off-street, essentially free.

The justification for this shift is that decreases in patronage have a far greater effect on the economic viability of downtown than do increased costs for employee parking. The loss of a single ten-dollar sale because a customer doesn’t want to pay exorbitant parking fees far outweighs the loss of a dollar’s worth of parking revenue that can be made up by charging employees more. Moreover, increasing long-term parking rates will encourage downtown employees to leave their cars at home and take the bus to work, which will reduce traffic congestion downtown, making it even more inviting to consumers.

I suggest that on-street metered parking return to the paradigm of the past. You park, put in any coin from a penny to a quarter, whatever’s convenient for you depending on what you have in your pocket or purse, and you get the maximum allowable time for the space. The money you spend is merely to start the clock that meters your stay, not charge you rent for parking on a public street that you’ve already paid for through taxes.

If you overstay your time, you get a rather expensive ticket, which is what actually encourages parking space turnover, not the cost of feeding the meter. Off-street short-term parking of slightly longer duration should be paid for by the hour, as these spaces are more costly to obtain and maintain, but the costs should not be greater than they are now. Off-street long-term daily parking rates for employees should be raised to cover the loss of revenue from on-street and short-term customer parking.

Certainly employees will howl at this prospect, but it’s more reasonable that they pay some additional costs at the back end for the convenience of parking downtown, close to their workplace in return for more economic vitality at the front end for the businesses that provide them with jobs. And employers can always offer to subsidize the parking costs of their employees as a benefit if they can afford to do so.

On the other hand, if the businesses they work for fail because the downtown experience becomes uncompetitive and unpleasant for consumers, they won’t have a job at all.

The choice seems pretty obvious to me.

© 2009 Altnews

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