Archive for the ‘Local’ Category

It’s been an odd week in parking news, mainly because of two six figure stories on opposite ends of the spectrum. In Chicago, we finally have a resolution to the car that accrued more than $105,000 in tickets at O’Hare airport; and in Buffalo, NY we have a meter technician that was caught stealing $210,000 in quarters over 8 years. First, let’s take a look at the Windy City.

As some may recall, a car owned by Jennifer Fitzgerald of Chicago was left in the O’Hare International Airport employee parking lot for more than three years, accruing 678 tickets totaling $106,000 during that time. She filed a suit with the city, showing evidence that while the car had been in her name, it had belonged to a now-ex boyfriend for all intents and purposes. He worked at O’Hare, and was the one who abandoned the vehicle in the lot, refusing to have the car signed over to his name. With the car in an employee lot where she was not allowed to go, Fitzgerald was unable to retrieve it. On top of that, after a vehicle has been deemed abandoned for two to three months, by law the city is supposed to tow and impound the vehicle, but parking enforcement workers at O’Hare never did this. Instead, they continued to ticket the vehicle for years, not just fining it for parking violations but also for having illegally tinted windows or out of date city tags and registration. While parking enforcement denies having quotas, it’s fairly obvious that employees were ticketing this car again and again instead of towing it to boost some kind of metric that they’re evaluated on.

Yesterday, Ms. Fitzgerald’s suit was dismissed and a settlement agreed upon with the city. She would pay a total of $4500 to clear the tickets and fines, with a $1600 down payment to be made by her former boyfriend and the rest to be paid off by Fitzgerald in monthly installments of $78 for the next three years. While being less than 5% of what was owed, this seems like a fairly equitable settlement; the majority of those fines shouldn’t have been there as the vehicle should have been towed, the ex boyfriend is taking care of a big chunk of it, with the rest on Fitzgerald (who missed an earlier court date related to the tickets, thereby increasing them all exponentially). Still, the fact that it took more than three years to even notice this is alarming, and just goes to show just how lax city oversight of parking enforcement and operations usually is.

That said, Chicago is still ahead of the game compared to Buffalo, NY where city meter mechanic James Bagarozzo was sentenced to two and half years in prison for stealing more than $210,000 in quarters from city meters between 2003 and 2011. Using his position and technical skills, he rigged about 70 parking meters so that he could collect from them undetected. He would then go to the bank on his lunch hour and roll and exchange the coins. I once had to roll nearly $50 in quarters and other change, and that took hours; Jimmy Bagz (that’s what I’m calling him now) rolled more than 10,000 pounds, that’s five tons, of quarters! Jimmy Bagz had one co-conspirator, a co-worker named Lawrence Charles who helped with the scheme for five years and stole $15,000 in that period.

So how did they get caught? Well that’s the beauty of this story, one that just drives home the point I make again and again in so many of these stories: a little attention and oversight by the city’s parking management will save money and keep most parking abuses from happening. You see, Buffalo parking commissioner Kevin Helfer noticed that the digital meters in the city were making significantly more money than the old mechanical meters, which is odd. He had an investigation launched and using video surveillance they were able to discover that Jimmy Bagz had been stealing fro the old meters daily. When the FBI was called in and they confronted Jimmy Bagz, he admitted to the thefts (which are considered a federal crime). Since this debacle, the city has switched entirely to digital meters that take both credit cards and coins and are next to impossible to rob. Since making these changes and ending Jimmy Bagz’ scheme, city parking meter revenue is up $500,000 annually. With that kind of improvement, you have to wonder if there might have been others skimming off the top as well. Regardless, the city and it’s citizens are all benefitting from this wannabe Stan Smith finally being caught, and all thanks to a parking official that actually took their job seriously and paid attention to what was going on.

As of yet, there is no word on whether Kevin Helfer looks like Forrest Whitaker, but I find the story far more amusing to imagine he does.

History has a way of repeating itself, and that certainly seems to be the case with the parking privatization dispute going on in Cincinnati. The city has been in negotiations with Xerox and Denison Parking to lease out all of the city’s parking meters and parking garages (the meters being leased to Xerox, the garages to Denison Parking). Specifically, the city council voted back in March to lease the city’s parking assets to the Cincinnati Port Authority, which in turn would be turning over operations to Xerox and Denison parking; the lease would be for 30 years, though the Port Authority has been unclear on how long they intended to allow Xerox and Denison to manage the properties. In exchange, the city would receive $92 million upfront for the sale, as well as $3 million annually which would gradually increase over time. Of course, none of this is certain, as much of the deal still remains vague or is yet to be determined, and there have been conflicting statements about the exact nature of the deal throughout the negotiation process.

Local residents are less than thrilled to say the least, especially many members of the local business community. One area of particular contention is whether Xerox would be allowed to extend meter hours from 6 pm to 9 pm; local business owners worry this would impact their businesses and that they would have far fewer avenues to address this going through Xerox instead of the city. Another concern is that Xerox would be incentivized to step up enforcement, which in turn could drive away customers. While there have been assurances that Xerox wouldn’t see any extra money from writing extra tickets, the reason for that is rather flimsy; extra revenue from enforcement would go into a an infrastructure fund for Port Authority and parking improvements, but there haven’t been any specifics into how this fund would be sequestered off and safe from being raided. Finally, how much parking rates might rise under Xerox management is unclear, since as yet there haven’t been any rate controls mentioned as part of the deal. If rates got too onerous, residents would have far less options for recourse with Xerox than they would with the city.

Of course the biggest indicator of there being something fishy with this deal is how city officials have tried to ram this deal through. First, there was the move by the city to use a parliamentary trick to shield this deal from a public referendum like many residents wanted. A lawsuit has been brought against the city over this, and while the city’s case was upheld by an appellate court, the case has now moved to the Ohio Supreme Court. This is of particular concern since the entire lease is going to be funded by public bonds issued by the Port Authority. As I’ve discussed before, Port Authorities frequently issue bonds, sometimes massive bonds, with no input or control from the public, and this can quickly lead to massive debt or even bankruptcy for a city without them even knowing about it until it happens. As usual, the city is interested in using the funds from the lease of their parking assets to pay for other city projects and to shore up holes in the city budget, while the Port Authority is trying to claim about a third of the $92 million upfront payment for itself (while ultimately the city and its residents are on the hook for the bonds issued to generate that money). It also recently came out that the original consulting firm that was hired to assess the deal, Walker Parking Consultants, had issued a memo critical of the deal, saying that Xerox would be making too much profit off of this deal and the revenue projections were too high (particularly concerning considering that bonds were being issued based on these revenue projections); but this memo was kept secret from the city council by city management, not coming out until after the city council had voted in favor of the deal. Right around the time this memo was issued, the Port Authority insisted that Walker no longer be used in the deal because of a potential “conflict of interest” created by Walker working for both the city and the Port Authority. After some of the information that has come out since the vote, a number of city council members have said they would change their vote and kill the deal, but city management says that the city council no longer has the ability to vote on or kill the deal. So basically, the city council voted on the deal before it was done being written, and now they’re being told they can’t vote on the actual deal that would take place.

So essentially, Cincinnati is looking at a deal being ramrodded through by the Port Authority and city management, one to generate short term profits and to deal with short term problems at the cost of real, long term solutions to the budget problems the city and Parking Authority are facing, with an all but guaranteed chance of major issues stemming from this deal down the line, and all of this being funded by public debt while those behind the deal try to exclude the public from having any input, control or even basic knowledge about it. It stinks to high heaven, and while leasing Cincinnati’s parking assets is not an inherently bad idea on paper, doing it this way certainly is. The deal should be killed and a new one started, this time with input from the public and transparency throughout the whole process. If all of that wasn’t damning enough, these numbers sum it up pretty well: in today’s dollars, the city’s parking assets over the next 30 years would be worth approximately $475 million, and they’re looking at making a total of $197.4 million off of this deal. With the city and the Port Authority fighting tooth and nail to keep citizens from having any say in this, I don’t know how much hope Cincinnati residents have, but with 2014 around the corner it might be a bad idea to start reminding the elected officials of Cincinnati who they have to rely on to vote them back into their jobs, and it sure as hell isn’t Xerox and the Port Authority. So to anyone in Cincinnati, good luck, it looks like you’re going to need it.

"Fill Those Empty Seats." Car Sharin...

“Fill Those Empty Seats.” Car Sharing is a “Must”^ – NARA – 514256 (Photo credit: Wikipedia)

Yesterday, car-sharing business Relay Rides announced they will be opening their first airport car-sharing/parking facility at SFO, upping the ante in the ongoing lawsuit SFO filed against SFO’s original, and still quite new, car sharing business, Flight Car. As some may recall, I wrote about SFO’s lawsuit against Flight Car a few weeks ago, and had a chance to talk with Flight Car’s CEO Rujul Zaparde about the case and the hurdles faced in not just starting a new business, but an entirely new type of business. What it essentially gets down to is that the car-sharing model doesn’t fit neatly into other previously established business models, straddling the line between rental service, parking facility and valet, where one is simultaneously a customer and supplier; SFO wants to classify these new businesses as car rental facilities, which would allow them to levy the maximum amount of fees and charges on these businesses but would also put a much larger financial burden on these businesses than the same rules do on traditional car rental businesses. SFO

‘s suit against Flight Car is poised to set the precedent for how other airports will classify and charge these new businesses; Boston-Logan and LAX have already said they are watching San Francisco closely to determine how they will respond to car-sharing businesses at their locations. Flight Car already pays to SFO the fees typically associated with off-site parking businesses, and Relay Rides has said they will be paying 10% of their profits to the airport, the typical arrangement for most businesses with airport-focused services. Primarily at issue is the $20 per customer that SFO charges traditional car rental businesses, a fee that both Flight Car and Relay Rides says shouldn’t apply to them.

While there are many similarities between Flight Car and Relay Rides, they are far from carbon copies of each other. Where as Flight Car has a lot that can accommodate hundreds of cars, Relay Rides’ facility, which opens August 9th, can accommodate only 30 cars; Flight Car pays any customer who’s car is rented out, Relay Rides does not; Flight Car uses a car service to pick up and drop off customers anywhere within ten minutes of their facility, Relay Rides uses hotel shuttles to get their customers to and from the airport. While starting with a seemingly more modest venture in San Francisco, Relay Rides has already announced plans to open similar facilities in four other airports, including Boston and LAX, two other locations that will put them head to head with Flight Car once again. It’s a shrewd move; by letting Flight Car be the trailblazer by just a few months it’s allowed them to open their business without having to spend the time, energy and capital on carving out a place for themselves in the airport industry, and if a place for car-sharing can’t be made they are looking at far less of a loss on their investment. As yet, there has been no word on whether Relay Rides will file an Amicus brief in the Flight Car/SFO suit to aid in the legal fight to make a place for car-sharing at the airport.

Regardless of the outcome, nothing is likely to stop the momentum that the sharing economy is steadily and rapidly gaining. As more and more entrepreneurs invent and re-invent business models, laws and municipalities are going to adapt and embrace these businesses, staying ahead of the curve and pre-emptively making spaces and rules for these businesses instead of lagging behind and only reacting, letting the courts and lawyers decide how to manage the emerging sharing economy. Obviously, the best outcome, both monetarily and societally (I and many others think that sharing-based businesses are great for communities for a whole host of reasons), is for municipal authorities to anticipate these businesses and make a place for them, but the cynic in me (and sadly the vast majority of the stories I’ve written about in this blog) would bet that, at least in most cases, we’ll be seeing a reactive, combative attitude toward these emerging sharing businesses. This won’t stop the sharing economy, but it will slow it down at a time in this country where we should be fostering and cheering for any new innovation that creates jobs, helps the environment, infuses money into local economies and makes life easier for the average person; you know, common sense. But if common sense and government were on speaking terms, we wouldn’t have the bath-salts caucus in congress, so there you go.

For now, it seems everyone will have to wait and see how SFO v. Flight Car turns out. But however that pans out, it’s very likely that a car-sharing business, and the opportunity to save hundreds when you travel, will be coming to an airport near you sooner rather than later.

 

On Friday, I had the opportunity to speak with FlightCar CEO and co-founder Rujul Zaparde and get the latest on their battle with SFO, how the company has been doing and where he sees it going in the future. For those of you who aren’t familiar with FlightCar, it’s a peer-to-peer car sharing business that was started by three teenage college students in February which has been making waves and getting lots of attention thanks to its innovative business model and a suit recently brought against them by SFO airport.

One of the first things we talked about was how FlightCar went from idea to reality. There’s been quite a bit written about when the lightning first struck in February of 2012, but I was more curious about the time between then and when FlightCar actually opened its doors in February of 2013, and Rujul was happy to fill me in. Rujul and his friends Kevin Petrovic and Shri Ganeshram, had all been fascinated with the rapidly emerging sharing economy being spearheaded by companies like AirBNB, and it was one day in February, while talking about travel hassles over lunch at a Panera, that they had the idea to bring the sharing economy to traveling, specifically parking and car rentals. It made perfect sense; everyone going to the airport was leaving their cars there or a nearby parking facility, and many of the people arriving were renting cars to use, so why not kill two birds with one stone and rent out cars that people weren’t using while they were traveling? Rujul, Kevin and Shri, researched and played with the idea for a couple months, and Rujul says it was during the following May that the idea really went from a pipe dream to reality, when they all said “Let’s do it!”

What followed was a whirlwind of activity. The teens applied for and were accepted in a startup accelerator called Brandery, which gave them hands on training in creating and developing a brand, as well as $20,000 in seed money to get them started. Even more importantly, the program gave them connections to people throughout the business world, connections which helped them hammer out a solid business model and line up investors who were excited about this new entry in the sharing market. Rujul, Kevin and Shri went on to participate in another startup accelerator, one which was also very helpful, though not as hands on as Brandery. After that, it was a mad dash to line up investors, such as AirBNB co-founder Brian Chesky, and getting the business actually setup and ready to go. By February of 2013, only a year after having the idea, Rujul and his friends had officially opened FlightCar for business.

While the business is steadily growing, as I mentioned last week it has not been without some speedbumps, mainly the suit brought by SFO. Rujul was able to shed some light on the dispute and share some details that bolster their case far more than what was apparent until now. The crux of the matter gets down to whether or not FlightCar is defined as car rental business under SFO regulation. While on the surface FlightCar may seem to be just that, that’s an oversimplification of their business. Rujul thinks the best label for their business is peer-to-peer car sharing. Unlike the actual car rental businesses that operate at SFO, FlightCar, has no desk there, and in fact is prohibited from having any kind of advertising at the airport. On top of that, despite the fact that they pick up and drop off customers at the airport, this is all handled through a third-party car service, so no FlightCar employees are ever on the property; so in essence, their interaction with the airport is more like that of a taxi service or an offsite parking facility. Now here’s where the SFO case really falls apart: FlightCar has been paying the airport access fee the airport charges for each car that picks up or drops off a customer, meaning that SFO has already been charging and treating FlightCar like something other than a car rental service and that slapping them with the usual rental business fees would be essentially double-taxing them. The final nail in the coffin is that FlightCar doesn’t operate exclusively at the airport and will pick up and drop off customers anywhere within ten minutes of the facility.

While these facts severely undermine SFO’s case, Rujul said that they are still very much open to dialogue and negotiation, and they’d much rather come to a mutual agreement with SFO than have a court make a final decision that may not be amenable to both parties. Whatever the outcome, it will set the precedent for how other airports classify and respond to FlightCar as they continue to expand to new locations (they’ve already opened a Boston location and have one in the works for Los Angeles). If worse comes to worse and FlightCar is saddled with a host of new fees, Rujul doesn’t foresee the costs being passed onto customers. He points out that rental companies spend 25% or more of revenue on maintaining their fleets, a cost they don’t have to contend with, thereby dramatically lowering their overhead. The one change he is concerned may happen if the case doesn’t go their way I that they’ll have to switch from a car service to a shuttle service for transporting their customers, which he feels would detract from the customer experience. But all that said, Rujul and his friends aren’t sweating the SFO suit; “It doesn’t help us to start worrying about what the airport thinks and what these guys think,” says Rujul.

So what are they focused on? The future. FlightCar already overcame one of its first major hurdles last week with the 4th of July. One of the concerns about FlightCar’s model was whether they could deal with demand during a busy travel time such as a major holiday, and last week proved that they could manage that challenge easily. They had more than a 100 cars come in for the 4th, and they had staffed up in anticipation of the increased demand. The week went smoothly without any major hiccups and posting some of their best numbers yet. Down the road, Rujul hopes that FlightCar will be like a gateway to the sharing market for the general public. As he explains it, some like Relay Rides or AirBNB is big life impact, involving a lot of planning, logistics and trust, whereas FlightCar is a very minor impact, as most people are already used to leaving their cars or renting cars when they travel so using FlightCar is already a familiar process. As enthusiastic a Rujul is about the sharing market, he doesn’t foresee FlightCar trying to expand into other types of markets. As he puts it they want to “focus on one thing and do it really well.” From where I’m standing, I’d have to say that Rujul and his friends are doing exactly that.

A new business with a new model of travel parking has emerged at SFO within the last few weeks, and already it is shaking up the industry. That business? FlightCar, a brand new parking company founded by three California teenagers who came up with an innovative, if controversial, way to bridge the travel parking and car rental industries, and already industry giants and airport municipalities are scrambling to catch up and either protect their market share or get their cut.

FlightCar was started in February of this year, and operates on a new car rental/travel parking model that is closest to the Meet and Greet model that is popular in England (where travel parking locations valet you to and/or from the airport in your own car rather than a shuttle), but even that is a tenuous link. Here’s how it works: when you want to park your car at FlightCar, you bring it to the facility, fill out some quick paperwork, get handed a check, and get valeted to the airport. That’s right, they pay you, not the other way around. The reason is because while you’re on your trip, your car may be rented out as a rental car by FlightCar. Their insurance covers any potential damages, and your car will be cleaned and washed before you return to claim it. When you do return, you’re picked up at the airport in your car. Not only is this model more convenient than the traditional model of travel parking, it actually helps subsidize travel costs rather than adding to them.

There are catches of course. First and foremost of course is the fact that a stranger may be renting your car. While FlightCar is well insured, that’s a small comfort if you return to find mysterious damage to your car after a long trip; that said, there have been no reported incidents of damaged cars in the four months FlightCar has been operating. And while uncommon, if for some reason a trip was cut short and you returned early, it’s possible your car could still be rented out. Overall though, there’s very little that the consumer has to worry about. That’s a different story when we talk about the future of FlightCar.

Not surprisingly, there has been pushback from the industry and airports, and the first major effort to check FlightCar has come from the SFO management. SFO levies a host of fees on car rental and airport parking businesses. While the shuttle-less system FlightCar employs would seem to allow them to bypass the usual airport access fee assessed on shuttles, it’s the car rental fees the airports normally collect that are at issue. Normally, rental companies pay 10% of their profit and $20 per rental transaction to SFO (don’t even get me started on how that’s double-or triple- taxation). SFO alleges FlightCar has not abided by those and other regulations laid out by the airport to govern car rental companies and has filed an injunction against FlightCar. FlightCar has countered by saying that they have complied with all applicable rules and regulations from SFO, and have been contributing income to SFO, which they claim the SFO brief admits (having read through the summons issued on May 31st I found no mention of FlightCar having paid anything to the airport or complying with airport regulation).

The devil is in the details here, and the one that is going to make or break FlightCar is whether they legally qualify as a car rental company. The basis for FlightCar’s claims of compliance lies in their belief that they are not a car rental company, but a car sharing company. This, they claim, means they are not covered by standard car rental company rules. SFO contends that they are a car rental company, pointing to FlightCar’s numerous ads billing itself as such and mentioning SFO, and points out that even rental companies that don’t have counters at the airport are required to acquire permits and pay fees to the airport. While the current information available does appear to support SFO’s case, it’s easy to see why FlightCar wants to carve out a special exemption for themselves; with rental rates (or “sharing” rates if you will) as low as $21 a day, paying $20 per rental plus 10% of their income to SFO will destroy their bottomline as well as the business itself if it didn’t dramatically change their pricing. Of course both SFO and other rental companies argue that that is a price that all the car rental companies pay and incorporate into their business model, and that FlightCar dodging those costs while still competing with car rental businesses directly is a huge unfair advantage. SFO states this directly in their suit, as well as pointing out that federal law requires certain permitting and regulation of businesses based on airport access if they are to receive federal funds for infrastructure improvements to the airport.

So all in all, it’s a legal mess, one partially brought on itself by FlightCar, but which will determine the company’s future as well as the future of the car sharing model at airports. If I had a crystal ball to look into, I’d wager that FlightCar can’t win this case and will be forced to settle instead, with the ultimate outcome probably being FlightCar falling under some airport fees and regulations while carving out some new rules and exemptions for the car-sharing business model. Either that, or if there’s enough pressure on the airport from other, larger businesses, they’ll go for an admission of guilt, hit them with a giant fine ($2500 per violation is what’s listed in the SFO summons in addition to paying damages equal to any lost revenue by the airport or other injured bodies), have FlightCar shut down until they comply, and open them up to all kinds of lawsuits from competitors who were “damaged” by FlightCar’s non-compliance.

Either way, with government and big business interests aligned against them, FlightCar has an uphill battle ahead of them. Still, they are confident they will weather this storm, and that their business model will evolve and survive; in fact, they just recently opened a new facility in Boston. Of course, Boston-Logan airport claims to have had no interaction with FlightCar, and has publicly stated that they are paying close attention to how things play out in the courts in San Francisco to figure out how they’ll deal with FlightCar.

FlightCar is looking at a rocky road ahead, but regardless of the outcome they’ve introduced a new travel business model that even if it doesn’t take root now will surely be back and will become a bigger and bigger part of the travel parking and car rental industry in the future, and that for the time being still means a great deal for any travelers that can take advantage of it.

Last week I talked about how local governments have been putting a squeeze on the travel parking industry, citing a few examples across the country in addition to the numerous instances I have covered in this blog. This week, we’re going to examine the motivations behind this industry squeeze and how these efforts have progressed beyond individual instances and turned into an endemic that is having a chilling effect on the entire industry.

So what’s the motivation behind this abuse of government power? Well money of course, though more specifically budget deficits. Parking is usually one of the only sources of revenue with a low relative overhead available to most municipalities, and these funds are frequently used to pay for special projects and budget shortfalls, as well as too infrequent infrastructure improvements to parking facilities. More often, infrastructure improvements are funded with bonds, which can come back to bite the city in the ass and all too often end up being used for unnecessary projects rather than vital improvements. With so many local governments struggling with a severe shortage of funds, they’ve been leaning even more heavily on their parking revenue, and more than a few have been willing to wield their authority to squash out any perceived competition. Because hey, why rise to the challenge of your competition when you can just change the rules so no one else can play the game?

A common way that parking authorities put the squeeze on off-site operators is through the access fees they charge to allow their shuttles onto the airport. You see, for each shuttle run to the port (air or sea) a fee is charged to the offsite parking facility. These fees typically were only a few dollars if that, but whenever budget shortfalls occur or there’s a new project that needs to be funded, raising these fees is usually one of the first things that happen. Since many offsite parking businesses operate with a low profit margin, having to rely on the quantity of their business to remain profitable. As these fees have risen, parking  businesses have had to pass that access cost onto the consumer, hence the one-time access fee of a couple dollars that’s added onto your bill at most offsite parking facilities. Not only will port authorities raise these fees to beef up their budget, they’ll also wield it as a weapon against offsite businesses, such as in Port Canaveral where they wanted to raise the fee so high that it would have instantly forced the closing of all the offsite parking businesses. In other cases, such as what’s unfolding in Nashville, they’ll selectively raise the fees on offsite parking facilities (more than tripling it in Nashville) while reducing the fees for hotel shuttles to access the port, even when those hotels are actively running an offsite parking business out of their lots as many of them do these days. It is literally robbing Peter to pay Paul, and this happens because the hotels typically hold far more sway over municipal authorities as such large economic drivers in their local economies, to say nothing of the typically incestuous relationship between hotel management and the commissions that run most air and sea ports. It’s one of the oldest forms of political corruption out there and it’s alive and well in many port and parking authorities.

Another way that municipalities have been having a chilling effect on the parking industry is through the way they’ve put a squeeze on investment, slowing or preventing the growth of parking businesses. As most of us are aware, since the recession, investment capital has been much harder to come by unless you’re already a mutli-million dollar corporation. The parking business is generally seen as a safe investment, as there is very little capital or debt needed after the initial development phase and it provides stable long term returns. While there’s nothing to be done about the general investment climate but to weather it, the real damage is being done by the uncertainty that is being created by local governments. One of the three key factors in investing in parking is how stable and sustainable the business in question is, and for travel parking businesses that means how likely it is that the business will retain ownership of their land, the ability to acquire more land down the line for expansion and growth, and how likely continued access to the air or cruise port in question will be in the short and long term. Traditionally this has been a strength for parking businesses, aw air and cruise ports don’t move often and the land around them tends to be undesirable for most other business and residential concerns, but that has changed since the recession, particularly in the past year. Whether it’s Indianapolis’s airport fighting to keep parking businesses from buying land for years on end, Port Canaveral pulling a 180 and refusing to issue permits to businesses that had already bought the land and marketed their grand opening in good faith as happened to Premier Parking, or trying to seize offsite parking businesses through eminent domain as happened to Cramer Airport Parking in Pennsylvania, these actions, particularly their ramped up frequency and aggression, has made for an uncertain and unstable investment environment. While the parking management giants continue to barrel ahead and reap ever greater profits, the industry as a whole has been suffering from this uncertainty and investment crunch, something that is borne out by 2012’s being the markedly slowest year of growth since the 2008 crash.

So what’s the remedy to this endemic corruption throughout our municipal system? Well daylight seems to be one of the best solutions. Most of these things are able to happen because no one is paying attention. I’m someone who works in and writes about the parking industry, and even I find it dull at times. And of course anyone who’s been to a city council or municipal committee meeting knows that those are typically duller than traffic court. When the Port Authority in Canaveral was declaring all-out war on the parking industry, it was the public outcry in support of the only two non-cronies on the Port Commission that stopped all their shenanigans and led to the ouster of the Port Authority’s CEO and greedy-bastard-in-chief Stan Payne. At the end of the day, it’s up to the public to take a stern look at their public servants, hold them accountable and tell them to stop being lazy and corrupt and to deal with their competition by rising to the challenge instead of trying to poison the well, because, frankly, no one else is going to do it. Surprisingly, many of these incidents happen in areas that have very active Tea Party and anti-government movements, yet none of these groups have pounced on these instances of government abuse; hopefully that will change and government watchdog groups will realize that tackling these abuses are not only good for their local economy and government, but great publicity for the need for keeping an eye on the government and the good that watchdog groups can have.

The economic crash and recession has affected everyone’s lives, and it’s no secret that the travel industry has been hit particularly hard. While many sectors of the travel business have been receiving government support, whether in the form of giant subsidies like the airlines receive or marketing from local government to promote tourism, one important sector has not been completely ignored, but has been actively under siege: offsite travel parking businesses. Whether cruise port or airport parking, parking businesses across the country have been facing obstacles whose size and number the industry has never seen before.

One of those obstacles, one more easily dealt with but still of concern, has been the privatization of parking management at many cruise ports and airports. Parking authorities and management are notoriously plagued with waste, inefficiency and corruption, so much so that they’ve bankrupted cities on more than one occasion (I’m looking at you Scranton). As many municipalities have been gripped by crushing budget shortfalls, they’ve finally been paying attention to their under-utilized and mismanaged parking programs. One relatively easy solution to these problems has been to lease or contract out their parking services to a large private parking firm such as Standard Parking. These private management firms will typically pay a lump sum to lease the parking infrastructure from the city for years or even decades at a time, giving the city a big short term windfall, such as what Chicago did with their entire parking system. When they take over a parking facility, these companies frequently invest in infrastructure improvement as well as upgrading facilities with the latest parking technologies and management systems, dramatically improving service and efficiency and putting far more competitive pressure on offsite travel parking businesses.

Now this in and of itself is not a bad thing. Competition is good for the market, as it means better service and prices that more accurately reflect the level of service that you’re getting. And frankly, there are offsite parking businesses that are not well run and have only been able to survive because their county-owned competition was even worse; these businesses being forced to meet basic business standards or go under is a good thing for travelers and the parking business as a whole. Where this becomes a problem is when local governments try to interfere with the market and use their ability to control and abuse the laws and ordnances governing the business to drive out the private competition. A great example of this is Port Canaveral, Florida. I’ve written about the Port Authority there and their downright repugnant attempts to kill the local parking businesses there on a number of occasions (and about one incredibly unsavory illegal business “owner” that they allowed to operate under their noses for years with no license). And the situation there, while extreme, is far from unique. Across the country, local governments have been using their authority to unfairly bludgeon offsite travel parking businesses.

For instance, earlier this month the Indianapolis airport finally gave up their fight to keep any parking businesses from opening near the airport. You see, back in 2008 the Indianapolis International Airport moved to a new location, while at the same time not approving any permits for new parking facilities to be built near it. This move had forced a number of off-site parking facilities to close, as they no longer were close enough. It was rather shocking, as I lived in Indiana until the end of 2008 and flew out of Indianapolis frequently, and always parked in one of the close to half dozen parking facilities there. When I started working in the parking business a few years later and was looking to contact Indianapolis parking facilities, I was shocked to find that that there was only one left. That was because the Airport Authority has been wasting money in court for years fighting the development of new off-site parking, a battle which they finally gave up earlier this month after three failed appeals and more than $55,000 wasted, and more than $250,000 in legal fees spent by the business they were fighting. And all so they could maintain a government created monopoly.

And these are just a couple examples. In part two of this story, we’ll look at some of the other ways local governments have been putting the squeeze on the travel parking business and the motivations behind those moves, and how they have had a chilling effect on the investment side of travel parking, changing what was once viewed one of the most stable industries to invest in to one which now faces unprecedented amounts of uncertainty. All this and more in part two of The Big Squeeze.

I’ve said it before and I’ll say it again, there must be something in the water down in Florida. I was reminded of this when speaking with a facility cruise parking facility manager down in Port Canaveral, who was talking with me about the trials and tribulations parking operators have been put through over the past year by the Canaveral Port Authority. As some may recall, I detailed some of the Canaveral Port Authority’s blunders and mismanagement in this blog back in November. While the level of crazy seems to have peaked back then, things have far from calmed down, even with former Port Authority CEO and apparent anti-free-marketeer Stan Payne recently being fired.

Case in point, while the Port Commission backed away from the onerous fees they wanted to enact on the local parking operators, they still decided to stop issuing new permits for off-site parking facilities. This derailed the plans of a number of facilities that had been planning to open at Port Canaveral, and with them went dozens of new jobs. But for the Port Authority, this was apparently a small price to pay for the opportunity to squash any new potential competition. This move was particularly costly for Florida’s Premiere Parking company, which was in the process of opening a facility when the new permit policy forced them to close. Ironically, they had been opening a facility to replace the one run by Jose “Jay” Nieves (whose outrageous antics I have discussed before) that had been operating illegally for years with no business permit and beyond shady business practices right under Port Authority’s nose. And it wasn’t even the Port Authority that shut him down, he packed up and ran after Jeff Deal of Orlando‘s WFTV Channel 9 filed a story where he documented Nieves joyriding in a car parked at their facility. But of course when a legitimate business wants to open in the same spot, the Port Authority was all too happy to shut it down.

Besides their ongoing war against the local parking businesses, which is mostly out of the public eye, the Port Authority also managed to snag itself some spectacularly bad publicity just recently that made national headlines. As many of you probably recall, Florida youth Trayvon Martin was murdered last year by George Zimmerman under the supposed justification of Florida’s “Stand Your Ground” law. Trayvon was targeted by Zimmerman because in his paranoid mind a black teenager in a hoodie in a nice neighborhood could only be up to no good and was probably a criminal just waiting to strike, and so he confronted him with his firearm. While many details are still disputed, what is known for sure is that George Zimmerman shot and killed a teenager who had nothing but a Snapple and some Skittles in his pockets and whose only crime was being a black kid in the “wrong neighborhood”. The whole story reeks of paranoia, racism and classism. So where does Port Canaveral come in, since Trayvon’s murder happened in Sanford? Well earlier this April,  it was discovered Sergeant Ron King of the Port Canaveral Police Department had been distributing targets during firearm trainings he was running for other officers of a person wearing a hoodie with skittles and an ice tea in the pockets. For the few of you reading this that are sociopaths/investment bankers, normal human beings feel using Trayvon targets for Florida Police training is wrong and insensitive to the point of malice on about a dozen levels.

Now in the Port Authority’s defense, interim CEO Jim Walsh immediately denounced Ron King’s actions. “We are offended by this. We are outraged that one of our officers would have this conduct,” said Walsh. “It is not tolerable. It is not acceptable.” While this incident calls into question the screening process used by the Port Canaveral Police Department, the Port Authority and Police Departments responses were swift and appropriate; and frankly, given the history of institutional and overt racism that has been ever-present in Florida politics and government, you can’t say the PCPD is doing worse than average for the Sunshine State. That said, being the best polished turd of the bunch still makes you a turd. The PCPD fired Sgt. King, with Walsh commenting, “Whether it was his stupidity or his hatred, (this is) not acceptable.”

Hopefully, Port Canaveral’s capacity for craziness is waning rather than waxing, at least for the sake of the local economy to say nothing of parking facilities and all of their employees. I know that many of the facility owners and managers are anxious or worried about what the Port Authority’s next move will be, and many of them feel like their business’ future as well as their own is in the hands of the Port Authority and is therefore very uncertain. Only time will tell whether those concerns prove to be true (they’re certainly valid given the past rollercoaster of a year there.); who the Port Commission chooses as their next CEO will be a big indicator of what is to come. Hopefully whoever is chosen will. want to foster the local business community instead of fighting it, but whatever the character of the eventual CEO pick, you can be sure it’ll be covered by It’s Just Parking.

 

It all started with a $20 parking ticket given to Toledo lawyer Jeffrey Zilba while he was parked in front of the Ottawa County courthouse in Port Clinton, OH in the summer of 2011. Since the legality of his parking was ambiguous (and being a professional arguer for a living), Mr. Zilba wanted to challenge the ticket, as many of us have unfortunately been forced to do at one point or another. That was when he realized that the ticket had no phone number and no way of challenging it given on the ticket. Failure to pay the $20 ticket would result in a misdemeanor, meaning that the only option for someone receiving one was to either pay the fine and admit guilt or become guilty of a crime. Not only was this unacceptable to Mr. Zilbas, but he saw it as a violation of his right to due process as guaranteed under both the U.S. and Ohio constitutions. So Mr. Zilbas paid the ticket to avoid the misdemeanor and decided to start a suit against the city.

And that’s when things started to spin out of control. The suit dragged on for more than a year and a half, finally ending with a ruling in favor of Mr. Zilbas. The city was ordered to decriminalize their parking tickets and provide a way to challenge them, as well as paying damages to Mr. Zilbas. Those damages? $45,000 worth of lawyers fees! The money to pay the settlement was approved by the Port Clinton city council, which has also started the process of changing their ticketing ordnances. The money to pay for this case will unfortunately come from the city’s general fund, which will cause the delay or abandonment of some of the projects slated for the city this year.

So where does the blame lie? Well, despite what seems like some pretty high lawyer fees and what must be heaping helpings of determination or stubbornness, Mr. Zilbas is not the one at fault; his rights were infringed on, and he had a legitimate case. The blame and responsibility really lies with the city. They enacted the unconstitutional ticket policy in the first place, and also failed to resolve this case out of court when it would have been much cheaper for taxpayers and saved a lot of time as well. When it gets down to it, it was, as always, the combination of a lack of oversight and attention to the city’s parking program and not wanting to give up some of the cash cow that is parking fees, even if those fees are being levied unfairly and without a way to challenge them. It’s a small tyranny, but it’s still a tyranny when meter maids are made into judge and jury for Port Clinton citizens.

In what is sadly becoming routine for Chicagoans, the Windy City was hit with yet another $60+ million parking bill at the end of February. As some may recall, a few weeks ago I talked about the mounting parking issues in Chicago including a recent dispute with Chicago Parking Meters LLC over an alleged overbilling of $22 million to the city. Well, on February 25 the city was told to pay $57.8 million to Chicago Loop Parking LLC as part of an arbitration agreement due to a breach of the city’s contract with the LLC committed under the Richard M. Daley administration.

As bad as that sounds, the silver lining is that the $57.8 million that was decided upon in arbitration is a far cry less than the $200 million that Chicago Loop Parking LLC originally demanded. The issue goes back to the deal that Mayor Daley signed with Chicago Loop Parking in 2006 giving them a 99 year lease on all parking garages at Millennium Park, Grant Park North, Grant Park South, and East Monroe Street for $563 million. As part of the deal, the city agreed to not allow new public parking garages to be opened in a designated area surrounding the CLP properties. Yet within months of inking the deal, the Daley administration approved the Aqua tower, which included a 1,288 space parking garage, in the off-limits area and subsequently granted a license to operate the parking garage to Standard Parking.

Not surprisingly, Chicago Loop Parking initiated private arbitration (as outlined in their contract with the city) which took place last October. Originally, the LLC had demanded $200 million, breaking it down as a combination of lost revenue, increased operating expenses caused by the Aqua facility and interest. Arbitration brought that amount down to $57.8 million ($50 million for lost revenue plus $7.8 million in interest), but was also supposed to be “final and binding”. Despite that, the city is trying to appeal the decision.

While already reducing the tab by almost 75%, the settlement is still a big hit to the city budget. The city is already in a dispute with Chicago Parking Meters LLC over a $25 million bill, and recently lost a job discrimination lawsuit dating back to 1995 that cost them nearly $80 million. And how much did the city have budgeted for settling lawsuits this year? $27.3 million, barely 15% of the City of Chicago’s legal tab so far this year. Hopefully for Chicagoans, the Daley administration hasn’t left any more fiscal time bombs to further cripple the city’s budget.