Harrisburg didn’t get its full share of parking revenues in 2017, but it wasn’t because the city’s municipal parking system underperformed as a whole.
Financial statements show that Harrisburg’s parking system generated $25 million in revenue in 2017, falling just $130,000 short of its budgeted projections once taxes were applied.
“The system is healthy,” said John Gass, managing director of bond administration at Trimont Real Estate Advisors, the international firm that manages Harrisburg’s parking assets through its subsidiaries Standard Parking and PK Harris Advisors, LLC.
Though the parking system met its goals for the year, individual revenue categories—such as monthly garage parkers and enforcement revenue—fell slightly short of projections, and some parties, including Harrisburg, are still waiting on funds. An interim operating budget for 2018 calls for increased operating expenses and revenues, even though rates for enforcement, metered and garage parking are being applied at 2017 levels on an interim basis.
Gass said those rates will hold steady “as discussion continues on the 2018 rates for the parking system.”
Revenue from the city’s metered and garage parking spots have fluctuated in the four years since Harrisburg privatized its municipal parking system as part of its financial recovery plan.
Under that agreement, the city erased some of its billion-dollar debt burden by leasing its metered parking and garage assets to Standard Parking, a private company, for $400 million over 40 years. The Pennsylvania Economic Development Financing Authority and Dauphin County helped finance the transaction by acting as bond issuers, effectively assuming liability for the transaction.
Keeping with the annual terms of that transaction, 2017 revenues were split between multiple accounts in a series of so-called “waterfall payments” based on a priority hierarchy. Those accounts include debt service, operating expenses and the capital reserves, which covers repairs and maintenance. Bond holders, the city of Harrisburg, the Pennsylvania Economic Development Financing Authority and Standard Parking (through its asset manager PK Harris and parent company Trimont) also get annual cuts of the parking system proceeds.
In addition, Harrisburg and the Harrisburg Parking Authority took in $2.64 million in 2017 compared to a total due of $3 million, according to Gass. That’s not including the $3.4 million that the city grossed from the parking tax. Gass confirmed that $825,934 of system revenues are being held back from Harrisburg and HPA until different parties agree on the payment of unpaid amounts from prior years.
Since funds were being held back, Gass said, asset managers at Trimont and Standard Parking did not take performance bonuses for 2017. Gass hopes that the parties can resolve their differences in the next few months, at which point the holdback money will be distributed and Harrisburg will get its 2017 due in full.
Both Gass and Bruce Weber, Harrisburg’s finance director, declined to comment on the details of those disputes.
Disagreements over past unpaid balances were one reason that the city’s Parking Advisory Committee did not meet in 2017. According to the terms of the 2013 parking transaction deal, the Advisory Committee must meet at least twice a year to hear public comments about rates and enforcement. Gass expects that the committee will meet again in the first half of 2018, once disputes between stakeholders are resolved.
Trimont usually announces a yearly budget, including any rate or enforcement hikes, at the annual, year-end Advisory Committee meeting. Currently, the parking system is operating under an interim budget, which Gass said increased operating expenses in accordance with the original 2013 transaction agreement.
In order to sustain a higher operating budget, SP also had to increase revenue projections for the year, even though 2017 rates are still being applied.
For instance, SP hopes to rake in $1.5 million from enforcement revenues in 2018, compared to the $1.4 million budgeted and $1.3 million actual revenue in 2017. Gass declined to say if the system would make up the discrepancy by issuing more tickets or increasing ticket rates for the year.
Harrisburg Mayor Eric Papenfuse said that ticket fines are “high enough” at the current rate of $30 per ticket. He also firmly opposes increasing metered parking rates.
“We believe doing so would actually have a negative effect on system revenue,” he said.
Papenfuse thinks that the system needs to cut operating costs and bring in more parkers through initiatives like on-street residential parking plans. He also thinks that discounted specials, such as the proposed deal to eliminate evening meter enforcement in Harrisburg’s downtown business district, could paradoxically result in more revenue.
Earlier this year, officials from Harrisburg, Dauphin County and the Harrisburg Downtown Improvement District reached an agreement to front the costs of parking from 5 to 7 p.m. in much of downtown Harrisburg from Monday to Saturday. The $270,000 annual figure that they settled on would fully cover the meter and enforcement revenues that the system generates downtown during those 12 hours each week.
Papenfuse also thinks that the proposal could drive more people to visit downtown, which could, in turn, increase demand for garage parking once the metered parking supply is depleted.
City council is expected to vote on that proposal at its March 10 legislative session.
Click to view the 4th Quarter 2017 Financial Report and the 2018 Park Harrisburg Interim Budget.
