Questions, concerns raised on city's parking plan

CINCINNATI, OH (FOX19) - A memo from Cincinnati's parking consultant highlights concerns and questions about the city's financial model for its Parking and Modernization Lease.

The memo was sent a day before the Port Authority signed the lease on June 20, pending a 75 day window for due diligence. It was given to the Port Authority last Friday and not made public until Monday.

"We are disappointed that the Walker Parking memo was shared with the Port Authority nearly 3 weeks after it was presented to members of the City of Cincinnati Economic Development department," stated Laura Brunner, CEO of The Port of Greater Cincinnati Development Authority.  "We will work even more diligently to communicate in a timely and transparent manner."

"Could the process have been better? Yes." Vice Mayor Roxanne Qualls told FOX19. "Is the content [of the memo] valid? No."

In the Walker memo the consultant highlights six main issues:

  1. 2014 on-street operating expenses are "excessive" at more than 257% higher than the city's most recent actual expenses. Currently the margin on gross revenues has exceeded 70% each of last five years while ParkCincy's margin is projected t 45% in year one, peaks at 63% and then declines to 56% by year 30.
  2. Math error results in an overstatement of revenues by more than $641,000 in 2016 and is compounded throughout the life of the lease.
  3. Parking Access and Revenue Control System has a budget discrepancy of $145,000 between a memo and a model.
  4. Projected meter costs exceed other projects reviewed.
  5. Parking structure figures need to be revised with the aid of a third party.
  6. Garage sweeper costs do not include replacement costs every 10 years.

"The memo from Walker raises issues," recognized Vice Mayor Qualls. "The Port Authority responded back and said those issues are not based upon accurate information, but based upon old data."

Included in the Port Authority critique of the Walker memo are the following arguments highlighting memo "inaccuracies":

  1. Actual revenues and expenses will be different from the current model in part due to conservative estimates of expenses.
  2. Any increased revenues or decreased expenses will either be returned to the city or used by the Port Authority on projects in the city.
  3. On-street meter products and services comparisons to other cities are "apples to oranges".
  4. Cutting $1.5 to $3 million annually from the Xerox contract would "likely have the effect of eliminating all of the modernization and ongoing strategy benefits," and "lead to significant reduction in net operating income".
  5. Operating margins for city-run systems likely "understate the true costs to run the system".
  6. On-street parking management fee is justifiable compared to off-street fees considering the larger workforce needed and scope of management services.
  7. Broadband and wireless communications charges are higher due to Xerox installing its own additional software to the meters to allow two-way communications between the meter and the overall system resulting in a higher level of data collection.
  8. Math error has been corrected and will not impact the upfront payment to the city but may impact the annual payout. Payout is not expected to drop below the annual $3 million discussed.
  9. Meter fees highlighted by Walker do not take into account additional installation related items like meter pole refinishing, old technology removal, and quality control testing.
  10. Expenses grow more slowly than revenues due in part because of ticket revenues flattening out when they hit the state cap of $100 and revenues growing in chucks because of 25 cent increments.

"The memo is wrong and the Administration didn't share it because it's wrong," Qualls stated. "We need to make sure that we are comparing apples to apples. We need to make sure that if there are excessive fees that they're identified and if they're not, we identify why they're not."

"I think the bigger issue is that this was done in secrecy and I think that is a big problem because we're talking about tax payer dollars," councilman Charlie Winburn argued.

Winburn gathered with political candidates gathered outside of the Port Authority offices Monday to voice concerns over the parking deal.

"We owe our public information that's transparent, information that's true and information that's solid," city council candidate Vanessa White said. "That's what's important to me; making sure that the public knows what it is signing."

When city councilman Charlie Winburn and mayoral candidate John Cranley went to deliver a letter inside the building on 6th Street they were told the building was privately owned and were ultimately not allowed up to the Port Authority offices.

"They are refusing to let us in the building and it is very disturbing as it relates to the transparency and openness that they claim to do, especially when everything they have comes from tax dollars," Cranley argued.

In a commitment to balanced news, FOX19 tried to contact the Port Authority for comment, but as of Monday afternoon had not heard back.

According to the City Manager, the Walker memo was written in response to a meeting with the consulting company where "the team was discussing positioning the City for the best deal". According to Dohoney, the information had already been used to improve the deal.

Currently the Port Authority's due diligence team is conducting a comprehensive financial review. The team consists of internal staff, executive leadership, and members of its Board of Directors and advisors. Leaders from P&G, Eagle Realty, Western & Southern, and Kroger are also volunteering time for review.

The Port Authority is simultaneously in the process of hiring an independent third-party structural engineering firm to conduct a study in relation to the lease. Bids have been received by the Port Authority and they expect a contract to be awarded as soon as negotiations are complete.

According to the Port Authority, contract negotiations with operators, including Xerox, are under way but not finalized.

The Port Authority will issue a detailed and public report of their process and findings following the review which wraps up September 4.

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