TITLE
Adopt resolution establishing parking meter rates as defined in Long Beach Municipal Code Section 10.28.130 to a maximum of $0.75 per hour for on-street single space meters in Zone 1, to a maximum of $1.00 per hour in Zones 4, 5, & 6, and to a maximum of $1.50 per hour in Zones 2, 3, & 18 (Citywide);
Decrease appropriations in the General Fund (GF) in the Citywide Activities Department (XC) by $800,000;
Increase appropriations in the General Fund (GF) in the Public Works Department (PW) by $1,148,134;
Increase appropriations in the Belmont Shore Parking Meter Fund
(SR 136) in the Public Works Department (PW) by $404,573; and
Increase appropriations in the Rainbow Harbor Fund (TF 411) in the Public Works Department (PW) by $153,891.
DISCUSSION
City Council approval is requested to enter into a contract with IPS Group, Inc., to purchase and install electronic parking meters.
City staff has been requested to study parking devices that offer alternative means of payment, specifically, parking devices that accept credit cards in addition to coins. This resulted in a Parking Meter Study released in August 2014 (Attachment A), and a community outreach effort to solicit input from Long Beach residents that spanned community meetings, "Speak Up, Long Beach!," and social media.
Technology/Procurement
A new class of single-space meters has emerged in recent years that accept both credit cards and coins. These meters rely on solar energy in combination with a battery. In addition to credit cards and coins, these meters have the option of accepting near field communication (NFC) payment and a pay-by-phone app. The new single-space meters enhance the user experience by accepting credit cards, providing a large, brightly lit screen for viewing, delivering key messages to inform the user of potential changes in regular parking hours (e.g. free parking on holidays, no parking for special event), and providing valuable data to phone apps that identify open parking spaces and distraction-free, voice navigation to the available space. Many cities in California use these new smart meters to manage their parking assets, including Los Angeles, San Francisco, Santa Monica, Venice Beach, Manhattan Beach, and Huntington Beach.
Smart parking meters also provide the capability of sensing the presence of a vehicle in the space with the installation of a sensor, known also as a puck. The sensors provide valuable information to inform future parking decisions, including the availability of a space, the occupancy rate of the space, the length of time per occupant, and the turnover rate. The data from sensors will provide additional information for the City to determine if the enforcement hours reflect the actual use of the space, and if a meter's placement should be reassessed. The City's existing parking meters do not collect this data.
City Charter Section 1802 provides an alternative procurement method by permitting the City to purchase or otherwise obtain services, supplies, materials, equipment and labor with other governmental agencies by purchasing under their contracts on a voluntary and selective basis when authorized by a Resolution of the City Council.
Should the City Council elect to proceed, City staff recommends relying on the City's ability to use "joint and cooperative purchasing" per Charter Section 1802. This practice, known as "piggybacking," allows the City to rely on the competitive bid process of another agency. The City of Sacramento bid single-space smart parking meters in November 2013 and Sacramento's City Council awarded the IPS Group (IPS) of San Diego, CA a contract as the most responsive and responsible for single-space smart parking meters.
Sacramento's award represents a 12 percent savings over similar procurements by other cities (Attachment A). City staff recommends that the City Council adopt a Resolution authorizing the purchase utilizing the City of Sacramento award. IPS has agreed to honor the Sacramento bid.
Net Revenue Neutrality, Operating Costs, and Rate Increase
City staff recommends that any upgrade to single-space smart parking meters should maintain the current net revenues (revenues minus any costs), inclusive of impact on enforcement costs, citation revenue and operating costs. In addition to the initial purchase costs, single-space smart meters are expected to be significantly more costly to operate than traditional meters. These higher operating costs reflect credit card gateway and bank fees, battery and equipment replacement, and wireless communication fees. The City's current operating costs are approximately $158 per meter annually; staff analysis suggests that this cost could increase up to $446 per meter.
Credit card fees, which are transaction costs imposed by credit card companies, are a highly variable cost, due to both the amount of the fee charged per transaction, and the volume of transactions driven by customer use. In Long Beach, credit card fees average $0.24 per transaction for parking in the Downtown pilot area on Broadway and Third Street, which has parking machines that accept credit cards. The City pays for each transaction as the cost of doing business, as do other cities that have implemented smart parking meters. Underestimating credit card use has negative fiscal consequences. One city initially projected that 35 percent of users would utilize credit cards. However, credit card use accounted for 60 percent of parking transactions, resulting in an unexpected $1.4 million expense due to credit card transaction fees. This experience demonstrates the need to accurately plan for the increased costs. The City's Parking Meter Study revealed that it is prudent to expect a high demand for credit card utilization and ensure that the cost can be covered by meter revenue if use increases up to 70 percent.
To meet these higher operating expenses and maintain net revenue neutrality, City staff proposes a rate increase for the City's on-street single space meters. This would bring hourly rates to $1.50 in the Downtown Core, $1.00 in the Downtown periphery, and $0.75 in Belmont Shore. City staff recommends that The Pike, which would also receive new meters, remain at $2.00 per hour. Attachment B details the revenue projections with the proposed meter rates. For each area, the rate increase is the minimum estimated rate required to pay for the new meters, both in terms of operating and capital cost. Even with the rate increase, the City expects to be at or below the rates other cities charge for parking (Attachment A).
Community Outreach
City staff conducted an outreach effort with the release of the Parking Meter Study to hear comments and answer questions, particularly in areas where parking meters are located. City staff attended or sponsored 14 community meetings in Downtown Long Beach and Belmont Shore. Additionally, staff invited public comments from residents who could not attend meetings via email to ParkingMeterStudy@longbeach.gov <mailto:ParkingMeterStudy@longbeach.gov>, and inaugurated "Speak Up, Long Beach!", an online community engagement forum. The City received 23 email comments and 73 responses on Speak Up. Finally, the City also used social media to encourage discussion. The City's Facebook page received 49 comments and 3 responses on Twitter.
These meetings included engagement with the two entities that receive parking meter revenue: The Belmont Shore Parking and Business Improvement Area Advisory Commission (BSPBIAAC) and the Downtown Long Beach Associates (DLBA). Both provided advisory recommendations to adopt the new IPS meters with conditions.
Belmont Shore
The BSPBIAAC recommended on September 18, 2014 to adopt the installation of parking meters only with specific conditions (Attachment C). The BSPBIAAC recommendations seek to mitigate the increased operating costs of the meters, and maintain the current rates of $0.50 per hour on the single-space meters on Second Street. These conditions include imposing a fee for credit card users (referred to as convenience fee in the motion), no change in the hours of enforcement for all Second Street meters, no installation of sensors, and increasing meter rates associated with City-owned parking lots in Belmont Shore along Second Street to $0.50.
These recommendations fall short of mitigating the full operating costs of the meters and sensors, and only cover costs at the expense of the user experience. Increasing lot rates, alone, will not cover the increased operating costs. Additionally, City staff has researched the BSPBIAAC recommendation to pass the credit card transaction fee on to the user, and has found that MasterCard and Visa prohibit charging a fee to users for credit card transactions by way of their agreements with Bank of America, the City's credit card processor. While residents who make online or pay-by-phone payments to the City for utility or parking ticket payments do pay a convenience fee, this fee is not for credit card transaction costs, but rather for the cost of providing the online or pay-by-phone services. Furthermore, City staff observes that the sensors provide valuable data that could assist the BSPBIAAC's parking study to assess parking conditions in Belmont Shore. These sensors can demonstrate if parking along Second Street is used efficiently, and can provide valuable data to inform future parking decisions. Thus, staff cannot support the recommendation to omit the sensors. Additionally, the lot increases, alone, cannot pay for the meters and sensors as, even with the increase, the five-year projection would result in a net loss of $320,164. Finally, the BSPBIAAC discussed a progressively increasing rate; after the first hour at $0.50, the next hour would cost a higher rate. Should the City Council elect to move forward with this concept, staff will require additional time to analyze the complexities of implementing progressive pricing.
However, it is clear that the Belmont Shore community has concerns about raising the rates in their area. In response, the revised staff recommendation only raises rates in Belmont Shore by $0.25, as opposed to $0.50 as originally recommended. This smaller increase is estimated to cover the costs of the meters, yet does create a significant discrepancy between the rates in Downtown and the rates in Belmont Shore. Because 100 percent of parking revenues collected in Belmont Shore must remain in the area by City ordinance, any additional revenue from the new parking meters represent an investment in parking in Belmont Shore, creating opportunities for additional parking options for residents and visitors. In order to afford the $0.25 rate increase, sufficient fund balance in the Belmont Shore Parking Fund would need to be available in the event the costs are higher than predicted. Staff recommends that a reserve of $140,000, which represents approximately half of the potential peak year costs, be established to cover these costs. Staff has determined that that there are sufficient funds available in the Belmont Shore Parking Meter Fund to establish this reserve, which allows for the lower rate increase.
Downtown Long Beach
DLBA provided recommendations for implementation and operational elements to the City on November 6, 2014 (Attachment D). These recommendations include: dedication of new net revenue (collected from the new parking meters during the first two years of operations) to downtown for parking infrastructure and operations in Downtown Long Beach; providing a comprehensive parking guide through a website, phone app, pocket parking guide, and enhanced parking signage; improving infrastructure in existing City-owned parking structures, including new lighting and security cameras; and evaluating Downtown parking needs with data collected from the sensors.
City staff notes that DLBA's recommendations are very similar to recommendations in the City's Parking Meter Study. Specifically, the City will conduct an extensive outreach and public information campaign if the new meters are installed. Staff also concurs with the need for investment in Downtown parking assets and recommends that, for the first two years of implementation, excess net revenues from the new parking meters be allocated on a one-time basis for parking enhancements in Downtown and implementation of the IPS meters. Finally, City staff agrees that the sensors provide valuable data and is committed to using this data to inform parking management decisions in Downtown and Belmont Shore.
City staff notes that public comments in the Downtown area at community meetings expressed concern of rate disparity between the City's commercial centers of Downtown and Belmont Shore. Specifically, Downtown businesses raised a concern of the potential $0.50 or $1.00 an hour difference in meter rates between the Downtown Area and Downtown Core meter rate proposal of $1.00 and $1.50, respectively, and Belmont Shore, which seeks to maintain meter rates at $0.50 an hour.
Community Feedback
The City's community outreach gathered a variety of comments about the parking meters. Key issues include opposition to "resetting" the meter to zero if the meter has remaining time, and emphasis on the need for IPS meters to allow continued feeding of meters beyond the two-hour maximum. Attachments E and F provide a summary on topics raised during community outreach.
Staff has identified potential programmatic elements to address these concerns. Firstly, the City is limited in ability to impose convenience fees, as discussed above, and does not recommend pursuing convenience fees for the stated reasons. Secondly, based on a community suggestion, staff recommends that the City conduct a pilot program that would offer the first five minutes free for all spaces, even if the meter does not have remaining time (similar to a recommendation by DLBA). This business-friendly approach would allow a user to press a button to receive five minutes free upon arrival, allowing short trips to be completely free and compensate for lost time that may have been on the meter prior to arrival. The results of the five-minute free pilot project will be evaluated to see if it could be continued in future years while still ensuring net revenue neutrality. Finally, staff recommends that the IPS meters accept payment after two-hours, and that the current enforcement practice remains unchanged until the sensors provide additional data to inform future decisions.
This matter was reviewed by Deputy City Attorney Amy R. Webber and by Budget Manager Lea D. Eriksen on November 7, 2014.
TIMING CONSIDERATIONS
City Council action to adopt the attached Resolution(s) (Attachment G) and execute a contract concurrently is requested on December 2, 2014, in order to ensure that the contract is in place expeditiously.
The meters will take approximately 60 days to be delivered and installation is to be completed as soon as practicable thereafter for the convenience of the public.
FISCAL IMPACT
The contract cost will not exceed $1,538,979 in the first year. The first year contract cost includes the one-time equipment purchase and installation cost of $1,230,188, plus the on-going contract cost of $308,792. In future years, the ongoing costs are estimated at $446,492. In addition, there will be as-needed amounts for spare parts, non-warranty replacement and maintenance, sensor replacement and battery replacement which could add up to an additional $495,050 in any given year, depending on the level of replacement needed. City costs not covered under the contract are estimated at $257,003 for meter pole adjustments, one-time implementation expenses for development of a parking application/website and community outreach, and anticipated credit card transaction fees. The DLBA has a Revenue Sharing agreement with the City and will receive half of the net revenue from the Downtown parking meters. The DLBA will also be responsible for half of the upfront costs, which will be paid off over a two-year period from the DLBA's share of the new net ongoing revenues. Therefore, there will be no additional net payment to DLBA in FY 15. If there is not sufficient new net revenues in the first two years, the DLBA repayment will extend to a third year.
The total FY 15 cost is estimated to be $1,706,598 and will be allocated to City funds based on the number of meters, sensors and anticipated credit card transactions. Funds impacted are the Belmont Shore Parking Meter Fund (for the Belmont Shore), the General Fund (for Downtown) and the Rainbow Harbor Fund (for The Pike).
The total FY 15 cost to the General Fund for the Downtown area is $1,148,134. Of that amount, $800,000 for one-time equipment purchase of Downtown meters and sensors was approved as part of the FY 15 Adopted Budget's Strategic Investments and is currently appropriated in the Citywide Activities Department. An appropriation transfer within the General Fund (GF) of $800,000 from the Citywide Activities Department (XC) to the Public Works Department (PW) is requested. An appropriation increase for the remaining amount of $348,134 is requested in the General Fund (GF) in the Public Works Department (PW). This amount is projected to be completely offset by anticipated additional revenue. In future years, the ongoing operations costs are projected to be completely offset by additional revenue.
The total FY 15 cost to the Belmont Shore Parking Meter Fund is $404,573. An appropriation increase for $404,573 is requested in the Belmont Shore Parking Meter Fund (SR 136) in the Public Works Department (PW), which is projected to be mostly offset by additional revenue. In future years, the ongoing operations costs are projected to be completely offset by additional revenue.
The total FY 15 cost in the Pike will be $153,891. An appropriation increase for $153,891 is requested in the Rainbow Harbor Fund (TF 411) in the Public Works Department (PW), which will be partially offset by additional parking meter revenue. In future years, the ongoing operations costs are projected to be completely offset by additional revenue.
SUGGESTED ACTION
Approve recommendation.
BODY
A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF LONG BEACH SETTING RATES OF PARKING METER FEES FOR PARKING METER ZONES 1 THROUGH SIX AND 18 PURSUANT TO SECTION 10.28.130 OF THE LONG BEACH MUNICIPAL CODE
Respectfully Submitted,
PATRICK H. WEST
CITY MANAGER
ARA MALOYAN
DIRECTOR OF PUBLIC WORKS
APPROVED:
PATRICK H. WEST
CITY MANAGER