Loading...
HomeMy WebLinkAboutEx 2 81320 Res 2020 06 Garage RatesExhibit 2: Bozeman Parking Commission ,8/13/2020DBOZEMAN PARKING COMMISSIONRESOLUTTON 2020-06A RESOLUTTON OF THE PARK|NG COMMTSSTON OF THE CIW OF BOZEMAN, MONTANA, INCREASINGTHE COST OF PARKING PERMITS AND TEASES AT THE BR¡DGER DOWNTOWN PARKING GARAGE AND BTACIçROUSE, N. WILISON, AND S. W¡LISON SURFACE LOTS.WHEREAS, pursuant to Bozeman City Commission Resolution #3803, the Bozeman Parking Commissionhas jurisdiction over the B-3 zoning district, and any residential parking permit districts created by the BozemanCity Commission; and,WHEREAS, Section 7-t4-45OL (3) of the Montana Code Annotated authorizes the Bozeman ParkingCommission to charge for use of parking facilities; and,WHEREAS, the 2016 Strategic Parking Management Plan recommended that the Bozeman ParkingCommission adopt a policy for annually reviewing and setting rates for parking services; and,WHEREAS, the Bozeman Parking Commission adopted Policy 2OL7-OI, on 3/9/t7; and,NOW, THEREFORE, BE lT RESOLVED that the Bozeman Parking Commission adopts the following parkingpermit and lease rates for the 2021 calendar year in the Bridger Park Downtown Garage and the Black, Rouse,N. Willson, and S. Willson surface Lots:L. Main Garage (monthly¡ = $952. Main Garage (UDC) = S1003. Basement Garage (UDC) = 51104. Surface ¡s15 = $755. Daily Rate = $56. Evening Rate =537. Daily Maximum (hourly¡ = $10PASSED AND ADOPTED by the Parking Commission of the City of Bozeman, Montana, at a session heldon the 13th day of August 2020. This resolution shall become effective immediately.Jim Ness, ChairBozeman Parking CommissionATTEST:Ed Meece, Parking Program ManagerCity of Bozeman Page 1 of 6Meeting DateTo:From:MEMORANDUMJuly 9, 2020Bozema n Pa rking CommissionEd Meece, Parking Program ManagerDavid Fine, Urban RenewalProgram ManagerBrit Fontenot, Economic Development DirectorMike Veselik, Economic Development SpecialistubjectsParking Garagel Lot Permit Pricing lor 2O2f.OverviewCurrent prícing of the City of Bozeman's parking assets is not aligned with the Guiding Principlesof the Downtown Strategic Parking Management Plan (the "Parking Plan") adopted by the Bozeman CityCommission in 2015. The Parking Plan guides the Parking Commission to manage and price parking forthe benefit of Downtown customers and visitors, while parking for employees and new developmentshould take a secondary position. Parking pricing should be aligned with the Guiding Principles of theParking Plan. ln addition, current prices are exceptionally low and distort the market for parking. Thecost of debt service, excluding operational and maintenance cost, for a new parking space exceeds 5215per monthl. To create new parking supply, the Parking Commission should test pr¡ce elasticity ofdemand by applying higher rates. We sutgest a pricing strategy thet iteratively tests the Bozemanmarket's capaclty for paylng retes that approach the actual cost of provldlng new structured parklng.lf the market cannot support higher rates, it is unlikely that it will be possible for the C¡ty to build newstructured parking w¡thout other sources of revenue. While we expect a gap in the midterm betweenmarket capacity and actual cost, staff recommends an approach that moves the market price of parkingtowards its unsubsidized actual cost over the long term.AnalysisAlign Parking Pricing with the Parking PlanThe Downtown Strategic Parking Management Plan (the "Parking Plan") promotes thedevelopment of parking management policies based on severalguiding principles. Guiding Principal 1.a)of the Parking Plan states the City's role in parking is to serve customers and visitors to downtown:AccommodaJe customerc and ylbl'fors downtown and residents and guesfs rnneighborhoods. Employee parking should be led by the private sector endthrough pañnerchips where the CiU can reasonably participate (flnancially orprrrgÌa,mmatically).The Parking Plan suggests that the City should manage downtown parking to pr¡or¡t¡ze hourlyparkers: the customers of downtown retail, restaurant, and business establ¡shments. Current pricingr Assumes 534,000 per stall, for a 2O-year term, at 4.5%ior a revenue bond. Page 2 of 6inverts this relationship and prioritizes downtown employees, employers, and developers overdowntown visitors and customers. UDC Lease holders, for example, pay far less for parking per hourthan hourly customers, despite the management inflexibility these long-term leases cause for parkinggarage management. Rather than paying more for the inflexible and consumptive use of parkingresources, current pricing provides a hefty discount.We created the "daytime equalized rate" as an analysis tool in an effort to fairly comparehourly, monthly, and long-term UDC rates. Since peak parking utilization occurs on weekdays betweennoon and 2pm and permit utilizat¡on is low in the evenings, we propose comparing pricing as if allpermits were used during weekdays. We assume a 20-day work month and an 8am -5pm weekday inwhich 2 hours of parking are currently free. The cost of parking hourly for a 9-hour weekday is $7.Similarly, an 580 permit used only on 20 weekdays a month produces a rate of 54.00 per day for parkingWhile monthly permits and UDC leases allow 2417 parking, this is not how these permits are commonlyused. Thus the da¡ime equalized rate, despite its assumptions, allows for a more fair comparison ofparking rates across different permit types,The chart below shows, via the dayt¡me equalized rate, the current price of parking in thegarage for monthly and hourly parkers. The chart shows that customers and visitors pay significantlymore for parking during the daytime than employees and developers using longer-term products.Current PricingDaytimeEqualizedRatezActualCustomers & Visitors(Transient Parkers)Employees/Employers(Monthly Parkers)Developers(UDC Parkers)s4.00The current pricing system is misaligned with the values of the adopted Bozeman Strategic ParkingManagement Plan. Moreover, the low prices for monthly and long-term permit holders means that theusers most consumptive of publlc parking assets pay the least for parking. As the Parking Commissionexplores setting future monthly and hourly rates, they should consider the values of the adoptedParking Plan alongside the desire to fund the construction of new parking downtown.Market Supply and Demand and the 85% RuleThe Parking Plan and the Parking Commission are committed to actively managing parkingbased on the 85% rule. The 85% rule refers to the accepted best practice for occupancy levels of aparking structure or block lace. This benchmark provides that parking should be managed and priced toSzS4.oo2 Assumes 8 am - 5pm workday (9 hours), 20 workweek days per month, at cost of $1 per hour with 2 hours of freeparking. Page 3 of 6promote enough vacancy for parking to occur with minimal searching for a space. Based on theDecember 2019 parking permit calculator, with 381 monthly/annual revocable permits issued, theaverage peak occupancy was T6Yoprior to March 2020 and stay at home order. As we approachS5%average peak occupancy, it is appropriate, from a market perspective, to use pricing to manage demandand maintain vacancy for customers, visitors, and other transient parkers.Parking industry best practices suggest a relationship between the size of the wait líst and priceelasticity of demand. Staff maintains that considering the wait list is a logical way to manage monthlypermits in the long term once the garage has reached equilibrium with the total number of monthlypermits available remaining static for a period of time. We have not reached that level of equilibrium.lmplementation of the 50% rule3 for management over the past year has significantly increased thesupply of monthly parking permits. Demand for permits has been organic with no marketing efforts toencourage new permit purchases. This absorption suggests strong demand for new permits. Thisdemand, combined with a desire to mainta¡n capacity for hourly parkers, suggests that now is a goodtime to increase the price of monthly permits and UDC leases to align this pricing with the Parking Plan.Reduce the Price of Daily Parking - Daily and Nightly ratesThe Parking Commission piloted daily and nightly rates for 2020. The rates were lower thanpaying the hourly cost for a full day or full evening, but high enough to capture some offsetting revenue.The daily rate available from 6am - 6pm of 55 and a nightly rate available from 5pm - 8am of 53. Priorto the COVID-19 shutdown, the public was beginning to utilize the daily and nightly rates on a regularbasis.Each Montana entity prÍces their parking based on their organizational values and parking goals. Otherentities may price their parking for the benefit of employees and employers. Other organizations, likethe Bozeman Airport, price their parking at a level that allows them to build more parking. The masterplan for the Bozeman Airport includes the construction of a second garage to be paid for entirely withuser fees. Likewise, the parkíng system at Montana State Univers¡ty (MSU) operates as an enterprisefund that must be able to support debt service, operations and maintenance of its parking assets.Bozeman's Parking Plan guides us to manage parking for the benefit of customers and visitors - dailyand hourly users. For context, it is worth considering how other entities price parking, but we shouldexpect our pricing strategy to match our values, reflected in our adopted Plan, with lower pricing fordaily and hourly parking, and higher prices for monthly and long-term parking.Parking Prices in Montana Communities (May 2020)Location Hourly DailyMSU GarageHelenaMissoulaS2.50^SrSrSrrSrsSsMonthly$sg.rorSess85*3 The 50% rule is a management strategy rooted in the Parking Plan's value of managing for the benefit ofcustomers and visitors. The rule reserves 50% of the average vacancy at the designated peak for hourly transientparking, while allowing the other 50% to be sold as monthly permits. Page 4 of 6Billings Sr 5eBozernan AirportPremium Covered SS S18Premium Uncovered SS SfZEconomy S¿ 59Bozeman Sr SsxNo monthly leases currently available.^S4 First hourt 4 month pass cost divided by 4I The airport only has weekly rates. Monthly rates multiply the weekly rates by 4'S60.sos54ors3361s2161SeoAlign Monthly and Daily Rates for 2O2OStaff recommends moving our comparatively low monthly permit and UDC permit parking ratestowards greater alignment with the values of the adopted Parking Plan. For 2O2L, staÍf recommendsaligning the newly proposed daytime rate of SS w¡ttr the daytime equalized rate in pricing of monthlyand UDC parking rates. Staff proposes a monthly rate for monthly parkers of S95 per month. Staffbelieve this rate is not significantly beyond the 2020 rates charged ln Bllllngs and Missoula and is farmore consistent with the values of the adopted Parking Plan than current rates. UDC Permits would besomewhat higher to reflect the¡r lack of management flexibility. Our hourly rates, with two hours free,are below the rates charged in Billings, Helena, and Missoula for the first two hours and equalto Helenaand Missoula beyond the f¡rst two hours. Our proposed 2Ghour maximum rates are significantly belowthe 24-hour maxlmum in other Montana communities with parking programs. These rates serve ourParking Plan's goal of prioritizing visitors and customers over employees and developers with ourparking pricing. Page 5 of 6RecommendationBridger Park GarageTypeParking PlanPrlorltlzationCustomers &VisltorsCustomers &Visitors &EmployeesCustomers &Visitors &EmployeesVlsitorsEmployees/EmployersDevelopers(UDC Parkers)Developers(UDC Parkers)Daytlme 2020 RateEqualizedRatel2020Sr/hourSsDaytimeEqualizedRates2021.Hourly RateDaytime Rate6am -6pmNighttimerRate5pm -8am24 Hour MaxMain Garage(Revocable)UDC Leasesi (Non_Revocable)BasementUDC Leases(Non-Revocable)$t$s$snlaS+.oos¿.oo$zSS$gSro$snlaS80/monthS80/month$92lmonth5+.soIIS¿.zsSs.oo$s.soa Assumes 8 am - 5 pm workday (9 hours), 20 workweek days per month, at cost of Sl per hour with 2 hours offree parking.s Assumes 8 am - 5 pm workday (9 hours), 20 workweek days per month, at cost of 51 per hour with 2 hours offree parklng. Page 6 of 6Surface LotsMonthly permit pricing in the surface lots should also increase to better align with thevalues of the Parking Plan. Add¡t¡onally, revenue from surface parking lots can be part of therevenue system that supports the acqulsition and development of additional structured parkingspaces. Since the projected cost of debt service for a structured parking space is S21s/monthand there is community support for a new parking structure, the price of surface lot parkingshould be raised commensurately with concurrent increases in the Bridger Park Garage.TypeHourly RateParking PlanPrioritizationDaytimeEqualizedRate20196FreeDaytimeEqualizedRateTnla2020RateMonthly' Permit' Customers &VisitorsEmployees/EmployersHours2Free$oo$g.zs$g.oo6 Assumes 8 am - 5pm workday (9 hours), 20 workweek days per month, at cost of $1 per hour with 2 hours of freeparking.7 Assumes 8 am - 5pm workday (9 hours), 2O workweek days per month, at cost of $1 Per hour with 2 hours of freeparking.