At the January 22nd meeting the Parking Department reported on a successful first quarter; the Department exceeded revenue projections. Additionally, the Department realized salary savings, which together with the added revenue provided the Department a two (2) million-dollar savings. Nevertheless, due to the persistence of COVID-19, future budgetary projections had to be modified. From our budgeted 75% of FY2019 revenue projection beginning in January of 2021, Q1 projections were lowered to 65%.
At the meeting staff was directed to return to FERC with a status update as well as information on the possible reinstatement of pay stations and sale of those permanently removed.
Our initial estimate of a two (2) million-dollar savings was over estimated due to a difference in posting of deferred revenue. However, January 2021 revenue came in at 64% of January 2019 (pre-covid revenue) and February 2021 revenue came in at a high 86% as compared to February 2019. Combined with salary savings of $143K in January and $165K in February, the Department now holds savings of $1.8 million. This is lower than the $2 million cushion reported in the first quarter but still a significant amount. The Department also estimates that an additional operating savings of over $1 million will be realized with the repurposing of staff and other efficiencies.
March will see increased overtime costs due to Spring Break coverage. However, the Department will still remain below budget. Also, there are currently multiple budgeted part-time enforcement officer and dispatcher positions which will be filled in the upcoming weeks. These positions are necessary to provide proper enforcement staffing levels.
The City had, at one time, approximately 770 pay station citywide. Prior to the pandemic we had 704 pay stations. Due to the Pandemic’s impact on the Department’s finances and because of contactless restrictions, the use of pay stations in the City was suspended on April 1, 2020. Recognizing not all parking customers are able to use or access the internet and that some feel more comfortable using a pay station, with the desire to offer as many payment options as possible, and in consideration to the potential loss of revenue due to the unavailability of an in-person payment option, the Department looked at the possibility of reinstating pay stations at a reduced operating cost.
Operational expenses to operate about 700 pay stations would amount to approximately $1.7 million dollars annually. To minimize costs, the Department looked at fewer pay stations and the elimination of cash payments to reduce labor and contractor costs. The Department and T-2, the vendor, agreed to a one-time 12-month reduction of 50% in connectivity and warranty charges for the operation of 300 pay stations. This would reduce our costs to operate pay stations to $161 thousand dollars for the upcoming year. Allowing for vendor charges, Parking staffing, and some start-up costs, this amount represents savings of over $1.4 million dollars for the first year (April 2021-April2022). An agreement to allow the reduction in fees has been signed.
Commissioner Richardson requested information on pay station modifications to allow for credit card usage only. T-2 had a solution that would cost $90 dollars per station for a total of $27 thousand dollars. Instead, the Department developed its own solution at a cost of less than $5 per station for a total of less than $1,500 dollars. Additionally, the Parking Department is in the process of removing the excess pay stations to minimize confusion.
With changes in technology, T-2 has developed new pay stations, making ours obsolete and difficult to sell because of warranty issues. However, there may be a market for parts. T2 is discussing with their team the possibility of providing us with a proposal for the purchase of these stations for parts. The pay stations are made of cold rolled steel and there appears to be a market for the recycling of this material. The Parking Department reached out to Procurement to pursue auction of the excess pay stations. The auction process requires the sorting, proper description, and inventory of the stations and parts to accurately list these for sale. This process can be time consuming; therefore, we have prioritized the removal of excess pay stations and servicing of the remaining stations and will then move to the sorting and documentation required by the auction process.