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Norwalk Parking Authority debt scrutinized for link to rates

Councilman Jerry Petrini (R-District D) holds up a graph showing parking violations. “Just exploring,” he said of the Finance Committee meeting last week.
Councilman Jerry Petrini (R-District D) holds up a graph showing parking violations. “Just exploring,” he said of the Finance Committee meeting last week.

NORWALK, Conn. – It’s worth having a discussion, council members say – if the Norwalk Parking Authority’s debt was lowered, how would that affect parking rates?

The Authority’s budget is on the agenda for Tuesday night’s council meeting, giving Finance Committee members the opportunity to question Department of Public Works Director Hal Alvord about that idea raised at last week’s committee meeting.

“The question is if the debt service is part of the pain of trying to come up with rates,” said Council President Doug Hempstead (R-At Large), who queried Alvord. “What happens if the city says, ‘Look we’ll take on a portion of the debt service, either the interest or the other, how does that reflect on rates?’ If it’s $400,000 or whatever it is, how is it disbursed? It’s not going to change how many people are working, but does that directly translate into reduced rates? I think it’s worthy of discussion.”

Finance Committee Chairman Bruce Kimmel (D-At Large) agreed.

“They’re under a lot of pressure because of the debt. They’ll kill themselves before they’ll come to the city asking for money,” Kimmel said.

Finance Director Thomas Hamilton said debt is about 20 percent of the Authority’s $5.48 million budget. That includes $751,104 for the principal and $366,000 in interest.

Alvord, who was standing in for Administrative Services Manager Kathryn Hebert, said there isn’t a direct correlation with rates.

“First off, the debt service is coming down,” he said. “We have managed our capital program to try to make sure that we don’t increase it outlandishly, and at the same time trying to bring it down and at the same time keeping the facilities safe and that sort of thing. … We don’t have a consistent rate policy across the city because, quite honestly, parking fees have been a political football.”

They vary from neighborhood to neighborhood, he said.

“It’s not market rate and there’s no consistent time frame throughout the city,” he said. “I mean, even in SoNo enforcement takes place until 6 o’clock on Washington Street, takes place until 9 o’clock on North Main Street. If you could have a consistent set of market rates and then take out the debt service we might be able to give you an answer on what would the impact be on rates.”

Robert Gibbs, described by the Norwalk Redevelopment Agency as a leader in new urbanism, said in a talk last week that people will pay to park closer to where they are going. Hempstead agreed, saying he and his wife had paid $25 to park in a garage in New Haven, which didn’t even have an elevator.

Alvord agreed.

“I’ll give you an example,” he said. “The rates on our meters is $1 an hour. On the Saturday night, Friday night, people go to Gingerman and pay 10 bucks because it’s as close to the bar as they can possibly get. They could care less about the 10 bucks. If they paid at the meter, after 6 o’clock it’s free.”

“Is there an opportunity to look at the rate structures on the spaces that are on the streets in Sono?” Hempstead asked. Alvord said a chapter in Gibbs’ book indicates that would be a good idea.

“The Parking Authority is doing it right, just that the rates aren’t high enough to encourage what you want to do with your on-street parking and off-street parking,” he said.

Permit sales are up, violations are down, Alvord said.

“Five years ago writing 50,000 tickets a year. In 2013 we wrote 18,000,” he said. Violations are primarily people parking where they shouldn’t be – in a handicapped spot or a no parking zone – or putting no money in the meter at all, he said.

“You have more people actually putting money in the meter and then you have more permit sales. Permit sales are going up and transient sales are going down,” he said.

Alvord said the debt isn’t going up.

“We’re not taking additional debt this year because we have the funds to pave Webster lot.That’s the only capital project we have this year,” he said. “We’re looking at some technological implementation but we also have the funds to do that.”

Comments

14 responses to “Norwalk Parking Authority debt scrutinized for link to rates”

  1. Suzanne

    Just curious: how can a parking authority, which, I assume by its very nature is taking in significant funds, be in debt? That is, how was this debt incurred? What is the mandate for this agency to pay it back?

  2. LWitherspoon

    @Suzanne
    I believe the debt mainly relates to construction of parking garages at the SoNo train station, Maritime Garage, and the Yankee Doodle garage at Wall Street.

  3. Bryan Meek

    Suzanne, the powers and responsibilities of the NPA are enumerated in the city charter Section 73A.
    .
    http://www.ecode360.com/27051449
    .
    The relevant section you are looking for is paragraph 2C.
    .
    The Authority shall assume all existing obligations of the City in connection with City parking facilities as of July 1, 2002, and any obligations which accrue on or after July 1, 2002, which arise from City parking facilities. Nothing contained in this chapter shall be deemed to transfer any existing fee ownership interest of the City in any City parking facility, including the underlying land, air rights above or any easements through City parking facilities, to the Authority, and provided further, that control over parking meters within the City, including, but not limited to, the type, location, number and servicing thereof, shall be subject to the approval of the traffic authority of the City.
    .
    The debt just crossed under $10 million for the first time late last year and is projected to be paid off by 2031. Not all, but most of the debt is from the Parking Garages and most of what is left over is from the Maritime Parking Garage. These things cost millions to build and maintain. You can see the full debt schedule of the NPA in the city’s annual financial report on page 92 here http://norwalkct.org/ArchiveCenter/ViewFile/Item/7355

  4. Bryan Meek

    The Governmental Accounting Standards Board establishes Generally accepted accounting principals for governmental entities. Accordingly, the NPA is properly organized as an Enterprise fund.
    .
    Enterprise Funds – used to account for any activity for which a fee is charged to external users for goods or services. Activities are required to be reported as enterprise funds, in the context of the activity’s principal revenue sources, if any one of the following criteria is met:
    a.The activity is financed with debt that is secured solely by pledge of the net revenues from fees and charges of the activity,

    b.Laws or regulations require that the activity’s costs of providing services, including capital costs (such as depreciation or debt service), be recovered with fees and charges, rather than with taxes or similar revenues, or
    .
    c.The pricing policies of the activity establish fees and charges designed to recover its costs, including capital costs (such as depreciation or debt service).
    .
    .
    .
    It wouldn’t be right or wrong, but the minute the city decides it wants to subsidize the parking (and it would have to do this by ordinance) it would need to report parking as a governmental fund activity, which would effectively increase the operating budget of the city by $5.5 million dollars overnight.
    .
    This council may have the good intentions of lowering parking rates by subsidizing the NPA, but what about future councils? How long would it be before the garages fell into disrepair like they had in years past that necessitated formation of the Parking Authority in the first place? What happens in a tough budget year? Do you buy hot lunches for the kids or put off that garage deck protective membrane for just another year? What happens when the concrete starts falling from overhead like it has in the past when garages weren’t kept up like they should be? Does the council, which largely operates on rules from 1913, have the time, capacity, and attention to maintain and operate parking garages on top of their already tremendous plate load of things?
    .
    I know this council is up to that task perhaps. But, what about future councils? $5.5 million today in operating costs is based on a less than 2% growth rate in expenses over the last 5 years. At 4% rate, which is the historical growth rate of the city’s government, that number would be $6 million today. Subsidizing $400k would essentially give the system just one free month of parking out of 12. Then what?

  5. Oyster

    What is the rate on the bonds for the the Parking Authority debt? Is it possible to refinance at a lower rate?

  6. Bryan Meek

    This is just my opinion after having served as a parking commissioner recently for the past five years. I didn’t need my CPA license to come to the following conclusions either.
    .
    The primary problem with parking in this city is the lack of it. Not that there aren’t other issues. But, for the most part the parking operations have been running on budget at zero expense to the taxpayers for the last five years. It needs to stay that way and the way to do this and ease pricing pressures is to take on some capacity with revenue neutral plans to pay for expanding the system to accommodate the growth and demand for services.
    .
    The city should have short to long term plans for the following:
    .
    1. Purchase portion of unused parking lot immediately behind the main library adjacent to Mott Ave. It is my understanding that the owner of this property had been reluctant to prior offers in years past from various city agencies and groups. The library and its customers desperately need this capacity and the bank no longer needs it. On line banking has dramatically reduced the footprint needed for retail banking and our library serves a community need that outweighs any and all other considerations in the area. Pay fair market value for these spaces and pay for this with limited metered on street parking in the district.
    .
    2. Provide parking services at the Glover Avenue rail station. The state has asked the NPA to do this and negotiations are in progress to get this done. This partnership with the State should be fostered and serve as a foundational arrangement to a future re-opening of the Wall Street station. This opens up the Wall Street district to pedestrian traffic that will enjoy our soon to be new theatre as well as numerous restaurants and shops we already have here. The revenues pay for the million plus in maintenance that has gone into the Yankee Doodle Garage.
    .
    3. Build a parking deck on North Bound side of East Norwalk Rail Road station. In the short future East avenue project will get underway and MNRR is also expanding the train platforms to accommodate full trains. More trains means we will need more parking and taking one old man’s property isn’t going to get it done. The added benefit of expanding ENRR is taking pressure off of SONO demands for parking. Many EN residents take trains from SONO now. That will change when the trains come and we clearly do not have capacity for parking in that area now. Pay for this mainly with permitted parking, but also allow for some transient day parkers.
    .
    4. Look to purchase vacant lots on Water street between Washington and Sono Seaport Seafood. These eyesores were gas pumps decades ago as I recall. I can imagine they would take considerable remediation if used for anything other than parking. The city can put a riverside gazebo there and have events and have lower cost parking. This capacity would probably be needed in the event Webster lot redevelopment takes place in the future. As well, this would open Sono past Washington street and help attract businesses down Water street to Hanford Place. You could finance these properties long term for a low daily/hourly parking rate if structured correctly.
    .
    We could have a vision for the future here. Or we could do what is politically expedient for one year at a time and pound our heads into the wall each and every budget cycle. What do you think?

  7. Bryan Meek

    @Oyster. You can see the full debt schedule of the NPA in the city’s annual financial report on page 92 here http://norwalkct.org/ArchiveCenter/ViewFile/Item/7355
    .
    Our city’s Finance Director has been very astute in refunding our debt for the best available rates. This has saved the city hundreds of thousands of dollars on parking debt alone. I understand this is a routine practice of his treasury function for all areas of our governmental debt.

  8. Oyster

    So the schedule is as follows:
    ENTERPRISE FUNDS
    Maritime Parking Garage 110 07/01/2007 4.125-5.75 07/15/2027 225,000
    112 07/01/2008 3.00-5.00 07/01/2028 1,200,000
    113 03/03/2009 2.50-5.00 07/01/2022 818,158
    115 07/15/2009 2.25-4.25 07/01/2029 1,205,000
    116 02/16/2010 3.00-5.00 07/01/2026 7,374,315
    117 04/28/2010 3.00-5.00 07/01/2024 209,400
    119 08/01/2010 1.60-5.20 08/01/2030 1,276,000
    121 08/16/2011 2.00-4.00 08/15/2031 226,000
    122 07/10/2012 1.25-5.00 07/15/2029 1,063,160

    Which of these are refinancings? From what rate to the new rate? What are the savings?

  9. Adam Blank

    @Bryan – I agree that the City ought to formulate a comprehensive short and long term plan for parking but I also believe that the Council can structure an agreement with the NPA now where the City guarantees any loss in revenue to the NPA for a couple of years and the parking rates are then restructured with prime on-street spots expensive and an hour or two of free parking in the garages with the garage rates rising after the first hour or two to a level still below on-street – in line with what Mr. Gibbs recently discussed. I personally would also add inexpensive on-street valet from Washington and S. Main to the garages during peak hours. I prefer a vibrant downtown with the City subsidizing some costs associated with parking to a desolate downtown with half full debt-free parking garages.

  10. Bryan Meek

    @Oyster. The CAFR doesn’t show detailed debt schedules. NPA doesn’t micromanage the city’s treasury function either which falls under the Finance Department. NPA will pay roughly $380,000 in interest this year on roughly $10 million in debt. That’s about 3.8% off the blended schedule. This is in line with cost of money for city’s with AAA bond rating. Keep in mind there are fees associated with issuing debt similar to personal property mortgages. So while the current 20 year yields on AAA muni debt are roughly 3.5%, it doesn’t necessarily mean you run out and refinance everything. In short, you seem to be concerned about this. But I can assure you there is nothing worth turning over here. It is already being done.

  11. Bryan Meek

    @Adam. You are correct that the council can do this. As I have pointed out they would no longer be able to account for the NPA as an Enterprise under GAAP. That in of itself may not seem like a significant barrier and shouldn’t stop the council from doing what is right. But what should concern more people is our history where we let garages fall into disrepair because there was always something more important in the budget for the council to spend money on. We have the reports that recommended closing Haviland and Yankee Doodle Garages for safety reasons. As any homeowner knows, it is cheaper to maintain properly rather than waiting for the catastrophe to happen. The NPA’s current structure helps prevent this from happening. Subjected to competing interests from the city like safety and education and our history has shown that things like infrastructure tend to be neglected.
    .
    I went to the Gibbs presentation. His proposals are valid and proven. But you can’t have the free off street lot parking without charging on the street. Maybe you weren’t there, but he also said he had been witness to near recall elections for those who were stoic enough to actually put the meters back on the streets. Personally, I agree with him. But I don’t think anyone involved in this city has the political fortitude or capital to actually charge more for metered parking than we already do. Maybe I am wrong, but I just don’t see it happening.

  12. Bryan Meek

    @Adam. I don’t know what debt free desolate parking garage you are referring to? We just finished over a million dollars worth of concrete repairs to the Yankee Doodle garage. That is being financed.
    .
    The valet service you point to is a nice service that can be provided by the NPA at very minimal cost as they are basically only charging interested parties for the labor on this. NPA wasn’t even looking to do this, but the requests from various businesses to provide made it sort of an add on service for us to promote the NPA as a business friendly entity.

  13. Suzanne

    Thank you, L. Witherspoon and, especially, Mr. Meek. I have some reading to do!

  14. Oyster

    @Meek.
    Many of us asking questions genuinely want to know the answers–they are not accusations, so there is no need to get defensive. The cost of parking here seems to be justified largely by the cost of the debt, and not necessarily by market value, as judged by some of the observations made by commenters in the past. So it’s logical to ask if something can be done about the cost of servicing the debt. I asked what it cost and instead of giving the answer you eventually provided (about 3.8% off the blended schedule) you sent me to that chart, and you assure the public that–quote “Our city’s Finance Director has been very astute in refunding our debt for the best available rates. This has saved the city hundreds of thousands of dollars on parking debt alone.”–unquote.
    So I ask the natural question. Which of those has been refinanced, and how many “hundreds of thousands” were saved? I am well aware of the fees associated with issuing debt, as I have worked on many corporate debt deals in my life.
    Again you assure the public “there is nothing worth turning over here. It is already being done.”, but you have not answered the question about what exactly was done, at what savings. Either you know (which I believe you do, as you seem to have plenty of facts at your disposal), or your assurances come out of trusting the Finance Dept, which each citizen is entitled to judge on their own.
    IMHO, the cost of parking here is very high for a city of this size, and pretty inconvenient for comparable facilities. It seems to me that the relative value to our city’s economy for a $1 spent at a local merchant is higher than $1 that goes into the city’s coffers for parking, so I have taken an interest, yes, in whether NPA can possibly do more with less.

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