Parking Dept In The Black For Now
The city’s parking system is fiscally healthy, even with a new ramp opening next year. That condition could change, however, as the city is facing a budget deficit for fiscal year 2003 that could reach up to $32 million.
Assistant City Manager of Fiscal Services Bob White told parking commissioners that they could expect an operating revenue of $8.7 million this year, roughly the same total the system had during FY02. But White pointed out that operating expenses are likely to rise by 10 percent this year, from $6 million to $6.6 million.
Acting Parking Services Director Pam Ritsema said the $600,000 increase in expenses was due to the maintenance and repair program that her department undertakes every other year. And this fiscal year is the year for that biannual program.
White projected that the system’s net income would be $1.4 million by next July, when the new fiscal year begins. He also reported that Parking Services would have about $1.6 million in minor capital outlays and bond payments, meaning that the department would likely have to use about $300,000 from its working-capital account to cover those expenses.
But White said the system’s working capital, the amount after liabilities are deducted from assets, would remain strong at nearly $5.7 million for the current fiscal year. The system also has $18.9 million in long-term bond indebtedness, but that will decline when bonds for the Louis Campau and Pearl-Ionia ramps mature in 2004 and 2010, respectively.
White said Parking Services will begin making debt-service payments this fiscal year on the new Monroe Center 2 ramp, which Ritsema said should be open by July. The first will be $465,000 and will be for interest only, as will be the case for a few more years. The ramp is being funded through $9 million in bond proceeds and $3.2 million in Parking Services cash.
“It’s a good and healthy working-capital position,” said White, who will start managing the finances of Kent County on Dec. 30.
White added, however, the situation could change in the coming months if the city looks for a revenue source to help fund its general services. A loss of state revenue-sharing dollars and lower tax revenues has the city projecting a deficit from $12 million to $32 million this fiscal year. Parking Services is treated as an enterprise fund, one that does not receive tax dollars, but the city is not obligated by law to continue to treat it in that manner.
As for the new Monroe Center 2 ramp, White said it likely wouldn’t show a profit for the first few years, but should turn one after that because most of its expenses will be fixed. He said its profit margin should be impacted by how many workers the state moves into the former City Centre building, and how well the downtown Renaissance Zone is developed.
White added that the parking department shouldn’t consider any expansion projects for at least another year.
“There are no new parkers just because you open this ramp,” he said of the garage at Louis and Ottawa. “Twelve months from now you will have a better understanding of that.”
Parking commissioners set the monthly rate for the Monroe Center 2 ramp at $111.50, the same fee charged at the Louis Campau ramp, but $10 more than the rate at the Ottawa-Fulton facility. At the same time, commissioners raised the event-parking rate from $5 to $6 for the new ramp and the Campau building — the same fee charged at the Ottawa-Fulton ramp. The increase becomes effective on Jan. 1.
“I think we’ll get complaints,” said Ritsema. “But to have all three ramps at the same price is fine.”