A Subsidy Creep

May 19, 2006
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GRAND RAPIDS — Whose money is it and how should it be spent are two questions parking commissioners asked recently and will try to answer in a few weeks, as board members are concerned that more and more of the system’s revenue is being used to finance activities previously bankrolled by the city’s general fund.

In just the past six weeks, the city has asked the Parking Commission to contribute up to $359,000 over the next three years to non-parking activities, and commissioners agreed to do so — but with reservations.

“Today it is the Office of Special Events; what is it going to be in six months?” asked Commissioner Monica Sekulich.

“We don’t want to become the go-to place for general-fund subsidies,” added Jack Hoffman, commission chairman, who labeled what was going on as a “subsidy creep.”

In April, the city asked the commission for $80,000 to fund the city’s new Office of Special Events, which replaces the whittled-down Parks and Recreation Department as a liaison to event planners, and board members approved the expense. That revenue will come from parking receipts the department collects during the annual Festival of the Arts.

Parking Services Director Pam Ritsema said her department pulled in about $80,000 in revenue last summer during Festival and feels this year’s receipts will be enough to cover the commission’s commitment to the new agency. But she also pointed out that the income isn’t enough to pay the department’s expenses during the event.

The city also asked commissioners to consider raising the parking rate during Festival from $6.50 to $7 at three ramps to meet those expenses. But board members didn’t go ahead with the hike, after Ritsema suggested they not raise the rate.

The parking system will join the Downtown Development Authority in providing the bulk of the operational cost for the Office of Special Events this year, which is expected to be $245,000. The DDA is contributing about $95,000.

A few weeks ago, the city asked parking to renew its share of the $260,000 in overtime pay that police officers accumulate each year during ticketed events at

DeVos Place
and Van Andel Arena. The cost of covering those hours can run up to $93,000 a year for Parking Services, or $279,000 over the three-year life of the renewal agreement.

“They’re not without benefits to the parking system,” Ritsema said of the events.

And commissioners agreed to extend their commitment to that overtime payment, which also has the DDA and the Convention and Arena Authority picking up sizable portions of that cost. The DDA agreed to send $214,000 to that account over the next three years, and the CAA will decide this week whether to give $279,000 to the account for the same period.

“But how about parking fees paying for parking?” asked Commissioner Kevin Denhof, in lieu of going toward special events and general fund activities.

Denhof explained that Parking Services doesn’t receive tax dollars from the general fund and is responsible for paying its own bills. But he pointed out that the subsidy creep began three years ago when the city took $1 million over two years from Parking Services for the general fund.

Denhof said money has to be set aside to build ramps to support economic development. Three new ramps may be going up in the coming years: one in Heartside and two more near the arena, if two parking lots are sold to private developers. Ritsema recently told the DDA that the construction cost of each parking space in a new ramp has risen to nearly $24,000.

“We have to have funds in 10 to 15 years,” said Denhof, referring to the higher debt payments the department could be facing then.

Commissioner John Tully added that parking needs a continuous revenue stream and these payment requests interfere with that flow, which makes it more difficult for the commission and department to do their jobs.

“If we rob Peter to pay Paul, we won’t be able to do that in the future,” said Lisa Haynes, also a parking commissioner.

Haynes said the city needs to look at the bigger picture: that a loss of revenue sharing from the state means that it can’t do everything it did in the past.

“I agreed to an $80,000 outlay that I’m embarrassed about,” said Commissioner Daniel Barcheski, of his vote last month to fund the Office of Special Events.

Barcheski added that he was considering resigning from the commission.

Sekulich said the commission had to go on record with its views on the subsidy creep so future commissioners would know how they felt. Ritsema said she would draft a resolution the board could discuss at its next meeting.    

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